Malawi’s Yellow raises $14m to broaden its solar system and smartphone financing offerings

Yellow – an asset financier focused on solar energy and digital services – just raised $14 million in a Series B funding round to help it expand coverage in select Sub-Saharan African markets. The round was led by Convergence Partners alongside the Energy Entrepreneurs Growth Fund and Platform Investment Partners. 

Mike Heyink and Maya Stewart initially launched Yellow in 2018 to close the electricity access gap in Malawi, its first market. Malawi in 2019 was among the “top-20 access deficit countries” alongside the likes of Nigeria, Ethiopia, Pakistan, Chad, Angola, and  Bangladesh.  The Pay-As-You-Go solar home system provider recorded great success in Malawi. As of June 2021, the startup had electrified 81,919 houses.

Today, Yellow is based in other African markets like Uganda, Rwanda, Zambia, and Madagascar. Aside from clean energy solutions, it now offers hardware like televisions and smartphones. Fresh insights into the mobile internet connectivity status of Sub-Saharan Africa reveal that around 200 million people aren’t covered by a mobile broadband network. 

Explaining the purpose of the new funding round, Heyink – one of the founders – revealed that “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.”

This round with the previous ones means Yellow has now raised $45 million. According to Techcrunch, the solar energy startup claims to have attained “a compound annual growth rate (CAGR) of 265% over the last four-year period.” Yellow currently has a network of 1,000+ agents. 

Among its catalog of products is the home solar system whose comments include a 6W-10W panel, 20-50Wh battery, 4 lights, a cellphone charger, and a radio. To own the above system, customers are required to make a downpayment of $10 followed by subsequent payments for 6 months. Yellow also offers a bigger home solar system for which potential users must deposit $68. The balance is spread over 24 months.

Read also: Haul247 secures $3 million seed funding to drive innovation in Africa’s logistics Industry

Yellow is tackling two major pain points of Sub-Saharan Africans 

Although Africa faces various infrastructural challenges, low electricity and smartphone access rank high. Fortunately, solar energy adoption has dramatically increased in recent years. This report found that solar energy kits have become the most common medium for electrifying homes. However, the study does state that the inability to pay remains a problem.

Consider Malawi – the country Yellow emerged from. It faces food and non-food inflation alongside a decline in the value of its local currency (Malawian Kwacha) against the United States Dollar. This combination translates into a high poverty level and considerably low purchasing power. 

But then, the availability of financing for clean energy solutions not only promotes financial incision but enables countries with low electricity access to join the grid. This will reduce the cost of doing business, unlock job opportunities, etc. 

As electricity is expensive, so does affordability remain a major factor for Sub-Saharan Africa’s smartphone gap. Recall that half of the population without mobile internet live in this region. 

To tackle this issue, the Kenyan government recently unveiled plans for locally-assembled smartphones that would cost $40. Ironically, a new set of taxes that the same administration has proposed will cause retailers to sell the local smartphone above $40. 

Yellow’s smartphone financing offers people the ability to own phones without paying the full amount at once. This business model will likely increase the adoption of smartphones in the markets it operates in. This will those regions areas to have sustainable digital economies where government services can be accessed online and buzzwords like content creators or influencers exist.