Egyptian Pylon secures $19 million to scale software for water and electricity companies – TechCrunch

Pylon, an Egyptian infrastructure management platform for water and power companies in emerging markets, raised a $19 million funding round.

The round, a combination of debt and equity, was led by US-based Endure Capital, which is backed by British International Investment (formerly CDC Group), the UK government’s development finance institution. Participating investors include Cathexis Ventures, Loftyinc Ventures, Khawarizmi Ventures and several anonymous angel investors.

Pylon currently operates in Egypt and the Philippines. Part of the seed investment will allow Pylon to expand into other emerging market countries, including Southeast Asia, Latin America and Africa. This financing is the company’s first funding round. CEO Ahmed Ashour said he and his co-founder, CTO Omar Radi, started Pylon since 2017.

Ashour has worked in the metering and utility industry for over a decade and has led the implementation of smart metering technologies – particularly hardware – in Africa, Europe, Asia and the Middle East to various companies.

In 2016, he found a niche in the market for solutions tailored to the needs of water and electricity distributors in Egypt and other emerging markets. He said these entities used software designed for developed economies with different needs and challenges than Siemens, Oracle and SAP that could not meet the demands of distributors in emerging markets.

“We saw them [foreign software] used in other projects but ultimately had great failures. We have started [Pylon] to replace them because their solution failed in the field,” Ashour told TechCrunch on a call..

CEO says Pylon solves several challenges for water and utility companies. First, they incur a very high rate of uncollected bills and thus miss out on huge revenue. Second, they experience high electricity costs and water theft. Thirdlytechnical losses occur on the network and network, whether due to lack of maintenance or law enforcement. These three problems contribute to the loss of 40% of their revenue by these entities and give rise to the last problem: these entities are unable to upgrade their solution or set up intelligent infrastructure due to high costs.

Pylon is developing solutions for these water and electricity companies to make them efficient and stem the bleeding. The company calculates hundreds of billions of losses (in dollars) each year in emerging markets. This is a huge opportunity to increase the AGGREGATE the income and turnover of these public services by 50%.

This is how it works. Pylon’s software collects data from networks, analyzes it and detects where thefts and losses occur throughout the procurement process. It then automates invoicing processes for businesses, similar to how telecom providers in these markets have done over the years.

With no upfront investment, Pylon says it can help utility companies reduce their losses to 8%, in addition to improving their bottom line. The company said it does not charge its customers an upfront cost for its hardware. Howeverits smart metering as a service (SMaaS) model makes it easy for money-conscious utility companies to deploy its solution at scale.

We believe that the electricity sector is following in the footsteps of the telecommunications industry and that the curve is starting to show. So we only mirrored the billing solution, and through data detection, we can detect exactly who is stealing electricity and where the losses are occurring,” said the CEO.

“Additionally, since these utilities are cash-strapped and cannot be upgraded, we are offering this solution to them as a subscription model.. So it’s a low investment model where they subscribe to us, pay around 10-12% less than the initial cost of their previous solution and can recoup the revenue. So only by signing with us, they start earning more money and increasing their turnover and bottom line.

More than 12 different utilities (seven in the private sector and five in the public) use Pylon. They serve more than one million metering terminals on 26 distinct meter models in Egypt and the Philippines.

Pylon has multiplied its revenue by 3.5 in 2021 and claims to be profitable. But in addition to building a thriving business, the founders are particularly mindful of how Pylon’s smart grids promote environmental sustainability.

We believe a lot of time in our role to help the environment and help meet the challenges we are currently facing,” said the CEO. “Emissions from the electricity sector are one of the largest sources of CO2 emissions on the planet. We are able to make electricity efficient and reduce [emissions] 25% when public services aresubscribe with us.

One of its goals is to reach 1 gigatonne of total CO2 reduction in emissions by 2035. On the other hand, water losses in emerging markets also reach more than 45 million cubic meters per day. “Pylon can reduce this by up to 22%, potentially provide enough water to serve more than 40 million people,” the company said..

Y Combinator-backed startup estimates water and power utility market opportunity worth more than $20 billion across 10 emerging markets. However, it is currently focusing on a quarter of that figure which covers Egypt, the Philippines, Brazil and Africa.. Ultimatelythe plan is for the Egyptian startup to capture more market share over time, Ashour said, and expansion into Southeast Asia, another fragmented marketis in the cards.

But these are all long-term projections. In the near future, next year to be exact, Ashour said Pylon plans to reach 3 million meters in its markets, which is a 4x growth year-over-year. The startup is already working with many companies on two continents that have deployed more than 2 million devices of Pylon’s smart grid technology in 15 distribution companies.

The development of its technology will be essential in this next phase of growth. Therefore, securing this seed funding – one of the largest in the MENA region – provides Pylon with the opportunity to advance its engineering and product development.

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