The pandemic is worsening in Africa as more contagious variants spread, vaccinations lag and hospitals in some places are pushed beyond their limits.
While there has been a wave of innovation in food tech worldwide, it’s still in early days for Africa. There are only a handful of African food-tech startups, and a year and a half’s worth of global pandemic has added a couple to that list.
Kune is one of the most recent food-tech startups, and today, the six-month-old Kenyan-based company is announcing that it has closed a $1 million pre-seed round to launch its on-demand food service in August.
Pan-African venture capital firm Launch Africa Ventures led the pre-seed round. Other investors that took part include Century Oak Capital GmbH and Consonance, with a contribution from ecosystem management firm Pariti.
Founded by CEO Robin Reecht in December 2020, Kune delivers freshly made, ready-to-eat meals at arguably affordable prices. When Reetch first came to Kenya from France in November 2020, it wasn’t easy to get affordable ready-to-eat meals.
“After three days of coming into Kenya, I asked where I can get great food at a cheap price, and everybody tell me it’s impossible,” he told TechCrunch. “It’s impossible because either you go to the street and you eat street food, which is really cheap but with not-so-good quality, or you order on Uber Eats, Glovo or Jumia, where you get quality but you have to pay at least $10.”
Reetch noticed a gap in the market and sought to fill it. The next month, he decided to start Kune. The goal? To provide affordable, convenient and tasty meals. It took a week to develop a pilot, and with a ready waitlist of 50 customers in a particular office space, his plans were in motion. Kune sold more than 500 meals ($4 average) and tripled its customer base from 50 to 150.
Customers were particularly excited about the product and Kune raised $50,000 from them to continue operations, Reetch said. After that, however, the orders became too large for the small team that they couldn’t keep up; at one point, it received 50 orders per day. Thus, instead of advancing with a momentum that could break down, the team took a hiatus.
“We had started to mess up the order because, you know, it’s complicated to get food right when you’re just in a small kitchen setting. So I said okay, that there is no point doing that, and the demand is so high and better to do things right.”
The next months were spent restructuring the company, making hires and building a factory to produce 5,000 meals per day. Then, when the company was ready to raise, Reetch said he saw the same enthusiasm from customers and investors. In two months, Kune closed this round, one of the largest in East Africa, and is one of the few non-fintechs to have raised a seven-figure pre-seed round on the continent.
In a fast-growing and crowded restaurant and food delivery marketplace in Kenya, Kune wants to offer a new way for busy people in Nairobi to access meals by finding a balance between Kibanda pricing (usually referred to as the typical local roadside food shop) and on-demand food delivery prices from global companies.
Kune applies a hybrid model, combining both cloud and dark kitchen concepts. Kune meals are cooked and packaged in its factory and delivered directly to online, retail and corporate customers.
The hybrid model speaks to why Launch Africa cut a check for Kune. And according to the director of the firm, Baljinder Sharma, “leveraging the cloud kitchen model and owning the entire supply chain provides a massive growth and scaling opportunity for Kune Africa.” He added: “We are looking forward to seeing the business take off and grow.”
Kune plans to fully launch in August after its new factory is completed. Per details on its site, the company is promising customers that delivery will be done on an average of 30 minutes daily.
To achieve this, Kune ensures that it owns the entire supply chain, from cooking to packaging to delivery with its own drivers and motorbikes. “Our strategy is to internalize all production and human resources capacities,” he stated. That’s where Kune will put most of the funds to use going forward. In addition to the factory, which costs about 10% of the total investment, Kune will be looking to build a huge team. Reetch tells me that judging by how operations-heavy Kune is, the team size will reach 100 come December.
Once launched, the company will build its own fleet of 100 electric motorcycles by early 2022. In addition, there are plans to hire 100 female drivers.
Currently, Kune showcases three different meals daily: two continental dishes and one foreign meal. In the coming months and quarters, Kune’s offerings will cut across microwavable meals, weight reduction meals and retail meals to target European and U.S. clients. For the latter, Reetch is enthusiastic about exporting the African food culture to Western countries. As someone who travels a lot, the CEO thinks Kenya, unlike other countries, doesn’t have a strong food culture. He references food media like TV shows where various meals and cuisines and tutorings on how to cook food are showcased. Reetch wants Kune to be the go-to for such programs in Kenya.
“In Kenya, we don’t have any culinary show. So we are going to take that position as the culinary major of Kenya, and how do you create this? By creating amazing content, which we plan to do by creating videos and writing articles on how to cook or maybe just food business in general.”
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The close was three-quarters of the target and was done in less than a year following the firm’s launch in February 2020. According to the firm, the second close should be concluded by the end of this year or Q1 2022.
Founded by partners Khaled Talhouni, Sarah Abu Risheh and Stephanie Nour Prince, Nuwa primarily targets markets in the Middle East and the wider GCC. The partners have a track record of investing in Middle Eastern companies — Careem, Mumzworld, Golden Scent and Nana Direct. However, they have also invested in Twiga Foods and AZA, two East African startups.
They have cut checks for three companies with this new fund: two Dubai-based companies, Eyewa and Flexxpay, and one Egypt-based company, Homzmart. And despite having a strong focus on the Middle East and the GCC, the firm wants to double down on investing in more African startups, particularly in Egypt and East Africa.
I spoke with the partners to discuss their past investments, why they are interested in Africa and the similarities and differences between the regions they operate in. This interview has been edited lightly for length and clarity.
TC: Why is Nuwa Capital choosing Sub-Saharan Africa as one of its target markets?
Khaled: I mean, it’s not our primary market, but it’s an area of secondary focus for us, which we’re really interested in. And we think that there are a lot of learnings from the Middle East that we can take from our experience of investing regionally here that we can use for investing in Africa, particularly in East Africa, especially as the digital adoption increases very significantly.
TC: Nuwa Capital invested in Homzmart recently. Are there any other startups Nuwa has invested in or plans to in North Africa and Sub-Saharan Africa?
Sarah: So there is a lot of the deal flow we’ve seen in North Africa, and we just started in December. We are seeing a lot of companies in Egypt, Morocco, across all of North Africa, and in the coming months, we will be investing aggressively across that geography. But for now, Homzmart is our only African investment.
TC: How do you plan to make the transition in investing in Sub-Saharan Africa?
Sarah: We have a network in East Africa because, in our previous fund, we did invest in two companies in Kenya. One was Twiga and the other was BitPesa, which is now AZA. We’ve invested in those, and as part of our due diligence and network that we’ve built in Africa, that’s why we think the opportunity is there because we got to see it and understood the market with those two companies.
TC: From your perception of how the African market is, how is it different from the GCC?
Sarah: There are different ways to look at it. But Africa is different from the GCC markets in terms of the population sizes, in terms of the purchasing power of people and in terms of companies that get a lot of attraction based on mass volume. So the success of the company sometimes is based on volume. So like a large number of people signing up to a company, for example. In Twiga, for example, it was bridging the gap between farmers and vendors, so they had a large number of farmers, and that really had a lot of power. And I think that’s where we see opportunity in Africa — in the power of the population.
Stephanie: From a VC standpoint, many funds have cropped up in the GCC region in the past couple of years, so there’s a lot more capital flowing directly in the market. That may not be exactly mirrored yet in East Africa if I might say. Also, I guess what we see from where we are in East Africa is that the capital seems to be concentrated around a particular set of founders.
TC: What will be the investment strategy for Nuwa Capital in Africa?
Sarah: We look for companies that fit into our thesis. So I can talk a bit more about the sectors that we invest in. So fintech is a large one that we look at. And then, we have a big focus on SaaS across different industries. We also really like e-commerce and marketplaces, the top of private label angle and private brands selling through e-commerce marketplaces.
And then we also have, we also look at something that we call the rapidly digitizing industries, and that’s companies that are disrupting the traditional industries through technology in education, health tech, agritech. So these are the theses we look at, and that’s how we drive our investment strategy. In terms of ticket sizes and stages, we focus on seed and Series A, and then we could also follow on in the round.
Stephanie: So when it particularly comes to Africa, what we’ve seen, which is also very interesting for us, is an increase of companies pitching to us in healthcare, in agritech, in different variations of financial services or intersection of fintech and something else. That will be very interesting also for us as we move forward, as we start looking a bit more intently.
TC: Since you are relatively new to African investment, will you be looking to partner or liaise with other VCs based on the continent?
Stephanie: It‘s a very common practice for us. We’re quite collaborative as a fund, and that’s also due to the nature of the region where you end up co-investing with a number of funds, and sometimes they tend to be the same funds that you have a similar mindset with. So that happens quite a bit; I think it’s very likely also to happen with funds we’ve co-invested with in the past in Africa.
TC: Egypt has been one of the exciting countries in both Africa and the Middle East region. What do you think is going for the market?
Stephanie: Egypt is one of the primary markets that we focus on. We are seeing a large part of our pipeline coming from Egypt. We’ve also seen a great shift in Egypt over the past few years where the type of entrepreneurs, the type of founders that are coming to us, are more mature and more experienced and just a higher calibre than before. We used to see a lot of earlier-stage companies with inexperienced founders. But today, what we’re seeing is just amazing. We are very bullish on the market when it is one of our primary focus markets.
Sarah: When companies come out of Egypt, their expansion strategy is usually either to the rest of North Africa or East Africa. Some will come to the GCC, while some will stay in Africa, depending on what industry they’re in. But I think that as we invest more in Egypt and then actively into our East Africa strategy will give us really good exposure in Africa, and as we grow, our subsequent funds will look more into Africa.
TC: Is there a portion of the fund dedicated to the African market?
Khalid: I don’t think we have a specific percentage, but the continent is part of the major strategy. We have a significant portion of the fund targeted at Egypt but we’d like to do at least 5-10% of the fund in Africa, excluding Egypt. It depends on the final fund size but we’re really bullish on Africa.
Chinese-backed and Africa-focused fintech platform OPay is in talks to raise up to $400 million, The Information reported today. The fundraising will be coming two years after OPay announced two funding rounds in 2019 — $50 million in June and $120 million Series B in November.
The $170 million raised so far comes from mainly Chinese investors who have begun to bet big on Africa over the past few years. Some of them include SoftBank, Sequoia Capital China, IDG Capital, SoftBank Ventures Asia, GSR Ventures, Source Code Capital.
In 2018, Opera, popularly known for its internet search engine and browser, launched the OPay mobile money platform in Lagos. It didn’t take long for the company to expand aggressively within the city using ORide, a now-defunct ride-hailing service, as an entry point to the array of services it wanted to offer. The company has tested several verticals — OBus, a bus-booking platform (also defunct); OExpress, a logistics delivery service; OTrade, a B2B e-commerce platform; OFood, a food delivery service, among others.
While none of these services has significantly scaled, OPay’s fintech and mobile money arm (which is its main play) is thriving. This year, its parent company Opera reported that OPay’s monthly transactions grew 4.5x last year to over $2 billion in December. OPay also claims to process about 80% of bank transfers among mobile money operators in Nigeria and 20% of the country’s non-merchant point of sales transactions.Last year, the company also said it acquired an international money transfer license with a partnership with WorldRemit also in the works.
It’s quite surprising that none of OPay’s plans to expand to South Africa and Kenya (countries it expressed interest in during its Series B) has come to fruition despite its large raises. The company blamed the pandemic for these shortcomings. However, earlier this year, the country set up shop in North Africa by expanding to Egypt. This next raise, likely a Series C, will be instrumental in the company’s quest for expansion, both geographically and product offerings. Per The Information, OPay’s valuation will increase to about $1.5 billion, three times its valuation in 2019.
We reached out to OPay, but they declined to comment on the story.
Countries should be getting vaccines based on their needs, not their population.
BuffaloGrid, a startup that provides phone charging and digital content to people in off-grid environments, is teaming up with the Techfugees refugee non-profit to provid free educational content and device charging to displaced people across East Africa and the Middle-East.
The initial service will see solar-powered ‘BuffaloGrid Hubs’ deployed in refugee camps across Kenya and Uganda, providing unlimited free access to education and health content, as well as other streaming services and mobile power charging.
The “Knowledge is Freedom” joint campaign has a goal of raising $3 million over the course of the next two years.
Daniel Becerra, CEO of BuffaloGrid, said: “Our mission is to remove barriers for internet adoption and provide the next billion with information, energy, and digital skills. I hope this campaign will raise awareness of the plight of displaced people and how collectively we have the power to change things. The entire team is excited to work with Techfugees. I believe together we have the technical expertise, experience, and connections to make a real difference.”
Raj Burman, Techfugees CEO, said: “In an increasingly digital and climate change stricken world, our mission is to make sure forcibly displaced people don’t get left behind. Around 400,000 marginalized refugees reside in the Rwamwanja and Kakuma-Kalobeyei settlements camp in Uganda and Kenya respectively. Our collaboration with BuffaloGrid presents a unique opportunity for an innovative, responsible digital solution to empower displaced communities with the support of our Chapters in Kenya and Uganda to overcome the access barriers to education and health content to better their livelihoods.”
Techfugees says 80 million people (roughly one percent of humanity) have been displaced because of climate change, war, conflict, economic challenges, and persecution. This figure is expected to grow to over 1 billion displaced people by 2050.
Belfast HQ’d BuffaloGrid has raised $6.4 million to date and counts, Tiny VC, ADV, Seedcamp, Kima Ventures and LocalGlobe among its investors.
(Disclosure: Mike Butcher is Chairman of Techfugees)
On April 16, Uganda-based two-wheel ride-hailing platform SafeBoda announced that it had completed 1 million rides in Ibadan, a southwestern city in Nigeria. This might not seem spectacular from a global perspective because it took the startup a year and two months to achieve but it’s a noteworthy feat in African markets.
Ibadan is one of the cities where SafeBoda operates. The company, which first launched in Uganda, is disrupting the offline market of local motorcycles referred to as boda-bodas in Uganda and okadas in Nigeria.
In 2017, SafeBoda officially started operations in Kampala and almost immediately began to deal with the threat posed by new entrants at the time: uberBODA and Bolt boda.
Uber and Bolt are two of the most well-known ride-hailing companies in the markets in which they operate. Uganda was the first African country the pair decided to test out their two-wheel ride-hailing ambitions and it was the second market globally after Thailand for Uber. So given the clout and money these companies hold, most people anticipated they would give SafeBoda a run for its money. But that didn’t happen.
According to Alastair Sussock, co-CEO of SafeBoda, who founded the company with Ricky Rapa Thomson and Maxime Dieudonne, SafeBoda was clocking about 1,000 rides daily at the time. He argued that even though the company’s volumes were one of the best, there was a misrepresentation in the media that SafeBoda wasn’t in the league as other platforms.
“Everyone thought Uber and Bolt would enter Africa to revolutionize the informal boda market,” Sussock told TechCrunch. “There was mention of other players, some of which have folded now, but no one mentioned SafeBoda although we were actually doing quite good stuff. And that energized us to prove the perception wrong, which was that SafeBoda didn’t really exist”.
Strategy, hard work and a large Series B investment followed the next couple of years, which has established SafeBoda as a market leader in Uganda. Sussock said the company now completes about 40,000 rides a day. Uber and Bolt barely complete 10,000 rides in the country.
So what has been pivotal to this growth? Before founding SafeBoda, Rapa Thomson was also a boda rider. As the company’s director of operations, he’s pivotal in making sure the company adopts localized methods with its riders. And despite its exciting features, pieces of equipment and safety measures employed, what stands out is how SafeBoda adapts to the boda boda community. This has been responsible for the 80% year-on-year retention the company currently enjoys, Sussock said.
“We tend to localize our product and take a local approach where we hire local guys to be part of the team. They help to have boots on the ground and of course, what you see with Nigeria, is not as much a dissimilar story,” the co-CEO added.
When starting in Nigeria, most two-wheel ride-hailing startups begin from Lagos, the nation’s hotbed of commerce and transport. In recent times, the city has had entrants like Opera’s OPay, Gokada and MAX.ng. These startups, like SafeBoda, are heavily backed by U.S., Chinese and Japanese investors. They have been at loggerheads with each other to capture on-demand mobility market share in Africa’s most populous country.
SafeBoda first hinted at a possible expansion into Nigeria in 2019. All the aforementioned ride-hailing companies were already in operation and it appeared as if SafeBoda was a very late entrant. But according to Babajide Duroshola, the country head for SafeBoda in Nigeria, the team knew it was going to thrive in spite of the timing and what competition looked like. “For us, it was a no-brainer decision to come into Nigeria and do the same thing that we did at Kampala, which is to grow quickly and make SafeBoda a household name,” he said to TechCrunch.
When time came to reveal which city it was going to start with, it was Ibadan, not Lagos. SafeBoda caught everyone unawares with the decision and subsequently faced heavy backlash. This was in December 2019 but fast-forward to February 2020; it proved to be a masterstroke because in one fell swoop, the Lagos State government rendered bike-hailing operations obsolete with new regulations. For the next couple of months, SafeBoda was the only reliable source of two-wheel ride-hail service in the country. While the regulations forced others to pivot into asset financing for bikes and logistics services, SafeBoda was waxing strong with its ride-hailing operations in Ibadan.
In its first five months, SafeBoda had completed more than 250,000 rides and onboarded thousands of drivers. Once again, adopting a local strategy and community building proved vital to the seemingly modest but explosive growth it experienced in a market no company had really tested.
“One of the things that really separated us from all the other guys in the market was a localization play. The fact that we could connect with and employ these people who were okada drivers right off the streets to become part of our operations team was very key,” Duroshola said.
The country manager added that SafeBoda’s progress showed other two-wheel operators that a market outside Lagos existed. “Lagos is the commercial capital. There’s a lot of money in the city and income per household is high. But then, it is not a true representation of Nigeria. We saw that if you really want to scale across the country, Ibadan was actually a very good place to start because it had all the kinds of people you’d typically find in Nigeria.”
The ease of doing business for a ride-hailing platform in Ibadan is also easier than in Lagos. The latter is known for endorsing NURTW, a transport group known to legally extort riders daily or weekly in the city. Such activities are prohibited in Ibadan giving SafeBoda a smooth path to achieving scale and allowing its drivers to work effectively.
A year in the city has rewarded the company with over 2,500 drivers and 40,000 customers. Together, they performed more than 750,000 trips in SafeBoda’s first year, which has since surpassed more than 1 million trips.
SafeBoda’s progress in Uganda and Nigeria makes it one of the most active players in Sub-Saharan Africa. The company has completed more than 35 million rides across both countries, with over 25,000 registered riders. It also claims to hold more than 80% market share in the two countries.
Despite this success, SafeBoda struggled in its third market, Kenya — a market it expanded to and left before Nigeria. The company had onboarded over 1,500 riders in less than a year, but it wasn’t growing at the pace it wanted. The pandemic made SafeBoda’s struggles obvious and per this report, riders’ dissatisfaction with pricing caused an upheaval that sent the company out of the Kenyan market.
In addition to rider troubles, Sussock noted that Kenya’s motorcycle taxi market wasn’t as highly dense as Uganda and Nigeria which, according to him, contributed to the exit.
“We were the market leader in Kenya, and we were doing like the most rides in Kenya. But it was still quite small in terms of volume compared to Uganda. And we knew what the potential would be in Nigeria, which we hadn’t done at the time. So it was just quite clear that Kenya, while very developed for tech, and developed per capita, was just really quite hard to scale in terms of motorcycle taxi transportation,” he said.
SafeBoda isn’t ruling out a return to the East African market. But with the East African market out of the way for now, it has the resources to focus ride-hailing efforts on Uganda and Nigeria. The ultimate goal, however, is to scale its super app play.
In Uganda, it is already in motion. SafeBoda offers on-demand food, grocery, pharmacy, essentials and beverages delivery services, of which more than 500,000 orders have been completed. This model is inspired by the Go-Pay model at GoJek, where two-wheel ride-hailing was an entry point to high-frequency wallet spend behavior.
The Asian multi-service company is one of the investors in SafeBoda via its GoVentures arm. Other backers include Transsion Holdings, Beenext, and serial entrepreneur Justin Kan.
SafeBoda has no real competition in the bike-hailing wars in Uganda and Nigeria as it stands. The company’s challenge remains the large offline market, where more than 1.5 million rides are completed daily in Uganda alone. The plan for SafeBoda is to convert more of this base to its existing online market share. Additionally, it wants to expand into P2P, merchant and bill payments and grow its on-demand business in Uganda. Its plan in Nigeria? Maintaining its core transport business before venturing into payments and deliveries.
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Africa’s insurance market stands at a 3% penetration rate, per a McKinsey study in 2018 comparing six insurance regions on the continent. If the South African market is excluded, this number drops to a measly 1.12%.
Unlike other parts of the world, most African insurance providers neglect the importance of tailored and affordable insurance products to the average African consumer. Lami Technologies, a startup out of Kenya armed with $1.8 million in seed money, is looking to change that.
The round was led by Accion Venture Lab, a seed-stage investment firm that supports financial services targeted at underserved markets. Other VCs that participated include AAIC, Consonance, P1 Ventures, Acuity Ventures, The Continent Venture Partners and Future Africa.
Low insurance uptake in Africa is somewhat due to the traditional distribution of insurance policies. They customarily rely on brick-and-mortar channels to sell and process policies. This takes a long processing cycle and has poor customer satisfaction and higher distribution costs.
Sequentially, the ways premiums are paid is affected. From the McKinsey report in 2018, the total gross written premiums (GWP) in Eastern Africa was $3.3 billion. In comparison, South Africa did $48.3 billion worth of GWP that same year.
For this reason, CEO Jihan Abass founded the company in 2018 to democratize insurance products in Kenya.
“For us, the main problem we wanted to solve was that 97% of Africans don’t buy insurance. We were trying to understand the methodology behind that, especially in Kenya where there are over 50 insurance companies but the penetration level is 2.4%,” she told TechCrunch.
“The driving force for us was making insurance widely available. We felt that building the technological infrastructure to facilitate the distribution of insurance was the best way to increase the penetration level in Africa.”
But selling directly to consumers would be a meticulous process as they rarely buy insurance from trusted organizations, let alone a third-party company. So Lami adopted a B2B2C approach to leverage the trust already built by platforms that converse with customers daily and innovate around it.
Via an API, it allows businesses like banks, startups, and organizations to offer digital insurance products to their users. The product can also be used by partner businesses to manage their own insurance needs.
Some customers like Stanbic Bank in Kenya use Lami’s API to run insurance operations; HR platform WorkPay makes insurance products available to the businesses using its platform. With over 20 insurance writers, the company is also launching an insurance marketplace on e-commerce platform Jumia.
Users can get a quote for motor, medical or other tailored insurance products through its API. They also can customize the benefits and adjust the premium to suit them, get their policy documents and access claims.
Typically, it takes about 90 days for claims to be processed for an average African insurer. Abass said Lami has reduced this to a week — it is one way the three-year-old company has developed trust with customers.
Another challenge that Lami has been able to overcome is getting insurance companies onboard. According to the CEO, transitioning from a traditional way of offering insurance to digital distribution channels only worked because Lami began to show early the value of customer experience and journey which requires getting the right insurance to the right customer at the right time.
This is what makes Lami stand out, Abass continued. It co-designs products with its underwriting partners. And approaching design in this manner helps the businesses to offer unique insurance products to their underlying customer base.
She illustrates an offering with a bus-booking platform where passengers’ insurance points are calculated on a per-trip basis. It counts when they board the bus and stops when they alight. She believes an innovative process like this will take the continent’s insurance play to a more desirable place.
“I think there’s huge potential in the insurance industry. Despite the low penetration, the annual market is worth more than $60 billion a year. I think people are starting to open their eyes to insurance as opposed to other financial services.”
Since its inception, the insurtech startup has sold more than 5,000 policies. It has partnered with more than 25 active underwriters, including Britam, Pioneer and Madison Insurance. These underwriters help distribute more than 30 products from medical and employee benefits to motor and device insurance.
Lami will use the seed investment to hire more people, improve its technology and grow its presence across Africa.
Accion Venture Lab is placing a bet on Lami’s embedded finance play. Here’s what its African director, Ashley Lewis said of the investment. “… By embedding customized insurance within businesses that customers know and trust, Lami is making insurance accessible for underserved populations in Africa and enabling them to build financial resilience.”
Lami’s investment also represents a spark in a Kenyan tech ecosystem where being both an indigenous and female founder is an incongruous mix. A study in 2019 showed that Kenya had the strongest presence of expat co-founders of any of the Big Four tech ecosystems. While the country has a better female co-founder representation than other countries (1 in 4), the percentage of those from Kenya is about 12%.
There are just a handful of female founders who have raised million-dollar rounds. Though Abass sits comfortably in this illustrious club, it took thick skins and confidence in her product to get in.
“The funding landscape in Kenya is generally biased towards male founders and in East Africa, especially to foreign founders. So it was a lot harder to get investors excited and onboard with us. For us, we’ve built something quite exciting, although it took some time. One key thing why we wanted to make this publicized is so other female founders can see that there’s an opportunity to do the same too,” she said.
In 2016, Ivorian e-commerce startup Afrikrea started as a marketplace for African-based and inspired clothing, accessories, arts, and crafts. Over the past five years, Afrikrea has served more than 7,000 sellers from 47 African countries and buyers from 170 countries.
Per the company’s data, it records more than 500,000 visits monthly, with the majority of its customers from Europe and North America recording over $15 million in transactions.
But while Afrikrea presents African merchants to showcase and sell their products to the world, it is just one of the many channels available, including personal websites and social media.
Co-founder and CEO Moulaye Taboure says that he noticed that merchants were splitting time and concentration across different channels, which affected their engagement with Afrikrea.
“We noticed that it was getting harder for our sellers to make sales because they were losing time, money and energy switching between channels,” Taboure told TechCrunch. “Every time they want to sell a product, they put it on social media, Afrikrea, and other websites. And when one buyer shows interest, there is no single place to track and see all the orders. That’s hard for these businesses to offer quality services and grow effectively.”
Then last year, Afrikrea began testing an all-in-one SaaS e-commerce platform for these merchants. Today, it is announcing its launch. The platform called ANKA will allow users to sell from Africa, ship products to anywhere in the world and get paid through local and international African payment methods.
E-commerce, payments and global shipping. That’s ANKA’s play for thousands of micro-retailers and businesses on the continent and around the world.
The platform lets users sell via an omnichannel dashboard with a single inventory, orders and messages management. Customers can carry out transactions via a customized online storefront like Shopify, social media platforms, links such as on Gumroad and the Afrikrea marketplace.
Merchants can carry out payments and payouts via a wallet and an Afrikrea Visa card. The platform, which costs $12, allows customers to perform mobile money and mobile banking transactions with MPesa, Orange, MTN and PayPal.
Shipping completes the entire sales life cycle, from the point of sale to receipt of goods. In 2019, Afrikrea partnered with global logistics partner DHL to offer shipping services to its customers.
Fashion is ANKA’s best-selling category because of its affiliation with Afrikrea. The African fashion and apparel market is worth $31billion, per Euromonitor, and Afrikrea estimates the yearly spend of its major markets to be worth $12.5 billion. A breakdown from the company puts “the African diaspora in Europe at $1 billion, those in America and the Caribbean at $9 billion and non-Africans with links to the continent at $2.5 billion.”
But in terms of general e-commerce activities on the continent, McKinsey & Company pegs consumer spending to reach $2.1 trillion by 2025. African e-commerce is also expected to account for up to 10% of retail sales.
Platforms like Jumia, Mall4Africa and Takealot have been at the forefront of this growth over this past decade. MallforAfrica struck a partnership with DHL in 2015, then launched DHL Africa eShop with the logistics giant four years later. More than 200 sellers from the U.S. and U.K. serve African consumers in more than 30 countries on the platform.
Unlike MallforAfrica and other e-commerce platforms, ANKA differentiates itself as a platform for export rather than import, specifically for African products. According to Moulaye, ANKA is currently the largest e-commerce exporter on the continent, and since its partnership with DHL, it has shipped more than 10 tons of cargo monthly from Africa.
“We are the biggest client of DHL exporting from Africa. We ship 10 tons every month and have sellers in 47 African countries, with Kenya and Nigeria as our largest markets. We have something African that is going to a global scale. That’s one of the angles we had with Afrikrea, and we want to keep that with ANKA. What sets us apart is that we’re not just trying to solve a purely African problem; we want to solve a global problem for Africans.”
Since launching five years ago, Afrikrea, which Taboure launched with Luc B. Perussault Diallo and Kadry Diallo, has raised a total of $2.1 million per Crunchbase. In this period, the company has seen its revenue grow 5x and claims to have ARR more than it has raised in its lifetime. To continue its growth efforts, Afrikrea is in the process of concluding a Series A round later this year.
WayaWaya’s customers and partners include the likes of I&M Bank, Interswitch and MTN. The company offers a range of services, from digital banking and payment services to financial services APIs and payment bots.
According to Ajua, the acquisition is primarily focused on WayaWaya’s payments bots system known as Janja. The platform, which has customers like Airtel, Ezee Money, Housing Finance Company of Kenya (HF Group), enables borderless banking and payments across apps and social media platforms. Teddy Ogallo, the entrepreneur who founded WayaWaya, joins Ajua as VP of Product APIs and Integrations.
Per Crunchbase, WayaWaya has just raised $75,000. Although the two companies did not disclose the financial details of the acquisition, Ajua is expected to have paid 10 times more than WayaWaya’s total raise.
“There’s a lot of commerce happening on the continent and Ajua wants companies to move from transaction numbers to the customers behind such transaction,” Griffith told TechCrunch. “Imagine if we knew what drove consumer habits for businesses. I mean, that’s a huge exponential curve for African businesses.”
Nigeria’s SME market alone is valued at $220 billion annually. And while businesses, mostly big enterprises, can afford customer communication tools, a large segment of small businesses are being left out. Ajua’s play is to use data and analytics to connect companies with their customers in real time. “We’ve taken what makes enterprise customers successful, and we’re capturing it in a simple format so SMEs can have the same tools,” Griffith added.
Since most consumer behavior for these SMEs happens offline, Ajua gives businesses unique USSD codes to receive payments, get feedback and offer discounts to their customers. It is one of the products Ajua has launched over the years for customer feedback at the point of service to businesses that cumulatively have over 45 million customers.
The company’s partners and clients also include Coca-Cola, FBNQuest, GoodLife Pharmacy, Java House, Safaricom, Standard Chartered and Total.
As an intelligent messaging bot, Janja is used by individuals and businesses across WhatsApp, Facebook Messenger and Telegram to automate customer support and make cross-border payments. So, Janja’s integration into Ajua’s product stack will close much of the acquirer’s customer experience loop by automating responses and giving customers what they want, when they want it.
This acquisition comes a month after Ajua announced that it partnered with telecom operator MTN Nigeria to launch a customer management product for Nigerian businesses. The product called MTN EnGauge carries the same features present in Ajua but, in this case, is tailored solely for businesses using the MTN network. The roll-out is expected to generate more data for Ajua’s thousands of users. It will also be upgraded to incorporate Janja and other services.
In hindsight, it appears Ajua could have created a product like Janja in-house due to its vast experience in the consumer experience space. However, the company chose an acquisition and Griffith gave two reasons why — building a similar product would have taken a long time and Ogallo seemed to know Janja’s business and operations so well, it just made sense to get him on board.
“Teddy was going the same direction we’re going. We just thought to acquire WayaWaya instead and make a really good company out of both products attempting to solve the same problem. To me, it’s all about solving the problem together rather than going alone,” said the CEO.
On why he accepted the acquisition, Ogallo, who now has a new role, noted that Ajua’s ability to scale customer service and experience and also help businesses was one reason and earned admiration from him. “Seeing how WayaWaya’s technology can complement Ajua’s innovative products and services, and help scale and monetize businesses, is an exciting opportunity for us, and we are happy that our teams will be collaborating to build something unique for the continent,” he added.
This is a solid infrastructure play from Ajua coming from a founder who is a massive advocate of acquisition and consolidation. Griffith believes that the two are strategies for a speedier route to new markets and channels in Africa.
“I think there are lots of ways we can build the ecosystem. There are lots of young talent building stuff, and they don’t have access to capital to get to the next stage. The question is if they want to race to the finish line or take off time and get acquired. I think there’s a huge opportunity in Africa if you want to solve complex problems by acquisition.”
There has been an uptick in local acquisitions in Africa from startups within a single country and between two countries in the past three years. For the former, Nigerian recruitment platform Jobberman’s acquisition of NGCareers last year comes to mind. And there are pan-African instances like Lagos-based hub CcHub’s acquisition of iHub, its Nairobi counterpart; Ethiopian software provider Apposit sell-off to Nigerian fintech Paga; and Johannesburg-based fintech MFS Africa acquiring Uganda’s Beyonic.
The common theme among the acquisitions (and most African acquisitions) is their undisclosed sums. For Ajua, Griffith cited regulatory issues as one reason why the company is keeping the figure under wraps.
Since launching nine years ago, Ajua has raised a total of $3.5 million, according to Crunchbase. Given the nature of this acquisition and partnership with MTN, the company might set sights on another fundraise to scale aggressively into Nigeria (a market it entered in 2019) and other African countries.
It is hugely expensive and a stain on the country.
In public schools across Africa, classrooms are often overcrowded and this affects how teachers and students interact. The large classroom creates too much work for teachers leaving students’ individual problems unattended.
Private schools are modeled to fix these issues, but they can be expensive for the average African middle-class professional with kids. Kidato, an online school for K-12 students in Africa, presents another alternative and is announcing today that it has closed its $1.4 million seed investment.
The investors who participated in the round are Learn Start Capital, Launch Africa Ventures Fund, Graph Ventures and Century Oak Capital, among other notable local and global angel investors.
Kidato was founded by Kenyan serial entrepreneur Sam Gichuru in 2020. As a father of three kids, he encountered similar problems facing the average Kenyan middle-class professional, one of which was struggling to keep up with private school exorbitant tuition fees as high as $8,000 yearly.
“I have three kids. I moved them from private schools to homeschooling because that was the next option to give them the same quality of education but at an affordable price,” Gichuru told TechCrunch. That was when I started noticing the other challenges private schools had.”
First is the overcrowded nature of these schools. Typically, public schools have a teacher-to-student ratio of 1:50 while private schools are at 1:20. “Depending on how much you pay for school fees. The more prestigious the school, the smaller the teacher-to-student ratio. That for me was a big indicator that you want to have a small number of students per teacher,” added Gichuru.
Then there’s the issue of long and tiring commutes for students. Gichuru tells me that kids going to private schools in Nairobi would have to wake up by 5 a.m., prepare to get on the bus at 6 a.m. to get to school at 7 a.m.
Like any homeschooling model, Gichuru had teachers come to his house to teach his kids what they’d ordinarily learn in school. But when the pandemic hit, he had to find another alternative by building a platform around Zoom for these teachers to continue delivering lessons for his kids. By September, the platform had opened up to accommodate 10 more children outside his home. In January, the number of students in its learning-from-home program increased to 30 students.
It is easy to see why the product is catching on with parents. Due to the pandemic, video services like Zoom have become the norm for the middle class in Africa with high internet accessibility. Also, cutting commute time helps to spend more time with family while reducing costs.
Building an online school for kids while capitalizing on the advantages of parents’ new remote work culture also got the Kenyan startup accepted into Y Combinator in January. Since then, Kidato has onboarded more than 50 students and claims to be growing at a 100% quarter on quarter.
Gichuru says Kidata wants to ensure better learning outcomes in smaller personalized class sizes. It is also offering the same international curriculum but with an average of 1:5 teacher-student ratio.
The company has also implemented after-school programs like robotics and chess, art, coding, and debate classes. Typically, they are usually found among students from affluent schools; however, they are being democratized by Kidato to the more than 700 registered students using its platform. The students mainly from Canada, Kenya, Malawi, Switzerland, Tanzania, UK, United States, and UAE pay $5 per lesson, the company revealed.
Kidato wants to make learning fun and gratifying. According to Gichuru, the business trains its 740 teachers on how to make classes interactive by using the context of arcade games like Minecraft and Roblox to tailor lessons taught to students in different subjects.
“Drawing from our understanding about how these platforms work and how kids learn from them, we have built-in behavior reward mechanisms such as lesson merits into our teaching methods resulting in interesting and enjoyable virtual classes,” an excerpt from the statement read.
But what happens when Kidato meets a demand and supply problem. While its product seems appealing for students, will Kidato find enough qualified teachers to meet the growing demand? The CEO holds that his company has it figured out.
Most private schools shut down during the lockdowns. Though some are beginning to re-open gradually, they are embarking on a recovery process with increased school fees and reduced teachers’ salaries. This has presented a big opportunity for Kidato as it currently has a waitlist of 3,000 teachers who are being swayed by Kidato’s promise of better pay. In the long run, this number creates a pipeline for 15,000 students.
Besides, Kidato doesn’t incur infrastructural costs like real estate, a feature common with traditional schools. Therefore the revenue made from students doesn’t go into any extreme costs, which means more money for teachers.
“Our teachers are paid at least one and a half times more than the average teacher in a private school, and that has driven a great supply of teachers to us.”
Kidato’s revenue split with teachers is 70/30; teachers take the larger percentage. Gichuru adds that if teachers combine their efforts in both normal and afterschool classes, they can earn an average of $2,000 per month.
One would’ve thought that a challenge Kidato would be facing despite its progress would be internet and power but that’s not the case. It is the skepticism of whether Kidato can offer socialization for the students. To solve that, Kidato is adopting an offline approach by leveraging the connections of corporates and align its after-school classes to include monthly educational field trips.
“We’re trying to show them how well kids socialize on our platform. We are partnering with companies that can make it possible to take these kids to plantations, factories, planetariums,” the CEO added.
Kidato is Gichuru’s second stint at Y Combinator. The entrepreneur who founded one of Kenya’s well-known incubator Nailab, also co-founded recruitment platform, Kuhustle. The company which seems to be in pilot mode at the moment, took part in Y Combinator’s batch in 2015.
Kidato has some high expectations given the CEO’s experience and as the only edtech startup in this current batch. The company will use the seed financing for growth and product development as it hopes to replace brick-and-mortar schools. In Gichuru’s words regarding the company’s future, he said, “in the next couple of years, we want to have the biggest online school for K-12 students.”
More than a year after the pandemic began, remote work shows no signs of going away. While it has its cons, it remains top of mind for potential employees around the world before joining a new company.
But while most people in Africa still go to physical offices, despite the pandemic, a few companies have nevertheless embraced this concept. Andela, a New York-based startup that helps tech companies build remote engineering teams from Africa, was one of the first to publicly announce it was going remote on the continent.
Today, it is doubling down on this effort by announcing the global expansion of its engineering talent. Over the past six months, the company has seen a 750% increase in applicants outside Africa. More than 30% of Andela’s inbound engineer applications also came from outside the continent in March alone. Half this number came from Latin America while Africa saw a 500% increase in applications, as well.
When Andela launched in 2014, it built hubs in Nigeria, Kenya, Rwanda and Uganda to source, vet and train engineers to be part of remote teams for international companies. It also tested satellite models in Egypt and Ghana as substitutes to physical hubs.
The company would issue a call for applications, select a few (less than 1%), pay them a salary for the first six months and provide them with housing and food. It also helped developers improve their skills via training and mentorship. Over 100,000 engineers have taken part in the company’s learning network and community, and, as of 2019, Andela had more than 1,500 engineers on its payroll.
However, after noticing that this model wasn’t sustainable, it began to make changes.
In September 2019, it let go of 420 junior engineers across Kenya, Uganda and Nigeria. Nine months later, citing the pandemic, it laid off 135 employees while introducing salary cuts for senior staff. But despite the layoffs, the pandemic provided some form of clarity to how Andela wanted to operate — which was remote, judging by the success of the satellite models.
“In the very beginning, a developer had to be in Lagos to work with Andela. Then it became living in Nigeria. Then Kenya. Then Uganda, Rwanda,” CEO Jeremy Johnson told TechCrunch. “Before the pandemic, Andela was opening applications in country after country. The pandemic came and changed that as we opened up to the entire continent.”
Shutting down its existing physical campuses and going remote also helped the company focus on getting engineers with more experience to meet its clients’ requirements. That experiment, which the company conducted in less than a year, is also part of its mission to be a global company.
“That went so well and we thought ‘what if we accelerated it now that we’re remote and just enable applicants from anywhere?’ because it was always the plan to become a global company. That was clear, but the timing was the question. We did that and it’s been an amazing experiment,” Johnson added.
Now with its global expansion, its clients can tap into regional expertise to support international growth.
According to a statement released by the firm, it currently has engineers from 37 countries across Africa, Asia, Latin America, North America and Europe.
Johnson didn’t go into details about how many of these engineers are getting jobs from Andela, or even its total developer count. He’s more interested in helping its clients solve the diversity issues that have plagued many Western corporations.
Andela is currently working with eight companies that have hired its engineers in Latin America and Africa. In addition to the diversity play, the CEO says that means Andela engineers get to prove themselves on a global playing field in a way the company has “always wanted to see.”
Andela serves more than 200 customers, including GitHub, ViacomCBS, Pluralsight, Seismic, Cloudflare, Coursera and InVision. GitHub is one company that seems to be benefitting from Andela’s new offerings. The company’s VP of Engineering, Dana Lawson, in a statement said, “As a business in the developer tool space, a lot of us are trying to enter those areas of the world (Southeast Asia, Latin America and Africa) where the emergent developers are coming so we can better understand their needs. Having a local presence there with amazing talent is super valuable to building a global product.”
In its quest to become a global company, going up against competition is unavoidable for the seven-year-old company. But since most of these companies are horizontal marketplaces (providing a wide range of expertise), whereas Andela is vertical, Johson believes there’s enough market share to be acquired by the company.
“We are focused on building digital products, and because of that, we’re able to do more, essentially, for our customers… That’s where our focus is — [building long-term relationships] and around building great digital products.”
The company was founded by Jeremy Johnson, Christina Sass, Nadayar Enegesi, Ian Carnevale, Brice Nkengsa and Iyinoluwa Aboyeji. It has raised more than $180 million (up to Series D) from firms like Chan Zuckerberg Initiative, Generation Investment Management, Google Ventures and Spark Capital, at a valuation of about $700 million.
While announcing the layoffs last year, Andela said it was on an annual revenue run rate of $50 million. But when asked how this number has changed over the past year, Johnson said the company is “growing at a healthier pace as we’ve ever had.”
The future of remote work is global and Johnson believes Andela provides the vital link to talent wherever it is found. The company’s head of talent operations, Martin Chikilian, echoes similar sentiments.
“We’ve seen exponential growth and interest from engineers from across Africa who want to work with some of the world’s most exciting technology-focused companies,” he said. “Growing our network of talent from Africa to include more markets is a unique proposition and we continue to match talent with opportunity beyond geographical boundaries.”
The unusual review of the conclusions of the initial inquiry comes more than a year after the attack by the Shabab revealed security lapses at the base.
A hastily formed crowdsourcing operation to contain the insects in Kenya, Ethiopia and Somalia could help manage climate-related disasters everywhere.
According to a McKinsey report, the total number of mobile money services worldwide was 282 in 2017, with more than half of those operating in sub-Saharan Africa.
In 2020, these numbers increased significantly, but the ratio remained similar. In 96 countries, there are 310 live mobile money services, according to a GSMA report. Out of that number, 171 are from Africa, while 157 are in sub-Saharan Africa.
In Tanzania, mobile money services can be relatively difficult to use due to unstable internet and high service fees. Benjamin Fernandes noticed this as a national television host while building a mobile money service to enable people to pay for TV subscriptions in East Africa back in 2011.
Six years later, he would start his own mobile money and wallet aggregator, NALA, to solve these issues. Its first mobile application allowed users to make mobile money payments and utilize mobile banking without an internet connection. The business grew to 250,000 users in over a year after its official launch.
Last year, the WorldBank predicted a sharp decline of international remittances to Africa. But even though Africa is still the most expensive region to send money to with averages of 10.6% in transaction fees, the opposite happened. There was an increase in remittance activity on the continent.
Kenya, for instance, had its highest-ever inbound remittance at $3 billion, while WorldRemit acquired Sendwave in August 2020 for $500 million and Mama Money claimed to have grown 500% within the year.
NALA also noticed an uptick in remittance requests where 1 in 7 users wanted to receive money internationally. This happened despite not being in that business at the time. It’s not hard to see why: Presently, over 70% of money sent to Sub-Saharan Africa is transacted through physical stores. When many over-the-counter services were suspended or limited due to coronavirus restrictions, people were left with expensive, unreliable or hard-to-access alternatives.
Combined with the increasing trend for digital-first financial services and listening to some users’ requests, NALA began testing international money transfers in August 2020 to facilitate payments from the U.K. to Kenya, Uganda and Tanzania. By building a multi-currency ledger where people can send money from the U.K. to Tanzania and back to the U.K., Fernandes says NALA can build a Wise for Africa.
“I believe international payments are only 1% built today. Until you can send money both ways seamlessly, our work isn’t done,” Fernandes told TechCrunch. “We believe African markets should be ‘sender’ markets, too; there is a lot of trade happening with other countries, and most of the money is sent via costly bank wires or at physical stores. It doesn’t need to be this way; it’s time for something better.”
Various platforms are trying to achieve this, but none specifically targets the East African region. That is NALA’s play, according to the CEO. “This is where we see a big advantage for us. We are local, we understand mobile money, we built bill payments on our previous product, and this is an extension of that,” he added.
Since graduating as the first East African company from Y Combinator in 2019, NALA has brought other interesting investors on board to support its mission. The most notable is Accel, which has been kept under wraps for some time. The VC firm rarely makes deals on the continent and has only invested in NALA and Egypt’s Instabug. Other backers include NYCA Partners and angel investors like Shamir Karkal (co-founder of Simple), Peeyush Ranjan (former Flipkart CTO and current head of Google Payments), and Thomas Stafford (DST Global).
NALA also enlisted the services of Nicolas Esteves, who was the VP of engineering at Osper and had a stint at Monzo to become the company’s CTO which, according to Fernandes, will considerably improve the company’s chances of achieving its goal. “When we brought someone of his calibre on our team, it just opened up the doors of what we could accomplish because he has built multi-currency ledgers across different large companies.”
For now, though, the company will be rolling out a beta product next month for U.K.-based customers sending money to Kenya and Uganda (Tanzania will come later). The company claims that the service will support instant payments to all major mobile money accounts and says it is closing some banking partnerships that will allow it to facilitate money transfers from East Africa to the U.K.
Known widely among Kenyans as Mama Sarah, Ms. Obama was seen as the matriarch of Barack Obama’s extended family in Africa.
In Africa, Y Combinator is known to be a major backer of most of the continent’s well-known startups.
Two of the most talked-about in the last two quarters — Flutterwave and Paystack — are YC-backed. Their successes (Flutterwave’s billion-dollar valuation and Paystack’s rare exit to Stripe) have greatly increased YC’s appeal in the eyes of founders on the continent with local investors clamoring to get their portfolio into the accelerator.
Unlike last year where Y Combinator held its Demo Day, both winter and summer in two days, it’s a single day for this Winter 2021 batch.
This is the accelerator’s third online demo day, its second all-virtual class and remote pitch session following its decision to go fully remote from the previous batch (Summer 2020).
A total of 319 companies pitched today from 41 countries drawing attention from more than 2,400 investors. However, only ten African startups pitched and similar to other batches; most of them are fintechs.
Other startups offer e-commerce fulfillment, edtech and B2B food marketplace services. Five startups represent Nigeria; three are from Egypt, and one from the Ivory Coast and Kenya. Here they are building.
Most of the gig workers in Egypt are unbanked, and it’s difficult for digital platforms to pay them for their services. The traditional method would be to use cash or third-party institutions.
Founded by Omar Ekram, Dayra is trying to solve this via an API. With its platform, Egyptian businesses can offer financial services including loans to unbanked workers and customers in the country.
Djamo (Ivory Coast)
While there has been a huge profusion of financial services that have emerged in recent years in Africa, there’s still a huge underserved gap in Francophone Africa. In fact, less than 25% of the population is banked.
Djamo acts as a challenger bank and offers banking solutions to break into this huge untapped market and help with financial inclusion in the region. Hassan Bourgi and Regis Bamba founded the Ivorian startup.
In African public schools, the student-teacher ratio can be as high as 50:1. This doesn’t aid effective learning. Other options like private schools can be costly.
Kidato, an edtech startup founded by Sam Gichuru, have classes with student-teacher ratios at 5:1. They also offer the same international curriculum as private schools in the country but collect much lower fees.
It takes days and sometimes weeks to send money from the U.S. to Nigeria and most African countries. There’s also the problem with expensive fees.
Flux, a Nigerian remittance startup, is using crypto to tackle this. Via an application and from a wallet, people can convert fiat into crypto and send it to the wallets of people in other countries who convert back to fiat if they choose. The startup was founded by Ben Eluan, Osezele Orukpe, and Israel Akintunde.
Financial stress plays a major role as a top distraction for employees. NowPay, a startup founded by Sabry Abuelenien and Mostafa Ashour, bridges that gap and provides several benefits for employers that choose to address this area of employee wellness proactively.
The company enables corporates to offer salary advances to employees. It also improves savings, spending, budgeting, and borrowing for employees by building products that tackle every vertical.
Due to the proliferation of financial services in Africa, it has become extremely difficult for banks and fintechs to combine users’ data from multiple points and make sense of it.
By streamlining various data in a single API, Mono helps companies and third-party developers retrieve vital information like account statements, real-time balance, historical transactions, income, expense, and account owner identification. Abdul Hassan and Prakhar Singh founded the company.
In the U.S. or the U.K, you can set up a business account in minutes but it can take hours and days in Nigeria. And most of this is still executed offline and on paper.
Prospa is a neobank for microbusinesses in Nigeria founded by Frederik Obasi and Rodney Jackson-Cole. It helps these businesses make international payments to more than 10 countries including China, Kenya, the U.K., and the U.S.
When merchants launch their e-commerce businesses, they can easily manage the end-to-end operations in the early stages. But as they begin to grow, managing their own operations can become difficult.
This is a burden for most businesses in Egypt and Flextock, a startup founded by Mohamed Mossaad and Enas Siam, solves it by providing an end to end fulfilment service. They manage a business inventory, pick, pack and ship orders while providing real-time visibility and insights into their products.
For some individuals and merchants, shipping can be a painstaking process. To operate efficiently, they partner with one or more service providers or build their delivery operations themselves.
Sendbox describes itself as a “fulfillment by Amazon for African merchants.” The company provides shipping, escrow payments, among other services, to social commerce merchants in Nigeria. Emotu Balogun and Olusegun Afolahan founded the company.
For small and mid-sized restaurants in Nigeria and most of Africa, food procurement can be a complex process to manage.
Founded by Tunde Kara, Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju, Vendease solves this problem by building a marketplace that allows restaurants to buy directly from farms and food manufacturers.
While richer places, such as the U.S., hope to vaccinate most of their citizens within months, poorer countries, like Kenya, expect to reach just small fractions of their populations in that time.
It is nearly impossible for businesses in some African countries to receive money from PayPal. While the payments giant has not given reasons why this is so, speculation hints at factors like insufficient regulation and poor banking security in said countries.
That might be a thing of the past for some businesses as African payments company Flutterwave today is announcing a collaboration with PayPal to allow PayPal customers globally to pay African merchants through its platform.
Via this partnership, businesses can connect with the more than 377 million PayPal accounts globally and overcome the challenges presented by the highly fragmented and complex payment and banking infrastructure on the continent.
According to CEO Olugbenga ‘GB’ Agboola, this will happen via a Flutterwave integration with PayPal so merchants can add PayPal as a payment option when receiving money outside the continent. The service, which is already available for merchants with registered business accounts on Flutterwave, will be operational across 50 African countries and worldwide, the company claims. Flutterwave hopes to roll out this service to individual merchants on the platform as well.
“In a nutshell, we’re bringing more than 300 million PayPal users to African businesses so they can accept payments across the continent,” he said to TechCrunch. “Our mission at the company has always been to simplify payments for endless possibilities, and from when we started, it has always been about global payments. So despite having the largest payment infrastructure in Africa, we want to have arguably all the important payments systems in the world on our platform.”
A PayPal spokesperson confirmed the Flutterwave collaboration with TechCrunch.
Since the company’s expansion to Africa, it has maintained a one-sided relationship with most countries on the continent, allowing them only to send money. And according to its website, only 12 African countries can send and receive money on the platform, but to varying degrees. They include Algeria, Botswana, Egypt, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Senegal, Seychelles and South Africa.
Users in countries who are not afforded the luxury to do so have to rely on using the PayPal account of a friend or family, based in countries where payments can be received. Next, they request the funds via bank transfer, leading to more incurred costs or use other cross-border money platforms like WorldRemit.
This is a pain point for these businesses, particularly in Nigeria. PayPal finally arrived Africa’s most populous country in 2014 and a year later, it became the company’s second-biggest market on the continent.
But despite its fast adoption rate and large fintech appetite, merchants cannot still receive payments from other countries on the platform with various sources alluding PayPal’s decision to the country’s history with internet fraud.
Fraud or not, Nigeria’s e-commerce and that of the continent at large continues to grow at a breathtaking pace. In 2017, Africa generated $16.5 billion in revenue, and by 2022, it is expected to reach $29 billion. With numbers like this, it isn’t hard to see why PayPal wants to get in on the action, albeit not completely. Hence, the partnership with Flutterwave.
The company, via its APIs, offer payment services to individuals and businesses across the continent. Since launching in 2019, the African payments company has partnered with Visa to launch Barter; Alipay to offer digital payments between Africa and China; and Worldpay FIS for payments in Africa.
But this one with PayPal is arguably its biggest partnership yet. Now, African businesses have more access to sell to global customers using PayPal to receive and send payments online.
In a way, Flutterwave absorbs most of the risk PayPal thinks it will incur if it makes its platform more open to merchants in these countries. But at the same time, it solidifies Flutterwave’s position in the eyes of multinationals looking to enter the African market.
Like when its partnership with Worldpay FIS coincided with its Series B funding, this announcement is also coming on the back of a raise. Last week, the payments company closed a $170 million Series C led by Avenir Growth Capital and Tiger Global, becoming a billion-dollar company in the process.
In hindsight, the mammoth raise suggests that there are a couple of projects in the company’s pipeline. Going by this partnership, we can expect the majority of them to be global plays.
Yet, these questions remain top of mind — What happens when PayPal automatically allows businesses from these neglected African countries to start receiving payments? Will both services continue to coexist if that happens? We’ve reached out to PayPal for comment.
However that plays out, this is a step forward in the right direction for Flutterwave, which has shown time and time again the length it is willing to go for its 290,000 merchants and the ongoing quest to become a global payments company.
“By working with PayPal, we can further strengthen our commitment to our customers and service users as we will be enabling them to transact and expand their business operations to reach new markets. PayPal’s global reach is unrivalled, and collaborating with them allows our customers to explore new markets where PayPal is embedded,” the CEO said.
Data shows that American exporters continue to ship plastic waste overseas, often to poorer countries, even though most of the world has agreed to not accept it.
mPharma, a Ghanaian health tech startup that manages prescription drug inventory for pharmacies and their suppliers, today announced its expansion to Ethiopia.
The company was founded by Daniel Shoukimas, Gregory Rockson and James Finucane in 2013. It specializes in vendor-managed inventory, retail pharmacy operations and market intelligence serving hospitals, pharmacies and patients.
In Africa, the pharmaceutical market worth $50 billion faces challenges such as sprawling supply chains, low order volumes, and exorbitant prices. Many Africans still suffer preventable or easily treated diseases because they cannot afford to buy their medications.
With a presence in Ghana, Kenya, Nigeria, Rwanda and Zambia, as well as two unnamed countries, mPharma wants to increase access to these medications at a reduced cost while assuring and preserving quality. The company claims to serve over 100,000 patients monthly and has distributed over a million drugs to Africans from 300 partner pharmacies across the continent.
CEO Rockson says that when mPharma started eight years ago, he wanted to own a pan-African brand with operations in Ethiopia, Kenya, and Nigeria from the get-go.
By 2018, mPharma went live in the West African country. In 2019, the health tech acquired Haltons, the second-largest pharmacy chain in Kenya, subsequently entering the market and gaining 85% ownership in the company. However, it seemed like a stretch to the Ghanaian-based company to expand to the East African country as it met several pushbacks. Rockson attributes this to the harsh nature of doing business with foreign companies.
“Ethiopia is one of the most closed economies on the continent. This has made it a bit hard for other startups to launch there just because the government rarely allows foreign investments in the retail sector.”
According to Rockson, most foreign brands operate in the country through franchising, a method mPharma has employed for its expansion into Africa’s second most populous nation.
The company signed a franchise agreement with Belayab Pharmaceuticals through its subsidiary, Haltons Limited. Belayab Pharmaceuticals is a part of the Belayab Group — a conglomerate that is also an official franchisee of companies like Pizza Hut and Kia Motors in Ethiopia.
Rockson says we should expect the partnership to open two pharmacies in Addis Ababa this year. Each pharmacy will offer the company’s consumer loyalty membership program called Mutti, where they’ll get discounts and financing options to access medication.
This franchising is a part of mPharma’s growth plans of enabling companies looking to enter the pharmacy retail sector. The plan is to provide access to a “pharmacy-in-a-box” solution where mPharma handles every infrastructure involved, and the pharmacy is just concerned about the consumer.
“What we’ve done is that we enable these pharmacies with our software, and we have the backend physical infrastructure and warehousing,” he said. ‘They can rely on mPharma to do all the background work from getting the products into your pharmacy and also providing the software infrastructure to be able to run delivery services while they focus on clinical care.”
mPharma is one of the well-funded healthtech startups in Africa and has raised over $50 million. Last year when it secured a Series C round of $17 million, Helena Foulkes, former president of CVS, the largest pharmacy retail chain in the U.S., was appointed to its board. She joined Daniel Vasella, ex-CEO and Chairman of Novartis as members who have decades of experience in the pharmaceutical industry.
This sort of backing, both in expertise and investment, has proven vital to how mPharma runs operations. Rockson doesn’t mince words when saying the company wants to dominate African healthcare with Ethiopia, its toughest market to enter, already secured.
“There are issues of fragmentation in pharmacy retailing, poor standards and high prices that haven’t been fixed. The African opportunity is still huge, and we are still at the beginning stages of privatisation of healthcare on the continent,” he said.
Antler is an early-stage venture capital firm which can also be described as a “company builder.” It helps founders build complementary co-founding teams, provides support with deep business model validation and a global platform for scaling their businesses. To date, Antler has invested in and helped build over 250 companies. Of these companies, 40% have at least one female co-founder, and the founders represent more than 70 nationalities.
Founded in 2017 by serial entrepreneur, Marcus Grimeland, and a team of experienced entrepreneurs, investors, and company builders worldwide, Antler has raised more than $75 million to help entrepreneurs spread across nine of the world’s major entrepreneurial hubs. They include Amsterdam, Berlin, London, Nairobi, New York, Oslo, Singapore, Stockholm and Sydney.
Antler’s only office in Africa is in Nairobi, and it is run and led by women.
Marie Nielsen, founder of a paper recycling company in Ethiopia called Penda Paper Recycling, is a partner at the firm. She was an associate partner at Mckinsey & Company responsible for opening their Addis Ababa office. Melalite Ayenew is the firm’s tech partner. Her prior experience includes Oracle, Bain & Company, and Princeton Consultants. Selam Kebede is the firm’s director and leads operations. Before joining Antler, she worked for a couple of VCs and entrepreneurship support organizations.
Turning professionals to founders
Similar to other locations around the world, Antler East Africa runs two cohorts in a year. The firm is particular about adopting a people-first approach, and they bring together professionals with, on average, 10 years of experience in their respective industries. These professionals who become founders ideate, iterate and create solutions typically based on insights they have gathered or problems observed during the course of their past professional experience in their respective industries. After six months of incubation, the firm invests in the teams they can help further. Typically in the pre-seed stage, Antler cuts $100,000 checks for a 20% equity in each selected team.
“Our process is very hands-on; by working with the co-founders over several months, we get the opportunity to help shape the business models and perform extensive due diligence before investing,” Nielsen said to TechCrunch.
The due diligence Nielsen talks about is supported by the global Antler platform, where they pull upon its network of more than 400 experts across technologies and industries. After the pre-seed investments, Antler East Africa claims to continue to support the teams as they hit the ground running and start raising funds from follow-on investors.
Ayenew adds that the firm is also exploring the opportunity to invest in pre-existing, early-stage startups developed outside its program, but early enough for them to come in and still provide value in addition to the monetary investment.
Given that Nairobi is Antler’s only office in Africa, the team looks out for founders working on pan-African problems and solutions. It has attracted founders from more than 15 African countries, which plays a large role in maintaining its cohorts’ outlook to be organically pan-African.
To date, Antler East Africa has invested in a broad range of technology companies in the B2B, B2C and direct-to-consumer space, ranging from emerging sectors like robotics and AI to sectors such as health tech, fintech, and proptech. From its last two cohorts, Antler East Africa has invested in six startups. They include:
Cooked, a subscription-based meal kit provider, helps consumers search for, shop, and cook food at home better. Cooked operates with weekly and monthly subscriptions and delivers products home to its customers on pre-agreed days of the week. The founders have more than 20 years of experience in finance, food, and restaurants industries between themselves.
UNCOVER claims to be building the continent’s most trusted skincare brand and content platform by partnering with top skincare labs in Korea. The company carried out a skincare survey with responses from 1,000 Kenyan women and claims the data obtained will help develop viral knowledge platforms and effective customized products.
Having spent its early days in FMCG, and particularly with small traders, ChapChapGo identified that the lack of simple and affordable tools tailored to the local context was a major challenge for Kenyan businesses to adopt e-commerce. ChapChapGo enables businesses to transact online in a few minutes with simple invoicing, automatic reconciliation, and faster M-PESA checkouts.
Anyi Health wants to improve access to financial support for primary healthcare seekers. In Nigeria and many other African countries, patients unable to pay their hospital bills are detained in the hospital or left untreated. Anyi Health aims to solve this through a mobile-based point-of-need credit facility, where patients can apply for credit directly at the hospital. The company just started its MVP pilot with three hospitals in Lagos, Nigeria and is looking to raise a $300k seed round based on pilot proof of concept.
AIFluence is an AI-driven influencer marketing platform. Founded by advertising veterans, AIfluence enables brands in Africa to make a better decision when launching, managing and evaluating their influencer marketing campaigns. The company has signed customer contracts worth more than $600,000 with leading international and African companies, including Sony and Safaricom.
Digiduka positions itself as the digital service solution for Kenya’s cash economy. Its thesis is that payment solutions in Africa have two problems shutting out millions of potential users. One is high transaction fees, ranging as high as 9% per transaction, and the other, inconvenient payment modes. With the CEO and CTO having between themselves over 15 years of experience working with leading African telcos and as a technical lead for various startups, they aim to build the unified digital services solution of choice for both consumers and smaller retailers in Kenya.
Antler East Africa’s next cohort is in April, and Kebede says by bringing brilliant and experienced people together to create outstanding businesses in Africa, they hope that Antler “will help foster organizations that change the way people think, are sustainable and innovative as well as encourage other people to realize their own business goals.”
The venture capital scene in Africa has consistently grown, with an influx of capital from local and international investors reaching unprecedented heights in recent years. To understand how much growth has occurred, African startups raised a meagre $400 million in 2015 compared to the $2 billion that came into the continent in 2019, according to Africa-focused fund Partech Africa.
However, that figure isn’t the only yardstick. With other outlets like media publications WeeTracker and Disrupt Africa disclosing different results for the African venture capital market, we compared and contrasted their results last year. The result of that investigation detailed differences in methodology, as well as similarities.
In comparison to Partech’s $2 billion figure for 2019, WeeTracker estimated that African startups raised $1.3 billion while Disrupt Africa, $496 million for the same year.
It was expected that these figures would increase in 2020. But with the pandemic bringing in utter confusion and panic, companies downsized as investors re-strategized, and due diligence slowed during the first few months of the year. Also, new predictions came into light in May with some pegging expected deals to close between $1.2 billion and $1.8 billion by the end of the year.
Investments did pick up, and from July, VC funding on the continent had a bullish run until December. Although 2020 didn’t witness the series of mammoth deals in 2019 and didn’t reach the $2 billion mark, it proved to be a good year for acquisitions. Sendwave’s $500 million purchase by WorldRemit; Network International buying DPO Group for $288 million; and Stripe’s larger than $200 million acquisition of Paystack were high-profile examples.
To better understand how VCs invested in Africa during 2020, we’ll look into data from Partech Africa, Briter Bridges and Disrupt Africa.
Behind the numbers
In 2019, Partech Africa reported that a total of $2 billion went into African startups. For 2020, the number dropped to $1.43 billion. Briter Bridges pegged total 2020 VC for African startups at $1.31 billion (for disclosed and undisclosed amounts), up from $1.27 billion in 2019. Disrupt Africa noted an increase in its figures moving from $496 million in 2019 to $700 million in 2020.
Just as last year, contrasting methodologies from the type of deals reviewed, to the definition of an African startup contributed to the numbers’ disparity.
Cyril Collon, general partner at Partech says the firm’s numbers are based on equity deals greater than $200,000. Also, it defines African startups “as companies with their primary market, in terms of operations or revenues, in Africa not based on HQ or incorporation,” he said. “When these companies evolve to go global, we still count them as African companies.”
Briter Bridges has a similar methodology. According to Dario Giuliani, the firm’s director, the research organisation avoided using geography to define an African startup due to factors contributing to business identities like taxation, customers, IP, and management team.
For Disrupt Africa, the startups featured in its report are seven years or less in operation, still scaling, and a potential to achieve profitability. It excluded “companies that are spin-offs of corporates or any other large entity, or that have developed past the point of being a startup, by our definition of one.”
The continued dominance of fintech and the Big Four
Despite the drop in total funding, Partech says African startups closed more total deals in 2020 than previous years. According to the firm, 347 startups completed 359 deals compared in 2020 compared to 250 deals in 2019. This can be attributed to an increase in seed rounds (up 88% from 2019) and bridge rounds due to shortage of cash amidst a pandemic-induced lockdown.
A common theme in the three reports shows fintech, healthtech, and cleantech in the top five sectors. But, as expected, fintech retained the lion’s share of African VC funding.
According to Partech, fintech represented 25% of total African funding raised last year, with agritech, logistics & mobility, off-grid tech, and healthtech sectors following behind.
Briter Bridges reported that fintech companies accounted for 31% of the total VC funding over the same time period. Cleantech came second; healthtech, third; agritech and data analytics, in fourth and fifth.
Fintech startups raised 24.9% of the total African VC funding counted by Disrupt Africa. E-commerce, healthtech, logistics, and energy startups followed respectively.
2020 also showed the Big Four countries’ preponderance in terms of investment destination, at least in two out of the three reports.
The countries remained unchanged on Partech’s top five as Nigeria remained the VC’s top destination with $307 million. At a close second was Kenya accounting for $304 million of the total investments in the continent. Egypt came third with its startups raising $269 million, while $259 million flowed into South African startups. Rounding up the top five was Ghana with $111 million, displacing Rwanda which was fifth in Partech’s 2019 list.
The sequence remained unchanged from Disrupt Africa’s 2019 list as well. Funding raised by Kenyan startups reached $191.4 million; Nigeria followed with $150.4 million; South Africa, third at $142.5 million; Egypt came a close fourth with $141.4 million; while Ghanaian startups raised $19.9 million.
Briter Bridges took a different approach. Whereas Partech and Disrupt Africa highlighted funding activities per country of origin and operations, Briter Bridges chose to attribute funding to the startups’ place of incorporation or headquarters. This premise slightly altered the Big Four’s positions. Startups headquartered in the US received $471.8 million of the total funding, according to Briter Bridges. Those in South Africa claimed $119.7 million. Mauritius-headquartered companies received $110 million while African startups headquartered in the U.K. and Kenya raised $107.6 million and $77.1 million respectively.
On why Briter Bridges went with this narrative, Giuliani said the company wants its data to be an impartial conversation starter which can be used to investigate more complex dynamics such as the need for better policies, regulation, or financial availability.
This speaks particularly to the absence of Nigeria as a primary location for incorporation. Due to unfriendly regulations, business and tax conditions, Nigerian startups are increasingly incorporating their startups abroad and other African countries like Seychelles and Mauritius. It’s a trend that may well continue as most foreign VCs prefer African startups to be incorporated in countries with business-friendly investment laws.
Regional and gender diversity check
With an increase in startup activity in Francophone Africa, one would’ve expected an uptick in VC funding in the region. Well, that’s not exactly the case. Senegal, the region’s top destination for VC funding dropped from $16 million in 2019 to $8.8 million in 2020 according to Partech. The country was 9th on the list while Ivory Coast, placed 10th, raised a meagre sum of $6.5 million.
However, the good news is that 22 other countries received investments outside this Big Four this year, according to Partech data. Will we see this continue? And if yes, which countries will likely join the nine-figure club?
Tidjane Deme, a general partner of Partech Africa, believes Ghana might be next. He references how it previously used to be a Big 3 of Kenya, Nigeria, and South Africa before Egypt became a dominant force, and says a similar event might happen with the West African country.
“We see a clear diversification happening as investors are going into more markets. Ghana, for instance, is already attracting above $100 million. Of course, we all wish it would happen faster, but we also recognize that this is a learning process for both investors entering new markets and for founders learning about this game.”
Ghana also emerged in Giuliani’s forecast. He adds the likes of Tunisia, Morocco, Rwanda as second-tier countries quickly entering global investors’ radar and building more sophisticated ecosystems.
Tom Jackson, co-founder of Disrupt Africa, doesn’t mention any names. But he thinks that while there are some positives from other markets, the Big Four dominance will continue.
“Funding will filter down to other markets more and more, and there are already positive signs in that regard. But the space is still relatively early-stage and those four big markets have a big head start and will remain far ahead for years to come,” he said.
Another diversity check that cannot be overlooked is that of gender. Despite all the talk of inclusion, Briter Bridges reported that 15% of the funded startups in 2020 had women as founders, co-founders, or C-level executives. Partech, on the other hand, places this number at 14%. There’s still a lot of work to be done to increase this figure, and we might see more early-stage firms looking to plug that gap.