Payhippo Rebrands as Rivy, Seeks $4M for Sustainable Energy

In order to concentrate on its renewable energy finance business, Payhippo, a Nigerian fintech that formerly offered SME loans, changed its name to Rivy and secured $4 million in a pre-Series A deal to finance its foray into renewable energy financing. The money, which is equally divided between $2 million in loan and $2 million in equity, would enable the company to provide its sustainable energy finance options for businesses outside of Nigeria. Local institutions provided the loans, and EchoVC and All-On co-led the $2 million equity round

Together with Shell’s All On, a climate-focused impact investing organization, EchoVC, a Nigerian venture capital (VC) firm that has invested in 38 African businesses, co-led the equity round through its $2.5 million Eco fund, which focuses on climate, energy, agricultural, and transportation solutions. Local loan providers supplied the debt.

This change represents a substantial departure from the organization’s initial emphasis on lending to SMEs in favor of meeting the continent’s energy demands.

The decision to change course was made in light of Nigeria’s complicated SME lending situation. The industry has significant dangers in addition to significant potential.

Digital banks such as Kuda, for example, have suffered large losses in their lending business. Despite a 190% increase in revenue to $22 million in 2022, Kuda recorded a net loss of $32 million.

Rivy’s change highlights a rising trend in which African fintechs are addressing structural issues by going beyond traditional financing. Nigeria’s Aella Credit extended its microlending offerings in 2020 to cover bill payment, insurance, and healthcare. The company even dabbled with blockchain loans using Creditcoin. After purchasing a microfinance bank in 2023, Kenyan microlender Branch changed its name to neobank.

Instead of directly providing sustainable energy solutions, Rivy runs a dual marketplace that links companies with more than 250 solar installers and vendors and provides loans to spread out the cost of solar systems over time.

The CEO of Rivy, previously Payhippo, Dami Olawoye, stated, “When we were a SME lender, the recurrent theme we found with small businesses that came to us for loans was their lack of electricity.” Additionally, we saw many solar installers lacked the financial money necessary to purchase equipment in large quantities. In June 2023, we added an asset financing option to enable these small enterprises to purchase solar systems and defer the expenditures over time.

Rivy was founded in 2019 by Zach Bijesse, Uche Nnadi, and Chioma Okotcha. At first, the company lent money to Nigerian SMEs. Rivy saw leadership changes in 2023 after being a part of Y Combinator in 2021. Bijesse joined the board, and Olawoye, who had previously been the CFO, became the CEO.

Rivy’s underwriting engine is still essential to its operations despite the growth of its product line. The startup’s non-performing loan (NPL) percentage, according to Olawaoye, stayed below 1%, indicating effective credit risk management.

He declined to elaborate, saying, “We built our underwriting engine and it is clearly working well because our loan defaults are low.”

Despite the high cost of solar systems, Rivy has seen a considerable demand from companies since switching to clean energy finance. Olawoye claims that it expanded its loan book at a rate of 15% per month on average and disbursed $2 million in business loans in 2024.

“Businesses will ultimately spend more [because of their high electricity demand] when you do the math,” Olawoye stated. “Their monthly expenses will be less than what they pay for fueling their generator sets or on the updated electricity tariff bands if they receive financing from us to purchase a solar system in terms of the equivalent generating capacity.”

The power usage, logistics, and solar installation service fees are taken into consideration while designing Rivy’s loan conditions. For a three-month duration, the loan interest rate normally begins at about 12% and rises as the term lengthens. Before they can receive the loans, enterprises must first make an initial deposit equal to at least 30% of the total loan amount.

In addition to funding individual companies, Rivy also sponsors micro-grids, which are sizable solar arrays that benefit homes, communities, and business clusters. Although companies continue to be the company’s primary emphasis, consumer lending has now been included.

Olawoye said that because debt is more appropriate for its lending approach, the business raised a combination of loan and equity. But it also needed to seek equity investment in order to raise debt.

“Equity is costly,” Olawoye remarked. Because all [shareholders] will continue to be diluted, we are unable to continue raising stock to lend money. The arrangement we’re most likely to employ if we wish to raise more rounds is one in which we raise both debt and equity.

Rivy intends to investigate market growth while strengthening its position in Nigeria. Rivy wants to wield the torch in the competition to keep the lights on in homes and businesses.

On the other hand, Africa’s climate technology industry has grown remarkably and is drawing more and more attention from investors.

Around $413.9 million had been raised by climate tech businesses by September 2024, making up a third of all startup funding on the continent and overtaking fintech as the top investment industry. Rivy has a strategic opportunity to match its operations with a sector that is expected to develop sustainably, as this surge indicates.

Rivy hopes to help underprivileged communities and companies access renewable energy solutions with the additional investment.

Given the increased emphasis on renewable energy projects throughout Africa, the company’s concentration on energy finance is appropriate. The European Union has pledged $35 million in funding to help South Africa’s aspirations for green hydrogen.

Rivy’s change of name and strategy highlights a larger pattern among African fintech companies looking to broaden their product lines and partner with industries that provide room for expansion and influence.