South African payments startup Yoco has raised US$83-million (about R1.2-billion) from top investors in series-C funding round as demand grows among small businesses for its digital payments tools. New investors include Dragoneer Investment Group, which is making its Africa investment debut, Breyer Capital, HOF Capital, The Raba Partnership, 4DX Ventures, TO Ventures, Futuregrowth, and several current and former executives from global technology companies such as Coinbase, Revolut, Spotify and Gojek.
The latest investment brings the total funds raised by Yoco to $107-million (R1.6-billion at the time of writing), and the money will be used to “accelerate the development” of its financial ecosystem — which includes online and in-store payments, business software, and capital — and expand its market presence beyond South Africa.
Yoco CEO Katlego Maphai said in a statement that the investment round will “unlock capacity for us to accelerate product development for our merchants and continue on our growth trajectory in South Africa and beyond”.
Christian Jensen, co-head of private investments at Dragoneer, said in a statement: “We couldn’t be more excited to partner with the Yoco team. At Dragoneer, we look for great teams that are building durable businesses with wonderful economic models, and that is exactly what we’ve found at Yoco. Yoco is already beloved by customers, and the product roadmap that the company is investing behind will drive even more value for merchants. While there is tremendous room for continued growth domestically, the opportunity for Yoco goes well beyond South Africa.”
Yoco has over 150 000 small business clients who process about R15-billion in card payments annually. Its growth, it said, has been driven almost exclusively by small businesses that were previously cash only due to the “complexity and high costs” of alternative payment systems.
“There are over six million small businesses in South Africa and well over 100 million across the Middle East and Africa that still transact with cash only,” said chief business officer Carl Wazen in the statement. “Recent consumer behaviour shows a shift away from cash and businesses have to rapidly adapt to this change. This presents a huge opportunity (for Yoco)…”
As a result, the company plans to deepen its market presence in South Africa while expanding into other African markets and the Middle East over the next 24 months. The goal is to reach at least a million merchants within the next four years, said Wazen.
