This week Yoco, a payments platform based in South Africa, announced they have closed a $83 million USD Series C funding round. The company focusses on providing cashless payment options to small and medium sized enterprises (SMEs), and reportedly has around 150,000 such clients regularly using their services, a five-fold increase from the 30,000 users the company reported at the time of their Series B raise back in 2018.
Backed by the likes of Dragoneer Investment Group, Breyer Capital, HOF Capital, The Raba Partnership, 4DX Ventures, TO Ventures, and Futuregrowth Asset Management, the team at Yoco intend on using this latest investment round to help support their continued growth. What is impressive is that this investment has come at a time when their core customers, South Africa’s SME businesses, have been rocked by the continual lockdowns, curfews and restrictions imposed to help fight the Covid-19 pandemic.
A tough year for SMEs
According to a McKinsey report published in Q2 2021 SMEs across South Africa represent over 90% of businesses, and employ between 50% and 60% of the country’s workforce across all sectors. They are also responsible for a quarter of job growth in the private sector. Yoco’s own business sentiment analysis, Yoco Business Pulse, highlights the difficult reality for many SME businesses over the last 18 months; during lockdown 80% of SME businesses in the retail sector had to close, and 83% reported their business had been severely affected over the last year.
What is interesting is how both consumers and businesses have adapted over the last 18 months. 35% of Yoco’s respondents indicated that they are going to increase their online presence over the next year, and 20% of respondents plan to move their retail company online.
In an interview with TechCrunch, a news service, Yoco’s co-founder Carl Wazen discussed recent business trends that followed months of lockdown “Recent consumer behaviour 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”.