Kenyan lender M-Kopa, which offers underbanked customers finance to acquire solar lighting, smartphones, TVs and domestic appliances, has raised $75m in an equity funding round, bringing its total equity funding to $100m.
The round was led by Generation Investment Management and Broadscale Group, with participation from new investors LocalGlobe’s Latitude Fund and HEPCO Capital Management. Existing investors CDC Group and LGT Lightrock also participated in the round.
With the funding, M-KOPA plans to expand into additional countries, adding to its presence in Kenya, Uganda, Nigeria and Ghana.
The company plans to go beyond asset financing to boost its offering of financial services products such as health insurance, cash loans and buy-now-pay-later partnerships with merchants.
The firm, launched in 2011, says it has provided over $600m in financing to over 2 million customers, and projects that it will reach 3 million before the end of 2022. It says that new customers grew by 2.5 times in 2021.
Jesse Moore, M-Kopa CEO and co-founder, said, “We’re thrilled to partner with leading global investors with deep experience supporting growth-stage companies as we expand our platform to serve more of our customers’ needs…With this funding, we will expand to more markets across Africa and scale to over 10 million customers in the next few years.”
M-Kopa’s financing model offers customers instant access to everyday products while building ownership over time through micro-payments. The firm says that its offering costs an average monthly interest rate of 3.1%, which it says is low in comparison to other credit sources.
West African expansion
The firm’s recent launch in follows its announced expansion into Nigeria last July after a pilot project in which the company recorded sales of over 20,000 smartphone devices in Lagos. The firm partnered with Airtel and Samsung to enable access to smartphones and broader digital connectivity.
The firm started out as a pay-as-you-go solar power provider to off-grid homes a decade ago, but in 2019 expanded into smartphone finance and now offers customers access to 4G devices. The firm brands itself as a “connected asset financing platform”.
“We were early supporters of M-Kopa and continue to be impressed by the continued innovation of its product offerings and ability to accelerate at a significant scale. We are pleased to continue supporting M-Kopa as it scales further”, said Dave Easton, partner in Generation Investment Management’s growth equity team, which participated in the funding round.
Mayur Patel, M-Kopa’s chief commercial officer, said that the firm had seen “extraordinary growth across our markets in East Africa and our recently launched operations in Nigeria and Ghana.”
Patel said that the firm has a chance to boost its offering by better integrating its loans with customers earning and spending cycles.
“There is a massive opportunity in front of us to make everyday essentials more accessible by better matching fractional payment terms with customers’ daily or weekly earning and spending cycles,” he said.