YOCO - The SA FinTech startup funding success story
South African Financial Technology (FinTech) startup, Yoco, has announced that they have secured $16-million in Series B funding. This comes at the same time that the South African economy is in technical recession. The fact that Yoco has secured funding during a difficult economic climate should be celebrated by the South African tech eco-system. It should also be regarded as a vote of confidence to the South African FinTech ecosystem.
According to the Global Entrepreneurship Monitor (GEM), entrepreneurs cite access to funding as one of their major challenges in starting and running a business. When Yoco was in search of funding, it was international investors (Velocity Capital Private Equity and Quona Capital) that offered funding for its series A funding. Yoco is one of the few South African startups that has managed to secure funding from international investors.The FinTech company was inspired by the challenges experienced by small businesses in accessing payment systems (such as Point of Sale systems) from traditional banks.They realised that the process of enabling small businesses to access payment systems was not easy. Through Yoco software and devices they have enabled small businesses to easily have access to a payment device and software.The series B funding for Yoco has been led by leading venture capital firms in the world. They include Partech, a venture capital firm based in Silicon Valley, Orange Digital Ventures, Dutch Development Bank FMO, South African-based FutureGrowth and existing Series A investors Quona Capital and Velocity Capital.
Yoco will leverage its Series B funding to grow its network of small business merchants, invest in product development, operational scalability and attracting top-tier fintech talent. It brings the company’s total investment to US$23M. The ability for Yoco to attract international investment provides important lessons for South African startups on how to access funding. The following are just some of the important lessons offered by the companies ability to attract funding:
Addressing a real need
Build a team
Building a community
ADDRESSING A NEED
Yoco has managed to address a real need through technology. Currently only 7% of South African small businesses accept card payments, yet South Africa has a card penetration of 75%. This fact, is a clear indicator that the solution developed by Yoco is necessary for small business community. Across the African continent there’s a need for similar solutions to enable small businesses.
BUILD A TEAM
Yoco is made up of not only Katlego Maphai but a team of co-founders and workers who are making the Yoco dream a reality. In the startup eco-system the norm is to highlight a single founder. Yoco has tried to avoid the founder syndrome by developing a team. Investors in tech eco-system pay more attention to startups that are driven by a team as opposed to a single founder.
BUILDING A COMMUNITY
Yoco serves a community of small businesses in South Africa. Most coffee shops in South Africa use the Yoco technology to enable payments and manage their finances. Yoco has managed to build a community of entrepreneurs that use the Yoco devices and software. Investors who invest in Yoco such as Orange Digital Ventures are also investing in the community of entrepreneurs in the fin-tech ecosystem.
The Yoco story is a true inspiration for entrepreneurs in the technology sector. Their story offers important lessons on how to access finance for technology companies.