Yoco scores R1.2bn funding to unlock capacity in Africa
South African fintech firm Yoco has secured $83 million (R1.2 billion) in Series C funding, amid a surge in demand for its digital payment solutions among African small businesses.
The e-commerce boom in the wake of the pandemic resulted in the company garnering 150 000 merchant customers, which have processed more than $1 billion in payments through its card machines and online payment services across SA.
The latest investment round brings the total funds raised to date by Yoco to $107 million (R1.6 billion).
According to the Cape Town-headquartered digital payments provider, the funds will enable it to accelerate the development of its financial ecosystem, which already includes online and in-store payments, business software and capital, as well as expand its market presence beyond SA.
Among the company's new investors are Dragoneer Investment Group, which is making its Africa investment debut, and Breyer Capital, HOF Capital, The Raba Partnership, 4DX Ventures, TO Ventures, Futuregrowth and several current and former executives from global tech firms such as Coinbase, Revolut, Spotify and Gojek.
“We are excited to partner with such world-class investors, who have joined our quest to break barriers and create access to financial services for millions of small businesses across the continent,” says Katlego Maphai, CEO of Yoco.
“Looking ahead, 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.”
The company says it has played a crucial role in enabling financial inclusion among local merchants, with around 80% of its customer base having never accepted card payments before.
Yoco says its growth has been driven almost exclusively by small, independent businesses that were previously cash-only due to the complexity and high costs of existing alternatives.
During the last year, Yoco launched a suite of products designed to simplify the process of setting up and facilitating payments for small businesses, including Payment Page, Payment Request, Yoco Neo and most recently the Yoco Payment Gateway – a plug-and-play solution that enables businesses to merge their online and card-present transactions to provide a holistic view of their business via the Yoco Business Portal.
The company says it plans to continue to deepen its market presence in SA and expand into Africa and the Middle East region over the next two years.
Yoco chief business officer Carl Wazen points out that the goal is to reach at least a million merchants within the next four years.
“There are over six million small businesses in SA and well over 100 million across the Middle East and Africa that still transact only in cash. Recent consumer behaviour shows a shift away from cash, and businesses have to rapidly adapt to this change. This presents a huge opportunity and it is our mission to support that transition.”
Since inception, Yoco has expanded to set up stores and offices in Johannesburg, Durban and Pretoria.