M-KOPA, the asset financing platform for underbanked African customers, has secured over $250 million in new funding. The funding includes $55 million in equity and over $200 million in debt. Sumitomo Corporation led the growth of equity capital with a contribution of $36.5 million. Other participants in the equity round included Blue Haven Initiative, Lightrock, Broadscale Group, and Latitude.
M-KOPA's business model revolves around financing customers' purchases of products and services, such as smartphones and solar power systems, through debt and micro-installments. The company operates in Kenya, Uganda, Ghana, and Nigeria. The recent funding will enable M-KOPA to double its 3-million-strong customer base and expand its financial services offerings. M-KOPA aims to promote women's financial inclusion and reduce greenhouse gas emissions in Kenya and Uganda.
The funding round included $200 million or more in debt financing, with Standard Bank providing half of the amount. Development financial institutions, including the IFC, FMO, BII, and funds managed by Lion's Head Global Partners, Mirova SunFunder, and Nithio, contributed the rest. M-KOPA has raised a total of $245 million in equity funding since its inception.
M-KOPA's success lies in its ability to address the challenges faced by underbanked customers in emerging markets, such as limited credit histories and low incomes. By offering flexible credit options and micro-installments, the company helps customers build their credit history over time. The default rates remain slightly above 10%.
In addition to its existing markets, M-KOPA plans to expand into South Africa and explore opportunities in electric mobility, starting with electric motorcycles. The company aims to provide life-enhancing products to customers, bridge the gender gap in smartphone ownership, and promote financial inclusion in Africa.
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