Yellow, a prominent asset financier specializing in solar energy and digital devices in Africa, has successfully raised $14 million in Series B funding. The funding round was led by Convergence Partners, with participation from the Energy Entrepreneurs Growth Fund (managed by Triple Jump), along with follow-on investment from Platform Investment Partners.
Founded in 2018 by Mike Heyink and Maya Stewart, Yellow initially aimed to provide solar energy solutions to Malawi, a country with limited access to electricity. Since then, the company has expanded its presence across Africa and diversified its product offerings to include electronics such as smartphones.
With the new funding, Yellow plans to further expand its reach in its current markets, which include Malawi, Rwanda, Uganda, Zambia, and Madagascar. Additionally, the company intends to launch digital and financial products in the near term and prepare for future debt funding rounds to accelerate its growth. This latest funding round brings Yellow's total debt and equity funding raised to $45 million.
Yellow's founder and CEO, Mike Heyink, stated
The newly injected capital is being used to leverage more 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.
READ ALSO - Eze Secures $3.7M in Seed Funding for Enhanced Product Portfolio and Global Growth
Yellow has already achieved profitability, with a compound annual growth rate (CAGR) of 265% over the past four years. The company has built a network of 1,100 agents who use the proprietary Ofeefee app to source and facilitate asset finance applications on behalf of customers. Through this network, Yellow has successfully reached over 400,000 customers across its five markets.
The startup's most popular product is its small home solar system, which includes a 6W-10W panel, 20-50Wh battery, 4 lights, a cellphone charger, and a radio. Yellow also offers solar systems with larger capacities, as well as smartphones.
For the small and large solar home systems, users make a deposit of $10 and $68, respectively, and then pay the remaining balance through monthly instalments spread over six and 24 months.
Mike further expressed his excitement about the company's role in Africa's sustained growth, saying
It's incredibly exciting to see the early stages of sustained growth in Africa. The team at Yellow is thrilled to be on the multi-decade journey with the African consumer, to a better life. We have a front-row seat to witness millions of people prospering as a result of joining the digital global economy for the first time.
READ ALSO - Kenyan Used-Car Marketplace, Peach Cars, Secures $5M in Seed Investment
Yellow's successful funding round reflects the continued interest in supporting startups that make solar energy accessible. This sector has seen significant investment, making cleantech the second most-funded sector after fintech in Africa. According to the 2022 Partech Africa report, cleantech attracted $863 million in equity funding, accounting for 18% of the total funding raised by African startups.
Over the past decade, startups in Africa's off-grid solar sector have received over $2.3 billion in funding, according to the biennial Gogla-World Bank report released in October last year.
Brandon Doyle, CEO of Convergence Partners, commented on the Yellow investment, stating
We are excited to be backing the Yellow team. We have been tracking the off-grid solar power asset finance space for many years but have failed to find a business model and team that we felt we could back until now.
Doyle added
Yellow's offering also aligns with our promise to investors of strong investment returns combined with significant social development impact. In this case, Yellow addresses the triple challenge of financial inclusion, green energy distribution, and broadband penetration, while operating profitably and serving the unbanked communities in the lowest-income countries in Africa"
Asset financiers like Yellow, Sun King, and M-Kopa operate pay-as-you-go models, providing asset-based financing for solar kits and lanterns. These products are highly popular in Sub-Saharan Africa, where millions of people lack access to the national power grid. It is estimated that sub-Saharan Africa accounts for 75% of the world's population without electricity access.
These companies, including Yellow, have diversified their revenue streams and leveraged debt financing to expand their customer base and enhance their offerings beyond solar products.
Subscribe to our mailing list