Decade of tech startups: Yoco, a small device that changed financial services in SA
CAPE TOWN - In October 2014 the first version of the Yoco card reader app went live.
This was a culmination of a 2012 visit to the US by Katlego Maphai. A US company, Square, that was created by the Twitter founder when he was booted out of Twitter inspired Katlego to start Yoco.
In an interview with Forbes magazine he was quoted as saying: "I noticed Square for the first time in the [San Francisco] Mission District in 2011 while strolling through an antique store. It was during a visit exactly a year later in 2012, that I saw it proliferate, seeing it in small stores, taxis, etc. An old friend took me to a hole-in-the-wall barbeque eatery run by an African American lady," he recalled. When it was time to pay, "she takes out this rundown Android phone, plugs in the Square reader and my friend signed with his finger. Here was a small business with a good product, nothing much else, and they were running their business with their phone.”
By being able to accept a credit card through a mobile phone (and without the traditional card point-of-sale system) allowed the store to bill a larger basket size "all set off light bulbs”.
On his return from the US, he launched his own mobile point-of-sale startup called Yoco with three friends in October 2015. Yoco was founded by 4 friends,Katlego Maphai (Chief Executive Officer), Carl Wazen (chief business officer), Bradley Wattrus (chief financial officer) and Lungisa Matshoba (chief technology officer), who shared a passion for smart technology and a desire to help small business.
The development of the M-POS prototype led to a beta testing process that took a year to assess the usability of the device. The beta test was conducted with 500 merchants in South Africa who became a critical feedback loop to design an ideal device for local retailers.
The beta process was a success that led to an official launch in 2015. By the end of that year Yoco moved from just 500 beta testing merchants to a whopping 5000 merchants who were users of the payment device in South Africa. When Yoco went live with its card machines in 2015, it wasn’t just a late entry to market, it was a full nine months behind many other entries.
The fintech startup grew 10 times more in just a year. The startup recorded 10 000 customers.
Yoco has enabled entrepreneurs who had no means of payments systems to easily access the best tech available with ease. It has transformed how South African entrepreneurs enable payments in their own business. Yoco has truly enabled financial inclusion.
The company has grown to become a major player in the South African startup scene, raising $23 million in total funding including a recent series B close of $16 million.
It plans to continue growing its network of small businesses, raise further funding and expand into other African markets.
From next year, the company plans to explore internationalisation and is considering both neighbouring countries and even other continents.
This is likely to lead to the company seeking to raise more capital in 2020. Last September’s series-B round was led by Partech, a venture capital firm based in Silicon Valley, Europe and Africa. Others who participated in the round included Orange Digital Ventures, FMO (the Dutch Development Bank), South African-based FutureGrowth, and existing series-A investors Quona Capital and Velocity Capital. That round brought the company’s total investment to $23-million.
As part of its growth Yoco recently launched a new, lower-cost POS terminal as it looks to double its customer base from 50 000 to 100 000 in 2020 ahead of a further fundraising round.
BUSINESS REPORT ONLINE