Nairobi-based M-KOPA Solar announced it has connected more than 200,000 homes to solar power in Kenya, Tanzania, and Uganda, an indicator that pay-as-you-go financing may be a powerful way to accelerate adoption of off-grid solar energy in East Africa and elsewhere.
M-KOPA has been credited for unlocking not only solar financing, but for demonstrating that asset-based lending can expand financial services for low-income cusotmers. For a small deposit, low-income customers can acquire a solar system and then pay daily usage credits, less than the cost of kerosene lighting. Within a year the customer owns the system and has ongoing access to solar energy.
The company says it is adding 500 new homes every day and aims to reach 1 million homes by the end of 2017.
“It took us two years to connect our first 100,000 homes and just eight months to connect our second 100,000 homes,” says M-KOPA’s Managing Director, Jesse Moore.
In February M-KOPA closed its fourth round of funding—$12.45 million in equity and debt—led by LGT Venture Philanthropy, which has backed the firm since 2011. Lundin Foundation and Treehouse Investments also made reinvestments. Blue Haven Initiative made its first investment M-KOPA in the round.
The company has a distinguished pedigree: it was incubated by Signal Point Partners, the mobile-services incubator started by Nick Hughes, who as Vodafone’s head of global payments in 2004 launched M-Pesa, a mobile payments system now used by tens of millions of Kenyans to pay bills and transfer money.
M-KOPA closed a $20 million third round in early 2014. That included $10 million syndicated debt facility by Commercial Bank of Africa and grants from the Bill and Melinda Gates Foundation, the United Kingdom’s Department for International Development, and the Shell Foundation. GrayGhost Ventures and Acumen Fund were also early equity investors.