PayGo Energy, a Kenyan startup founded in 2015, main product is called a Cylinder Smart Meter, a patented portable device to help households monitor and manage consumption, and for gas retailers to extend reach and track distribution metric.
Located in Tokyo, Saisan is a 75-year-old conglomerate offering various household essentials from gas, electricity and water, to vegetables and furniture. In partnership with Saisan, PayGo will expand operations to Asia, starting with Vietnam and Bangladesh.
Under its ‘Gas One’ brand, Saisan sells and supplies LPG (liquefied petroleum gas) in Japan to households, medical facilities and industries. Besides Vietnam and Bangladesh, Saisan has downstream investments in Mongolia, Indonesia, Cambodia, Nepal, Thailand, Laos and India.
PayGo co-founder and CEO Nick Quintong says Asia has a huge untapped demand and that Saisan gives them a trusted brand with generations of LPG retail experience.
Saisan’s Gas One retail network gives PayGo access to households in the pilot countries some of whom are familiar with buying utilities in small portions. The strategic partnership has a financial aspect too with the corporation investing capital in PayGo’s broader plans to expand into Asia, including a Series B round that has kicked off this month.
According to Berman, the average Nairobi household using PayGo consumes over 4kg of gas per month. Some families are cooking more than usual, thanks to children who could have been in boarding houses now staying at home due to coronavirus lockdowns.
The startup’s business model in Kenya rests on partnerships with gas distributors. None of them are on the scale of Saisan’s capacity however, and the startup believes this sort of engagement with trans-national distributors is the path to scale in fast-growing emerging economies.
In 2019, LPG demand grew by 9% in Africa and PayGo wants to expand across the continent where there is also an unmet demand for clean cooking fuel, Berman. But the opportunity to test the product overseas is an important way to demonstrate capacity for scale should a big corporate become interested in Africa.
A crucial player in PayGo’s move to Asia is Kepple Africa Ventures, an investment firm backed by the Japan Startup Immersion Program that helps startups raise funds from Japanese corporations and potentially sign partnerships with them.
The firm says it has made 52 investments across 8 African countries since December 2018. Some of its portfolio companies include Sendy, Lifestores Pharmacy, Decagon, Termii and Carry1st, the South African gaming company that closed a US$2.5 million seed round in May.
In October 2019, the Kenyan Bureau of Standards launched the world’s first technology standard for LPG metering, with PayGo’s meter acclaimed as the first fully compliant one in the market. The startup’s device also conforms with ATEX directives – a European Union safety certification required of explosive equipment.
Takehiko Kawamoto, Saisan’s president & CEO, describes PayGo’s tech as a pioneering innovation. He’s relishing the opportunity to use it as a vehicle to further drive Saisan’s gas service in Asia.
Ashley Berman, PayGo’s lead on strategy, calls it a gas-as-a-service offering, adding to the list of as a service possibilities that mobile technology facilitates in Africa. After four years in Nairobi, Kenya’s capital, the startup has gotten the interest of a major trans-national distributor to scale beyond Africa.
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