Seven scaleups hog over 70% funding to Africa’s Solar PayGo ventures • TechCrunch


Over the past 10 years, startups in the off-grid solar energy sector in Africa have attracted more than $2.3 billion in funding. However, the largest share of the funding has gone to seven PayGo expansions in Africa, leaving hundreds more in the early stage struggling to raise funds, according to the biennial Gogla-World Bank magazine. Report.

The seven most funded companies in solar energy are sun kingAnd the Zola ElectricAnd the M-CubaAnd the BboxxAnd the d- lightAnd the Engy EnergyAnd the Lumus Which, according to the Gogla Investment database, attracted 72% of the sector’s capital, debt financing and grants, while more than 150 start-ups in the initial and staged stages took the rest of the amount.

In terms of equity financing, scaling operations received $600 million in investment, between 2015 and last year, with early-stage startups attracting $255 million in venture capital over the same period.

Overall, access to debt has not been easy for most early-stage startups in Africa, especially since the spread of the Covid pandemic, yet expansions continue to unlock more debt financing amid a similar operating environment.

The aforementioned scaling-ups are working on payment models that offer asset-based (pay-as-you-go) financing for solar panels and lanterns, products very popular in sub-Saharan Africa where millions are off-grid and where national power grids are still lagging. .

The lack of capital means early-stage startups are unable to acquire assets such as solar arrays and lanterns, needed to help them expand and capture more consumers and markets. Kenya, Uganda, Nigeria, Rwanda, Ghana and the Democratic Republic of the Congo are some of its main markets in Africa

Start-up companies report that access to capital is a challenge, which has resulted in some becoming increasingly leveraged, while others are having difficulties operating. Google, the global off-grid solar industry consortium, said in the report that the lack of early-stage equity stifled growth for many companies.

“This is an impediment to expanding off-grid solar into new markets; equity, grants or output-based incentives, such as results-based financing, are generally the best tools for market expansion.

This trend is likely to continue as data on deals uncovered from the BigDeal database shows that so far this year, many of the seven domains have captured most of the funding raised by Paygo’s off-grid solar companies.

A review of the data shows that nearly half a billion dollars in debt and equity financing has been raised by nearly 30 startups and scaling companies this year. Of this amount, $367 million was raised to fund equity raised by 11 companies – including SunKing, M-Kopa and d.light, which accounted for 93% of the total amount of equity. If we add $50 million from d.light and $35.5 million in Bboxx debt financing, the four domains so far account for 86% of the total debt equity financing raised by startups in the paygo solar sector in Africa.

The ability of these companies to attract financing is attributed to their ability to capture huge markets across Africa, and by leveraging syndicated loans. These companies, some of which provide financing for other assets, have also been quick to add new sources of income to further tap and grow their customer base.

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