M-KOPA, a prominent fintech platform, has recently announced the successful completion of a significant funding round totaling over $250 million. The funds, which were sourced through debt and equity financing, are intended to expand M-KOPA’s financial services to underbanked consumers throughout Sub-Saharan Africa. This investment constitutes one of the largest combined debt and equity raises in the African tech industry and will fuel the continuation of M-KOPA‘s rapid growth.
Funding Details
The sustainability-linked debt financing, constituting over $200 million of the total funds, was led and arranged by Africa’s largest bank, the Standard Bank Group, which has been a strategic partner to M-KOPA. Other lenders include The International Finance Corporation (IFC), Lion’s Head Global Partners, FMO: Dutch Entrepreneurial Development Bank, British International Investment, Mirova SunFunder, and Nithio.
In addition to the debt financing, M-KOPA also secured an equity investment of $55 million. The lead investor in this segment was the existing strategic investor, Sumitomo Corporation, contributing $36.5 million. Other participants included Blue Haven Initiative, Lightrock, Broadscale Group, and Latitude.
M-KOPA’s Innovative Fintech Platform
M-KOPA’s fintech platform ingeniously merges digital micropayments and the Internet-of-Things (IoT) to provide customers with access to productive assets. In regions where traditional financial identities and collateral are limited, M-KOPA offers a flexible credit model, enabling individuals to make small deposits and gain immediate access to essential items like smartphones, electric motorcycles, and solar power systems.
This innovative approach embeds credit into the product through a smart digital connection, providing customers instant ownership that can be paid off through micro-installments over time. To date, M-KOPA has sold over 3 million of these products through a unique direct sales model, which employs more than 10,000 agents.
Impressive Growth and Expansion
M-KOPA initially started its operations in East Africa and has since successfully expanded to Nigeria and Ghana. Between 2020 and 2022, the company experienced a compound annual growth rate of 85% in new customer acquisition, earning it the recognition as one of Africa’s Fastest-Growing Top 100 companies by the Financial Times for two consecutive years, 2022 and 2023.
M-KOPA’s recent achievement also includes reaching over 3 million customers and providing over $1 billion in cumulative credit to underbanked customers in Africa. The company is on track to acquire an additional million customers in 2023.
Future Goals
The newly acquired funds will be used to expand M-KOPA’s smartphone services, finance product sets, and extend its model to new markets. In alignment with M-KOPA and its partners’ commitment to sustainability, part of the debt financing will be directed towards achieving environmental and social targets, with pricing linked to these goals. Furthermore, M-KOPA plans to use the financing to advance women’s financial inclusion and mitigate greenhouse gas emissions in its East African markets. This will be achieved by boosting smartphone ownership among women and further developing its offering of electric mobility solutions.
Lendable, the Borrowing Base and Sustainability Verification Agent for the debt transaction, will oversee the sustainability-linked aspects of the financing.
Leadership Remarks
Jesse Moore, M-KOPA CEO and Co-founder, expressed the company’s dedication to creating positive environmental and social impact by addressing barriers to digital financial services. “We have already unlocked $1 billion in cumulative credit to over 3 million customers, and are proud of the thousands of local jobs we’ve created during tough economic times,” Moore said. He added that as M-KOPA continues to scale, it remains committed to building a sustainable business and closing economic and digital gender gaps.
Nick Riley, Corporate Financing Solutions at Standard Bank, echoed these sentiments, stating that supporting M-KOPA aligns with their purpose of driving sustainable growth for Africa and her people. “M-KOPA has, in a short time, managed to positively impact so many lives by enabling access to power and smartphone connectivity, which are a vital part of enabling the economic empowerment of all.”
Sumitomo Corporation’s Senior Managing Executive Officer, Masaki Nakajima, also expressed excitement about the partnership and its potential to enrich lives across the continent. “By leveraging each expertise and resource, we believe this partnership will have a positive impact on both the financial and telecommunications sectors,” Nakajima said.
