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M-KOPA Reaches 2 Million Customers After It Expanded in Africa
In February, M-KOPA surpassed 2 million customers meaning it has taken only 18 months to achieve its second million after taking 8 years to acquire its first million customers. The company’s customer base is projected to reach 3 million customers in the next nine months, having almost recorded a 2.5X growth of new customers from 2020 to 2021.
The company which is led by co-founder and CEO Jesse Moore. It 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.
M-KOPA started with solar-power home systems targeted at lower-income and rural customers without electricity in Kenya, Tanzania and Uganda. It has since expanded its pay-as-you-go model to include other needs: smartphones (launched in Kenya two years ago), TVs, refrigerators, solar lighting and digital financial services such as cash loans and health insurance.
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M-KOPA’s financing platform has proved helpful to this set of users since launching as an energy provider in 2011. The company, which enables underbanked customers in select African markets to access a broad range of products and services without collateral or a guarantor, also announced on March 1st that it has raised $75 million.
The titular “growth equity round” highlighted by M-KOPA in its press statement is its fifth equity round (it has raised similar rounds of debt, too). M-KOPA’s total equity raise stands at $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. Generation Investment Management and Broadscale Group led the growth equity round.
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The company’s geographical reach has also changed shape. Six years ago, it was heavily focused on East Africa, but having pulled out of Tanzania, M-KOPA is present in Kenya, Uganda, Nigeria and Ghana.
In the company’s more established markets, Kenya and Uganda, customers can access the full suite of M-KOPA’s offerings. But in its other two newer markets, customers are only eligible for smartphone financing at the moment.
Since launching in Nigeria, M-KOPA has acquired over 50,000 customers, its executives said. For Ghana, its newest market, they say it “has grown two times as fast as any of its previous markets.”
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As part of its growth plans, which comes off the back of this recent funding, M-KOPA 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 platform provides financing and digital financial services to underbanked consumers across four markets by matching fractional payment terms with customers’ daily or weekly earning and spending cycles.
Its customers range from ride-hailing drivers to small kiosks owners who use smartphones to run their businesses. But for a market where a sizeable number of adults earn less than $5 daily, to afford a $100 smartphone is a luxury.
“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, as quoted by Tech Crunch.