Yoco, a South African payments, and software startup have announced the raise of $83 million in a Series C funding round to accelerate the development of its platform and expand internationally.
One of the major backers in the round includes Dragoneer Investment Group, making its Africa investment debut. The fund has previously backed fintech giants like Chime, Nubank, Mercado Libre, Square, and Klarna.
Other participants in the round include Breyer Capital, HOF Capital, The Raba Partnership, 4DX Ventures, TO Ventures, and several current and former executives from global tech leaders such as Coinbase and Revolut Spotify, and Gojek.
The funding round also included existing Yoco investors Partech, Velocity Capital Fintech Ventures, Orange Ventures, and Quona Capital.
Founded in 2012, Yoco builds tools and services to help small businesses accept card payments in-store and online, access loans, and manage their day-to-day activities. In less than six years, the startup has become the preferred payments partner for over 150,000 small businesses across South Africa, processing more than US$1 billion in card payments per year.
Largest funding round in South Africa
The last time Yoco raised funds was in 2018 when the startup raised a US$16 million Series B round to expand its payment management and audit services for SMEs. Today, it has secured a record-making $83 million in VC funding from some of the world’s leading investors and VC firms. This amount is the largest to be raised by a South African startup and is one of the highest in Africa – coming third behind Chippercash and Flutterwave.
This investment brings the total amount raised by the startup to US$107 million, which will enable it to accelerate the development of its financial ecosystem for small businesses, and expand its market presence beyond South Africa.
From South Africa to the World
Yoco plans to expand into the wider African market, as well as the Middle East and has set itself the goal of reaching one million merchants within the next four years. It is currently piloting its technologies in Mauritius with plans to add another country by the beginning of next year.
Katlego Maphai, chief executive officer (CEO) of Yoco, said the successful conclusion of this fundraising speaks volumes about the growth potential of the African small business sector.
“We are excited to partner with such world-class investors who have joined our quest to break barriers and create access to financial services for millions of small businesses across the continent,” he said. “Looking ahead, this investment will unlock capacity for us to accelerate product development for our merchants and continue on our growth trajectory in South Africa and beyond.”
Carl Wazen, Yoco’s chief business officer, said that despite being the largest payments platform in South Africa, Yoco is still at the beginning of its journey.
“There are over six million small businesses in South Africa and well over 100 million across the Middle East and Africa that still transact only in cash. Recent consumer behavior shows a shift away from cash and businesses have to rapidly adapt to this change. This presents a huge opportunity and it is our mission to support that transition,” he said.
To support the company’s growth plans, Yoco aims to increase its team by 200 people within the coming year. Already, the business has attracted top talent to its executive ranks, including a former VP of product at Monzo, the former product marketing director at iZettle/PayPal, and the former head of communications at Uber.
A new chairman has also been brought on board – Juan Fuentes, former managing director of Pagseguro, a business that he grew into a $19 billion payments giant in Brazil.
Maphai is confident that the funding round and Yoco’s small business-focused approach, coupled with its depth of talent and now the backing of some of the world’s leading investors, positions the digital payments platform on a springboard to significant and long-term growth.
“Working so closely with small businesses during a global pandemic, and in particular through a challenging socio-economic environment in South Africa, we have a first-hand account of how agile these businesses need to be in a rapidly changing world,” said Maphai. “Removing barriers and leveling the playing field by creating access to financial tools is a big part of answering these challenges. Yoco is at the forefront of solving what is critical for small businesses and enabling them to thrive. This new capital injection translates into an acceleration of access for small businesses in our region and beyond, bringing our vision of open commerce forward,”