M-Kopa raises $75m in equity funding and targets expansion

Financing company, M-KOPA, has announced that it has raised $75 million in its fifth equity round bringing the total amount it has managed to raise to $190 million. Previous backers such as the CDC Group and LGT Lightrock took part in this round alongside LocalGlobe’s Latitude Fund and HEPCO Capital Management with the Generation Investment Management and Broadscale Group leading the growth equity round. 

The company which was founded by Jesse Moore is known chiefly for its pay-as-you-go (PAYG) financing model that allows customers to build ownership of appliances over time by paying an initial deposit followed by flexible micro-payments. According to the 2019 World Bank report, 85% of Africans live on less than $5.50 per day thus are unable to be banked nor access any form of credit easily.

M-KOPA started with solar-power home systems and targeted lower-income and rural customers without electricity in Kenya, Tanzania and Uganda before it expanded its pay-as-you-go model to include other needs: smartphones, TVs, refrigerators, solar lighting and digital financial services such as cash loans and health insurance.

 “At the moment when we launch in our new markets, we start with one product which is our smartphone financing. We obviously have a broader portfolio of products in our more mature markets, but to enable a rapid scale-up and to facilitate the early execution in a new market, we start just on the device financing,” M-KOPA COO Mayur Patel said.

M-KOPA now intends to launch in one new market this year and in 2023. The decade-old company plans to expand its offerings in the second half of this year in Nigeria and Q1 2023 in Ghana.

 “The other thing that is important to know about our model is it’s very inclusive in terms of who can qualify. So, as you know, most credit instruments have a number of restrictions in terms of screening or collateral or a guarantor, and that’s the limiting factor for so many people when it comes to financial inclusion,” said Moore, the chief executive.

“With M-KOPA’s model, everybody is welcome. There’s no upfront scoring; if you can pay the upfront deposit, that’s all we require. And then you’re into a relationship where consumers can get the solar system or smartphones which irrespective of the market, whether you’re in Lagos or semi-urban Nairobi, can immediately put those to enhance their businesses.”

The pandemic spurred M-KOPA’s business and, coupled with its change in strategy by introducing smartphone financing, drove customer base and hiring off the charts.

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