South African fintech startup Yoco announced that it raised $83 million in its Series C funding round led by Dragoneer, bringing the total amount raised in cumulative funding rounds to $107 million.
Yoco was founded in Capetown, South Africa, in 2015 and has been in the business of creating avenues for small and medium enterprises to accept card payments through in-person and online options. Its simple-to-use card machines and online payment tools have been instrumental in bringing growth to small and medium businesses. The startup raised $16 million in its Series B round and had more than 30,000 merchants using its platform at that time. The number has increased to over 150,000 merchants today.
In South Africa (and extensively Africa), small and medium businesses contribute around one-third of the country’s GDP, and since its launch in South Africa, Yoco has solidified its position as the go-to platform to access offline payments among small and medium business owners in the country.
Yoco advanced from providing offline payments to also providing online transactions. Just before South Africa’s lockdown in March last year, Yoco rolled out an online offering that enabled business owners to continue accepting payments on the platform.
“We want to offer whatever payment methods our merchants need. And we did start in the in-person payment space, focusing on terminals, which was where the biggest demand was, but the pandemic, which had a devastating effect on so many businesses that relied on in-person trade, accelerated the need for businesses to accept payments online”, Carl Wazen, Yoco’s Chief Business Officer, said.
Many individuals opted for online payments during the lockdowns, but with the ease of the lockdowns came about an accelerated rate of in-person payments. As a result, Yoco’s online payments account for a small part of the transactions made on the platform.
However, Carl Wazen noted that “recent consumer behaviour shows a shift away from cash, and businesses have to rapidly adapt to this change.” According to him, consumers’ recent shift away from cash is a post-pandemic behaviour which presents a huge opportunity. He added that it was Yoco’s mission to support the transition from in-person payments to online payments.
Yoco’s newly raised funds will be targeted at expanding to new markets. Earlier this year, the company’s Chief Executive Officer – Katlego Maphai said that Yoco was looking to expand its services into other aspects of digital payments. He mentioned mobile money, QR payments, and electronic funds transfer (ETF) as areas that the company would love to explore.
Yoco has managed to position itself as South Africa’s top card payments provider by creating easy and efficient ways for small and medium businesses to adopt digital financial services, which it does by focusing on product capabilities.
According to its Chief Business Officer, Yoco will continue to triumph over competitors because it stays as focused as possible on parts of the market that other competitors are not focused on enough.