South Africa’s Yoco raises $16 million to boost digital services to small businesses

Jake Bright Contributor Jake Bright is a writer and author in New York City. He is co-author of The Next Africa. More posts by this contributor African tech leaders Fope Adelowo, Ken Njoroge, Tayo Oviosu to speak at Disrupt SF Offering a white-labeled lending service in emerging markets, Mines raises $13 million South African startup Yoco has […]

South African startup Yoco has raised $16 million in a new round of funding to expand its payment management and audit services for small and medium sized businesses as it angles to be one of Africa’s billion dollar businesses.

To get there the company that “builds tools and services to help SMEs get paid and manage their business” plans to tap $20 billion in commercial activity that the company’s co-founder and chief executive, Katlego Maphai estimates is waiting to move from cash payments to digital offerings.

Yoco’s already posted significant numbers for its business connecting small companies to digital payment and enterprise software products.

The company offers a point of sale card reader that links to its proprietary payment and performance software at an entry cost of 1799 South African Rand, or just over $100.

With this kit, cash based businesses can start accepting cards and tracking metrics such as top selling products, peak sales periods, and inventory flows.

“Many of these businesses were using cash only and paper ledgers” according to Maphai—who co-founded Yoco with Carl Wazen and fellow South Africans Bradley Wattrus and Lungisa Matshoba. The company’s name is derivative of “Your Commerce.”

Yoco has positioned itself as a missing link to “solving an access problem” for SMEs. Though South Africa has POS and business enterprise providers — and relatively high card (75 percent) and mobile penetration (68 percent) — the company estimates only 7 percent of South African businesses accept cards.

Why such a low percentage? “It doesn’t just come down to cost and technology, but the rules that have been set in the market for getting card machines,” said Maphai.

He named requirements to provide extensive transaction history, shop location, and revenue requirements as exclusionary factors for SMEs to connect to POS services in South Africa.

“Our vision is around open commerce. How do we open things up and remove exclusivity,” said Maphai.

“If someone wants to start a company, we want it to be as simple as getting our software and card reader and your good to go.”

Yoco says it is already processing $280 million in annualized payment volume for just under 30,000 businesses.

The startup generates revenue through margins on hardware and software sales and fees of 2.95 percent per transaction on its POS devices.

Yoco will use the $16 million round on product and platform development, growing its distribution channels, and acquiring new talent.

Round leader Partech confirmed the investment and continued involvement with Yoco. “We do act as a strategic hands on investor, not just a financial investor,” Partech General Partner Tidjane Deme told TechCrunch. “We will assist and support the development of the company to accelerate growth through business development and internationalization.”

On expanding outside South Africa, Yoco’s Maphai said it’s in the company’s future, but not just yet.

“We’ll continue to explore new markets and geographies across Africa’s payments landscape,” he said. “But on the market readiness side, we still see some maturity gaps on the P2B side…and we’re waiting very patiently for this to turn.”

Elastic’s IPO filing is here

Elastic, the provider of subscription-based data search software used by Dell, Netflix, The New York Times and others, has unveiled its IPO filing after confidentially submitting paperwork to the SEC in June. The company will be the latest in a line of enterprise SaaS businesses to hit the public markets in 2018. Headquartered in Mountain View, […]

Elastic, the provider of subscription-based data search software used by Dell, Netflix, The New York Times and others, has unveiled its IPO filing after confidentially submitting paperwork to the SEC in June. The company will be the latest in a line of enterprise SaaS businesses to hit the public markets in 2018.

Headquartered in Mountain View, Elastic plans to raise $100 million in its NYSE listing, though that’s likely a placeholder amount. The timing of the filing suggests the company will transition to the public markets this fall; we’ve reached out to the company for more details. 

Elastic will trade under the symbol ESTC.

The business is known for its core product, an open source search tool called ElasticSearch. It also offers a range of analytics and visualization tools meant to help businesses organize large datasets, competing directly with companies like Splunk and even Amazon — a name it mentions 14 times in the filing.

Amazon offers some of our open source features as part of its Amazon Web Services offering. As such, Amazon competes with us for potential customers, and while Amazon cannot provide our proprietary software, the pricing of Amazon’s offerings may limit our ability to adjust,” the company wrote in the filing, which also lists Endeca, FAST, Autonomy and several others as key competitors.

This is our first look at the Elastic’s financials. The company brought in $159.9 million in revenue in the 12 months ended July 30, 2018, up roughly 100% from $88.1 million the year prior. Losses are growing at about the same rate. Elastic reported a net loss of $18.5 million in the second quarter of 2018. That’s an increase from $9.9 million in the same period in 2017.

Founded in 2012, the company has raised about $100 million in venture capital funding, garnering a $700 million the last time it raised VC, which was all the way back in 2014. Its investors include Benchmark, NEA and Future Fund, which each retain a 17.8%, 10.2% and 8.2% pre-IPO stake, respectively.

A flurry of business software companies have opted to go public this year. Domo, a business analytics company based in Utah, went public in June raising $193 million in the process. On top of that, subscription biller Zuora had a positive debut in April in what was a “clear sign post on the road to SaaS maturation,” according to TechCrunch’s Ron Miller. DocuSign and Smartsheet are also recent examples of both high-profile and successful SaaS IPOs.

 

Square now lets developers use its Reader to build custom checkout experiences

Square, the company you know from your favorite coffee shop’s checkout counter, is opening to developers its Reader hardware. Using the new Square Reader SDK, developers will be able to build their own custom checkout and point of sale experiences, no matter whether that’s a self-ordering kiosk, a mobile app for waiters or any other […]

Square, the company you know from your favorite coffee shop’s checkout counter, is opening to developers its Reader hardware. Using the new Square Reader SDK, developers will be able to build their own custom checkout and point of sale experiences, no matter whether that’s a self-ordering kiosk, a mobile app for waiters or any other similar service.

“While we’ve built some of the best point of sale software on the market, we know that many industries have niche needs and businesses may crave unique experiences that aren’t served by our existing products,” Square’s developer platform lead Carl Perry writes today. “That’s why we’re opening up our platform and providing developers direct access to Square hardware for the very first time.”

The overall idea here, it seems, is to ensure that Square’s service doesn’t just work well in industries where it is already strong (retail, restaurants, etc.) but also in niches where it currently doesn’t have a presence. And this new SDK will allow iOS and Android developers that want to support Square’s payment system to bring their solutions to verticals like transportation and healthcare, for example. It’ll also make it easy for them to integrate their payment system with other business software, like customer relationship management solutions and more complex enterprise resource planning systems.

Among those who have already trialed the SDK is Shake Shack, which is testing a Square Reader SDK-powered self-service kiosk at its “Shack of the Future” in New York and a number of pop-up locations. Similarly, Infinite Peripherals is building a digital taxi meter that’s currently in use in Washington, DC. Other early users include Joe and the Juice, a juice chain with an Instagram account, and  QuiqMeds, which helps healthcare providers dispense medication at the point-of-care (instead of the pharmacy).