PayGo solar startup Yellow raises $14 million to scale in africa

Yellow, an asset financier for solar energy and digital devices in Africa, raised $14 million series B funding led by Convergence Partners with participation from the Energy Entrepreneurs Growth Fund, managed by Triple Jump, and Platform Investment Partners.

Mike Heyink and Maya Stewart founded Yellow in Malawi in 2018 to bring solar energy to the world’s lowest-access nation. It now sells electronics like smartphones across Africa.

Yellow plans to expand its reach in Malawi, Rwanda, Uganda, Zambia, and Madagascar after the new funding, launch digital and financial products, and prepare for future debt funding rounds to accelerate growth. Yellow has raised $45 million in debt and equity.

 

“The new capital is leveraging debt finance to reach more customers with financed smartphones and solar systems. “While the business will broaden its product offering to include other mobile financial services, growth will be fueled primarily by deepening our expertise in our existing product categories,” said Yellow founder and CEO Heyink.

Yellow claims to be profitable after a four-year CAGR of 265%. The startup says its 1100 agents, who source and apply for asset finance on behalf of customers through its Ofeefee app, have helped it reach over 400,000 customers in its five markets.

The startup’s most popular product is its 6W-10W panel, 20-50Wh battery, 4 lights, cellphone charger, and radio small home solar system. It sells smartphones and larger solar systems.

Users deposit $10 or $68 and pay the balance over six or 24 months for small and large solar home systems.

“Africa’s sustained growth is thrilling. Yellow is excited to journey with African consumers for decades to a better life. Heyink said, “We have a front-row seat to watch millions of people prosper after joining the digital global economy for the first time.”

Yellow, an asset financier, has received VC funding this year, following last year’s trend of cleantech becoming the second most-funded sector after fintech. According to the 2022 Partech Africa report, cleantechs raised 18% of African startup equity funding with $863M.

According to the biennial Gogla-World Bank report released in October 2018, African off-grid solar startups have raised over $2.3 billion in funding over the past decade.

“We are excited to back the Yellow team,” Convergence Partner CEO Brandon Doyle said of the Yellow investment. We’ve been tracking off-grid solar power asset finance for years but haven’t found a business model and team we could back until now.”

“Yellow’s offering also sits well with our promise to our investors of strong investment returns married with solid social development impact; in this case, tackling the triple challenge of financial inclusion, green energy distribution, and broadband penetration profitably while servicing the unbanked communities of the lowest income countries of Africa,” said Doyle.

Asset financiers like Yellow, Sun King, and M-Kopa offer asset-based financing (pay-to-own) for solar kits and lanterns, which are popular in Sub-Saharan Africa, where millions are off-grid due to underdeveloped power grids. 75% of the world’s population lacks electricity.

These companies, some of which finance other assets, have also quickly added new revenue streams and used debt-financing to expand their clientele.