Executive Summary
Yellow is a PAYGO solar and smartphone financing company operating across 7 African markets. Founded in 2018 in Malawi, they've built what appears to be the most capital-efficient operator in an industry littered with failures.
VERDICT: PROCEED TO DD
This is one of the most compelling growth equity opportunities I've seen in African infrastructure. The team has demonstrated exceptional capital discipline, survived a 490% FX devaluation while remaining profitable, and now sits on $15M cash with a clear path to 10x scale.
The Ask
- Total equity needed: ~$40M over 5 years (2 tranches)
- First tranche: ~$17M (2026-2027)
- Use of funds: Stock (solar systems + smartphones) to fund $780M of assets
- Debt component: ~$300M LCY debt (World Bank, Standard Bank)
Why This Is Interesting
1. Exceptional Capital Efficiency
Metric | Yellow | Industry Norm |
Net equity used | $3M | $50M+ |
Assets funded | $80M | Similar or less |
Time to profitability | Year 2 | 10+ years or never |
Retained earnings | $5M | Negative |
Cash position | $15M | Often distressed |
Yellow has deployed $3M of net equity to fund $80M of assets — a 27:1 ratio that is unheard of in PAYGO solar.
2. Survived the Stress Test
Malawi experienced 490% FX devaluation from 2022-2025. Yellow:
- Remained profitable throughout
- 100% of debt in local currency (hedged)
- Diversified into 7 markets
- Built $15M cash buffer
This is the ultimate proof of model resilience.
3. Competitive Landscape Is Clearing
Of 27 PAYGO companies founded 2007-2020:
- 8 insolvent/exited/acquired
- 13 financially stressed or sub-scale
- 3 profitable and scaled (Sun King, d.light, Yellow)
Yellow is the only Gen 2 (distribution/finance focused) company that is profitable, scaled, AND geographically diversified.
4. Strong Founder Team
Michael Heyink (CEO)
- Monitor Group → Metier Private Equity → Yellow
- UCT Economics (Hons)
- Identified opportunity while at Metier (renewable energy PE)
- 40% founder ownership retained
Maya Khonje-Stewart (COO)
- Malawian entrepreneur, 15+ years local experience
- Founded Maeve Project (cookstoves NGO) and Lenziemill (fish feed)
- Deep understanding of rural Malawi distribution
- Critical for on-ground execution
Business Model Analysis
Not Pure Balance Sheet Lending
While Yellow does finance assets, this is fundamentally different from pure balance sheet lending:
- Physical collateral with locking technology — devices can be remotely disabled
- Tangible value proposition — 40x better value than alternatives (candles, battery torches)
- Repeat customer potential — upgrade path from solar → smartphones → larger systems
- Hardware margin — Yellow earns on the spread between hardware cost and financed price
- Distribution moat — 870K customers, local agent networks, credit scoring data
Unit Economics
- Tier 1 Solar: ~$100 financed over 24 months
- Smartphones: $70-200 financed over 12 months
- Credit losses: Manageable due to asset locking + local underwriter incentives
- 27% NPAT margin achieved in Year 2
Growth Plan
Metric | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
Customers (000s) | 870 | 1,304 | 2,265 | 3,898 | 6,350 | 9,415 |
Revenue ($M) | ~26 | 55 | 164 | 294 | 435 | 536 |
Growth | - | 113% | 197% | 79% | 48% | 23% |
73% CAGR over 5 years, with 70% funded by internal cash generation.
Key Risks
1. Execution at Scale
Going from 870K to 10M customers requires significant operational expansion. Can the tech-enabled model scale without losing unit economics?
2. FX Exposure in New Markets
DRC, Nigeria expansion brings new currency risks. Mitigation: 100% LCY debt strategy.
3. Competitive Response
Sun King and M-KOPA are well-funded. Could they enter Yellow's markets aggressively?
4. Macro Sensitivity
Low-income consumers are vulnerable to economic shocks. The 2022-2025 stress test provides comfort, but future shocks could be different.
Raba Criteria Assessment
Criterion | Assessment |
Big market, little competition | ✓ 1.6B people by 2040, competitors thinning |
Antiquated incumbents | ✓ Grid utilities are slow/unreliable |
Poor incumbent talent brand | ✓ Best talent goes to fintech, not utilities |
Slow incumbent product | ✓ Grid expansion is decades away |
Poor incumbent NPS | ✓ Off-grid customers love solar |
Stability over time | ✓ Energy is a permanent need |
Founder-market fit | ✓ Maya is Malawian, deep local networks |
This checks more boxes than most deals we see.
Comparable Transactions
Company | Last Raise | Valuation | Revenue Multiple |
M-KOPA | Series F 2025 | ~$1B+ | ~2.5x |
Sun King | Series D 2022 | ~$700M | ~3x |
d.light | Debt structures | N/A | N/A |
Yellow at $100-150M valuation on ~$55M 2026 revenue would be 2-3x, in line with peers but with better capital efficiency metrics.
Recommendation
PROCEED TO DUE DILIGENCE
Key DD Questions:
- Detailed unit economics by market and product
- Credit loss experience and trends
- Technology stack and scalability
- Agent network economics and retention
- Detailed FX hedging mechanics
- Customer cohort analysis and repeat rates
- Competitive positioning vs Sun King in overlapping markets
Deal Structure Considerations:
- First tranche sizing relative to milestones
- Board seat / information rights
- Pro-rata rights for second tranche
- Co-investor quality (Convergence Partners, Triple Jump are solid)
Assessment by Raba VC Analyst | January 2026