Solar and financial technology firm M-Kopa has raised $75 million (Sh8.5 billion) in equity financing as it seeks to speed up its expansion in Kenya and regional countries.
M-Kopa which says it has so far provided financing to two million customers across its African markets including Kenya said it would use the funds to grow in new and existing markets.
“With the funding, M-Kopa plans to expand into additional countries, adding to its hubs in Kenya, Uganda, Nigeria and recently launched Ghana, to further scale its footprint across the continent,” said the firm in a statement.
“The company will also continue expanding its flexible daily and weekly payments model to go beyond asset financing, by scaling its financial services products such as health insurance, cash loans and BNPL merchant partnerships that have proven to be popular with customers.”
The funding round was led by sustainable investment specialist Generation Investment Management, which was co-founded by former US Vice President Al Gore, Broadscale Group, with participation from new investors including LocalGlobe's Latitude the early-stage venture capital fund run by two of Britain’s best-known tech investors.
Others who participated include Hepco Capital Management a family investment firm founded in 2015 by American entrepreneurs father and son Jonathan and Edward Cohen.
Britain's development finance agency CDC Group and LGT Lightrock the impact-focused private equity fund backed the Liechtenstein royal family, one of Europe’s richest families also participated.
M-Kopa said the capital injection brings its total equity funding to $190 million (Sh214.7 billion).
Launched in 2011, M-Kopa’s financing platform enables underbanked customers to access a broad range of products and services without collateral or a guarantor through a flexible payment model.
Its customers have accessed under the model smartphones, solar lighting, solar-powered appliances and digital financial services such as cash loans and health insurance.
“With this funding, we will expand to more markets across Africa and scale to over 10 million customers in the next few years,” said M-Kopa chief executive and co-founder Jesse Moore in a statement.
Buoyed by the success of pioneer peers, more off-grid solar power start-ups are pouring into Kenya's rural areas offering pay-as-you-go kits in a race to claim customers who lack reliable access to electricity.
Venture capital funds have consequently been stepping up their investments in the clean and renewable energy space in Kenya.
This has coincided with the growth of the Kenyan solar kits market which has attracted multinationals like Indian firm Orb Energy and Germany-based Mobisol.
The main challenge facing smaller companies, however, is how to raise enough capital to supply the expensive solar kits in return for small upfront payments from customers.
Solar experts reckon that Kenya, like most African countries, has a high potential for solar energy generation given high radiation levels from the sun throughout the year.