Barely A Year After Its Last Funding, South African Startup Yellow Raises $3.3 million In New Round
Yellow, the three-year-old South Africa and Malawi-based pay-as-you-go off-grid tech startup, has secured another $3.3-million in a Series A Equity Financing Round to expand its services and customer base, barely a yearly after it raised $725k in a funding round.
“We have many aims, but underpinning all that we do is to “LIVE BETTER”. As a team, we are brought together, by the way, our desire to create long term solutions for the real problems our customers face,” the startup noted in a statement.
Here Is What You Need To Know
- The investment which came from Platform Investment Partners (PIP), also saw Ruby Rock Investment and LBO participating.
- With the funding, the startup has been able to supply its pay-as-you-go solar-power devices to over 100 000 customers in Malawi and Uganda.
- The startup also intends to use the funding to rapidly scale up.
- In 2019, the startup raised $725 000 in investment, with a €2-million debt facility earlier raised from mostly Swedish members of the public on crowdfunding platform Trine.
- In May, it also secured a $1-million grant from USAID after coming out tops in its Malawi Kickstarter Programme. The USAID grant will be paid out as the business meets certain milestones in devices issued.
Why The Investors Invested
“Platform Growth seeks to invest in businesses that combine strong management teams with unique technology. In Yellow, we feel we have found this combination and have been hugely impressed by the deployment of Yellow’s Ofeefee software to solve complex problems in Malawi and Uganda. We are proud to provide capital alongside our investment partners, Ruby Rock, to grow Yellow into one of Africa’s leading digital retailers,” Michael Stannard, COO Platform Investment Partners (PIP) said.
Richard Came of PIP; the South African Telco & Fibre entrepreneur, Ben Kruger; and Neil Surgey of Ruby Rock, former senior executives of Standard Bank, are three of the key principals behind the funding round. PIP and Ruby Rock joined LBOS, Yellow ’s seed funders, who have reinvested in the startup ‘s latest round.
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A Look At What The Startup Does
Founded in 2017, by Michael Heyink and Maya Stewart, Yellow is a tech startup which utilises an online platform to sell pay-as-you-go solar-power devices to African households.
Yellow co-founder Michael Heyink saw the opportunity to start a business providing pay-as-you-go solar power to African households while working at a Johannesburg based private equity firm Metier, which finances a number of energy deals on the continent.
After leaving the private equity firm he set off to Zimbabwe and Malawi (where he met fellow co-founder Maya Khonje-Stewart). But in the beginning things didn’t go as planned.
“We learnt the hard lessons of trying to operate a business in Africa. We sat for hours under trees with chiefs and drove through hundreds of places that aren’t on the maps,” he said.
Recruiting agents to sell the devices soon proved a slow and expensive process. “We’d ask who wanted to be an agent and 500 people would put up their hand,” he said.
‘Web platform changed everything’
Back in Cape Town, and partly as a way to try to run the business remotely, Heyink began building a web platform, dubbed Ofeefee.
“The platform changed everything. The business developed huge traction,” he said.
“We substituted meetings under trees for automated recruitment workflows and soon the business was thriving and attracting heavyweight investors and funders,” he added.
Today, the startup claims to have enabled 30 000 low income and rural households access to electricity via solar home systems on a financed basis. Yellow’s business model is low cost with reportedly bad debts of customers at less than 2%.
The team has also grown. Heyink and Khonje-Stewart were joined by Ross Thompson, a former Rand Merchant Bank financier in 2018, while Ben Walwyn, a former actuary from Discovery Bank joined earlier last year. Both Thompson and Walwyn can also code.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer