Yellow secures $14m for African solar finance

Yellow, a ground-breaking tech start-up focused on off-grid solar asset finance in Africa, has successfully closed its Series B funding round, raising $14 million. This latest investment brings the total capital raised by Yellow, through a combination of debt and equity, to an impressive $45 million.

The round attracted new investors such as Convergence Partners and the Energy Entrepreneurs Growth Fund, managed by Triple Jump, along with follow-on investment from Platform Investment Partners.

While the electrification of the African off-grid population seemed promising a decade ago, developing profitable business models to achieve this goal proved to be a significant challenge. However, Yellow’s success demonstrates that the initial optimism was well-founded. Despite entering the market in 2018 when interest in new start-ups in the sector was waning, Yellow leveraged early setbacks and rapidly iterated its model.

One of Yellow’s key innovations is its software platform called “Ofeefee”, which digitises all aspects of operations required to serve rural African households. This digitisation significantly reduces operational expenses while improving service quality.

By cutting operational costs, Yellow was able to offer its services at a more affordable price point, leading to increased sales volumes and improved credit performance.

This virtuous cycle played a crucial role in the early-stage success of the business.

Yellow also tackled the challenge of providing credit to the unbanked and underserved population by drawing inspiration from informal community lending practices. Leveraging real-time digital incentives and behavioural economics, the company decentralised credit decisions and utilised its network of rural agents to achieve impressive repayment rates among previously deemed “uncreditworthy” customers. This pioneering approach resulted in profitability within Yellow’s second year of operation.

Embracing a digital-first strategy, Yellow has rapidly expanded its operations, tripling the rate of rural electrification in Malawi and expanding its presence to five African countries, including Rwanda, Uganda, Zambia, and Madagascar.

The company has also ventured into new product segments, such as smartphone handset financing. To date, Yellow has brought electricity or internet access to over 400 000 households, showcasing its transformative impact.

Convergence Partners, an experienced fund manager in digital infrastructure in Africa, resonates with Yellow’s vision of empowering young African consumers to leapfrog their way to a better life through connectivity.

The funds raised from the Series B round will be utilised to enhance Yellow’s product offerings, improve operational capabilities, and reach even more underserved communities. Additionally, the funding will strengthen Yellow’s balance sheet in preparation for future debt funding rounds, which are crucial for scaling a business of this nature.

Despite challenges posed by global macroeconomic conditions, including inflation, currency devaluations, and hard currency shortages, Yellow’s dynamic and resilient team has maintained profitability throughout.

Driven by their unwavering optimism, the team firmly believes that technology holds the key to improving the lives of their customers. With a promising future ahead, Yellow remains dedicated to bridging the energy and connectivity gap in Africa, a continent with immense growth prospects for the 21st century.

Yellow is a leading African tech start-up that specializes in solar energy and connectivity asset finance. Through innovative technology and disruptive distribution models, the company is empowering individuals and communities, enabling them to thrive and live better lives.

Yellow’s customer-centric approach and commitment to technological advancements position them as a catalyst for positive change and a model for leveraging technology to solve pressing issues in African households.

Corniche Growth Advisors served as the exclusive corporate finance advisor to Yellow in this funding round. With offices in London and Johannesburg, Corniche is a regulated boutique advisor that provides guidance to disruptive tech companies in selected sectors on early-stage capital raises and M&A activities.

READ NEXT: GEC+ Africa 2024: Igniting African entrepreneurship