IN THE midst of the South African gloomy business environment, Yoco, a local fintech company has given global investors a reason to invest R1.2 billion.
This is the largest single investment raised by a small business-focused payments platform in the Middle East and Africa and the largest ever raised by a payments company in South Africa.
Among the company's new investors are Dragoneer Investment Group, which is making its Africa investment debut, after having previously backed fintech giants like Chime, Nubank, Mercado Libre, Square, and Klarna. Also joining the round were Breyer Capital, HOF Capital, The Raba Partnership, 4DX Ventures, TO Ventures, and several current and former executives from global tech leaders such as Coinbase, Revolut, Spotify, and Gojek.
The funding round also included existing Yoco investors Partech, Velocity Capital Fintech Ventures, Orange Ventures, Quona Capital, and FMO.
What is it about Yoco that makes this youth-led company attract global investors to look into a company in one of the most challenging environments to do business and during a pandemic?
Yoco is not an ordinary South African tech company. This fintech company is not just an app or website. This company falls under a category of companies that Steve Jobs once said about "People who are really serious about software should make their own hardware."
Apple had a track record of making their own hardware and software work together really well. This is what Yoco does very well. This fintech company has created its own hardware as well as its own software. When small business get their first device it gives a reason to show it to the world via a tweet.
In the same way that Apple amassed a cult of followers, Yoco has cultivated massive followership within the small business community in South Africa. The company facilitates (pre-covid19) meetups, YocoMeets, for the small business community that makes attendees feel like they are attending a business concert.
During the pandemic, Yoco became the first company to host Twitter Spaces virtual events to motivate the small business community during one of the toughest periods for South African businesses in recent times. This is what makes Yoco unique and attracts so much investment in a country that is struggling to attract foreign investments.
Yoco is not just building a business, it’s building a movement of small business owners in the African continent.
Katlego Maphai, Yoco chief executive said: “this investment will unlock capacity for us to accelerate product development for our merchants and continue on our growth trajectory in South Africa and beyond”
These funds, which brings the total funds raised to date, by Yoco, to $107 million (R1.5bn), will enable the fintech darling of South Africa to accelerate the development of its financial ecosystem for small businesses, which already includes online and in-store payments, business software, and capital, as well as expand its market presence beyond South Africa.
Yoco has big plans for seizing this opportunity by continuing to deepen its market presence in South Africa and expanding into Africa and the Middle East region over the next two years. The goal, according to its chief business officer – Carl Wazen – is to reach at least a million merchants within the next four years. Currently, Yoco is piloting its technologies in Mauritius with plans to add another country by the beginning of next year.
Maphai views this investment as something that will enable not just growth for Yoco but for other small businesses. Commenting on the significance of this funding he said: “Yoco is at the forefront of solving what is critical for small businesses and enabling them to thrive. This new capital injection translates into an acceleration of access for small businesses in our region and beyond, bringing our vision of open commerce forward”.
If there was ever a doubt about the value of the South African tech start-up ecosystem, Yoco, has proven that these companies matter in the economy.
This moment serves as an inspiration to many other start-ups to continue to pursue their mission despite the economic climate. Yoco has shown that there’s an interest in funding businesses that deliver value with the propensity to scale.
Wesley Diphoko is the editor in chief of Biztech.
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