Egyptian Startup Pylon Raises $19 Million Seed Round In Debt And Equity

Pylon is a startup that focuses on providing infrastructure management services for water and electricity companies in emerging markets. Founded in 2017 by CEO Ahmed Ashour and CTO Omar Radi, the startup came to fill the gap in market solutions that would help water and electricity companies in emerging markets to operate better. Pylon is currently operating in Egypt and the Philippines and has plans to venture into other “emerging markets.”

According to the CEO of Pylon, he saw that there was a gap that needed to be filled in terms of providing solutions to the need of water and electricity distributors in Egypt as well as other emerging markets. According to him, the software already being used by these aforementioned companies was developed for their counterparts in developed economies and as such does not capture the realities of emerging markets. These emerging markets, as explained by him, have different challenges and needs from their other counterparts. Hence the appearance of Pylon, an infrastructure management platform focused on emerging markets. The CEO has experience on the utility business having worked for over a decade in the metering and utility business and pioneering the implementation of smart metering technologies in Africa, Europe, Asia and the Middle East for a handful of companies.

To scale its operations as well as expand to other emerging markets other than Egypt and the Philippines, Pylon has raised a seed funding round of $19 million. The round, which came in debt and equity was led by Endure Capital and saw the participation of Khawarizmi Ventures, Cathexis Ventures, Loftyinc Ventures and a host of angel investors.

Explaining the focus on emerging markets, Pylon’s CEO explained that “We have seen them [foreign software] used in other projects but eventually experienced great failures. We started [Pylon] to replace them because their solution failed on the ground.” According to him, Pylon combats major challenges faced by water and distribution companies in emerging markets, helping them reduce unpaid bills, water and electricity theft, technical losses, etc. By combating these challenges, Pylon is helping these companies to either save or recover an approximated 40 percent of their revenue which would have otherwise been lost.

The solutions built by Pylon help these companies not only reduce losses, it also helps them to be efficient in providing services as well. Essentially, here’s how its solution works… It acquires data from the grids, makes an analysis using the data and then detects abnormalities along the supply line. It also helps these companies to automate billing for their respective users.

So why should utility companies use Pylon’s solution? Pylon says it can help utility companies to reduce their losses by as much as 8 percent while improving their top line. Customers are also not charged upfront for its hardware, however, its smart metering-as-a-service (SMaaS) model enables cash-conscious utility companies to deploy its solution at scale.

“We believe that the electricity sector is following the footsteps of the telecom industry and the curve is starting to show. So we just mirrored the billing solution, and with the data detection, we can detect who exactly is stealing electricity and where the losses are happening. Also, since those utilities are cash-strapped and cannot upgrade, we offer them this solution as a subscription model. So it’s a low-capex model where they subscribe with us, pay around 10-12% of the initial cost of their previous solution, and can recuperate the revenues. So just by signing with us, they start making more money and increasing their top line and bottom line,” CEO Ahmed Ashour said.

In 2021, Pylon experienced revenue growth of 3.5 times and says its business is profitable. It is used by 12 different utility companies – five in the public sector and seven in the private sector. It says it serves over 1 million metering endpoints across 26 separate meter models in Egypt and the Philippines. Its founders are also particular about its solution being sustainable to the environment. “We believe big time in our role in helping the environment and helping with the challenges that we are currently facing. Emissions coming from the electricity sector are one of the biggest sources of CO₂ emissions on the planet. We are able to make electricity efficient and reduce [emissions] by 25% when utilities subscribe with us,” they said.

The startup hopes to reach 3 million meters across its markets by next year as well as expand into newer markets.