South African payment startup Yoco raises $83M Series C

South African payment company Yoco announced the success of its $83 million Series C funding round led by Dragoneer Investment Group.

Other participants in the Series C funding round include fintech giants Chime, Klarna, Nubank, Mercado Libre and Square. Other investors include Breyer Capital, HOF Capital, 4DX Ventures, TO Ventures, The Raba Partnership, amongst existing investors such as Partech, Orange Ventures, Velocity Capital Fintech Ventures, and Quona Capital.

"We couldn't be more excited to partner with Yoco team," said Christen Jensen, co-head of private investments at Dragoneer, in a statement. "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."

Since its founding in 2013, Yoco has contributed its quota in contributing to the success of the South African economy. Small and Medium Enterprises (SMEs) contribute to the economic development of many countries, especially those in the developing world. Globally, SMEs accounts for 90% of existing businesses and responsible for more than 50% of employment, according to TechCrunch reports. In South Africa, SMEs make up one-third of the country's GDP.

Despite the global economic downturn and slow economic recovery caused by the coronavirus pandemic, Yoco has managed to maintain a top spot in South Africa's fintech sector. The company has positioned itself as the number one platform to process offline payments among merchants.

Yoco formerly functioned strictly offline through its portable card machines. Shortly before the lockdown in March 2020, the company built an online offering which allows merchants to process their payments from wherever they are. 

"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," said Carl Wazen, chief business officer. "But the pandemic, which was a devastating effect on so many businesses that relied on in-person trade, accelerated the need for businesses to accept payments online."

The company said it plans to use the Series C fund to expand its offline and online operations. Earlier this year, Yoco's chief executive, Katlego Maphai said the company was looking to expand into other aspects of digital payments like QR payments and electronic funds transfer (ETF). Wazen confirmed this in his statement but didn't disclose details about how far the company has gone in achieving these offerings. Rather, he emphasized that the company is still fully a card-focused payment provider.

"We've got a brand that is recognized now. That's how we win and it's about staying as focused as possible on that part of the market that, in our opinion, people like other competitors are not focused on," Wazen said.

The payment company has so far raised a total of $107 million in funding. Its latest Series C round is the largest of its kind in South Africa and one of the largest in the continent, third to Flutterwave and Chipper Cash. 

Yoco remains one of the most valuable fintech startups in Africa, as the sector continues to dominate the African economy.

The platform's user-base has quintupled from a little over 30,000 after its $16 billion Series B funding round in 2018.