Pylon is an Egyptian infrastructure management platform for water and electricity companies in emerging markets.
The round was led by Endure Capital, which is backed by British International Investment, the U.K. government's development finance institution. Several angel investors are participating.
Pylon operates in Egypt and the Philippines. Pylon will be able to expand to other countries in the emerging markets of Southeast Asia, Latin America and Africa. The company has its first venture round. The CEO said that he and his co-founder had been bootstrapping.
For more than a decade, Ashour worked in the metering and utility business and led the implementation of smart metering technologies across Africa, Europe, Asia and the Middle East for various companies.
In Egypt and other emerging markets, there was a gap in the market for solutions tailored to the needs of water and electricity distributors. He said that these entities used software designed for developed economies that couldn't meet the demands of emerging markets.
We've seen foreign software used in other projects that ended in failure. The solution failed on the ground, so we started Pantheon to replace them.
The chief executive said that Pylon solved several challenges for the water and distribution companies. They incur a high rate of uncollected bills and miss out on huge revenues. They have high electricity costs and water theft. Whether for lack of maintenance or law enforcement, technical losses happen on the grid and network. These three issues contribute to the entities losing 40% of their revenues and the last issue is the entities being unable to upgrade their solution due to high costs.
The company calculates hundreds of billions of losses across emerging markets per year, because Pylon builds solutions for these water and electricity distribution companies to make them efficient. The aggregate revenues and top line of those utilities can be increased by 50%.
Here is how it works. Pylon's software gathers data from the grids, analyzes it, and finds out where theft and losses occur along the supply process. Similar to how telecom providers in these markets have done over the years, it thenAutomates billing processes for the companies.
Pylon says it can help utility companies reduce their losses to 8% and improve their top line. The company does not charge an upfront cost for its hardware. It is easy for cash-conscious utility companies to deploy its solution at scale because of its smart metering-as-a-service model.
The curve is starting to show that the electricity sector is following in the footsteps of the telecom industry. The CEO said that with the data detection, they can detect who is stealing electricity and where the losses are happening.
We offer this solution as a subscription model since the utilities are cash- strapped and cannot upgrade. It is a low capex model where they subscribe with us, pay around 10% of the initial cost of their previous solution, and can recuperate the revenues. They start making more money when they sign with us.
Seven of the private sector and five of the public utilities use Pylon. They serve more than one million metering endpoints across 26 separate meter models in Egypt and the Philippines.
Pylon claims to be profitable and grew its revenues by 3.5 times. Aside from building a thriving business, the founders are particular about how Pylon's smart electricity grids foster sustainable environment.
The CEO said that they believe big time in their role in helping the environment and helping with the challenges that they are currently facing. We can make electricity efficient and reduce emissions by 25% when utilities use us.
One of the goals is to reduce total CO 2 emissions by a factor of one. Water losses in emerging markets can reach over 45 million cubic meters per day.
The market opportunity in the water and electricity distribution space is worth over $20 billion across 10 emerging markets, according to the Y Combinator-backed startup. One-fourth of that figure is focused on Egypt, the Phillippines, Brazil and Africa. The plan is for the Egyptian startup to capture more market share over time, Ashour said, and an expansion to Southeast Asia is in the cards.
These are long-term projections. According to Ashour, Pylon plans to reach 3 million meters across its markets in the near future. More than 2 million endpoints of Pylon's smart grid technology have been deployed by multiple companies across two continents.
This next phase of growth will require getting its technology right. Pylon has the chance to advance its engineering and product development as a result of securing the seed financing.
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