How UK-based Lendable is powering fintechs across emerging markets

What moves the needle for digital lenders is serving loans to their respective customers. But where does this money come from? The pool is usually equity or debt. While some lenders use the former, it can be seen as folly because, over time, the founders tend to lose ownership of their businesses after giving out too much equity to raise capital for loans. Hence the reason why most lending companies secure debt facilities. 

TechCrunch has recently reported on two prominent digital lenders (also digital banks in their own rights) gaining steam in Africa — Carbon and FairMoney. In 2019, Carbon secured $5 million in debt financing and the following year, FairMoney did the same but raised a higher sum, $13 million.

Enter Lendable, the UK-based firm responsible for supplying both lenders with debt finance.

The company with offices in Nairobi, New York, and Singapore advances loans to fintechs across eight markets in Africa, Southeast Asia, and Latin America. Since launching in 2014, the company has disbursed over $125 million to these fintechs — SME lenders, payment platforms, asset lenders, marketplaces, and consumer lenders.

In a phone conversation with TechCrunch, Samuel Eyob, a principal at the firm, said the company is raising almost $180 million to continue its investment efforts across the three continents.

“We want to raise more than $180 million and we have investors that have committed cash to us,” he said. “Right now, we’re already investing out of that amount because we’ve already closed on a bunch of it. Ideally, the goal is to invest that amount over this year.”

Lendable was founded by Daniel Goldfarb and Dylan Friend. It was based on an insight that they had while Daniel was a partner at Greenstart, a venture capital firm focused on data, finance and energy. That insight was that the poorest people in the world pay the most for goods and services, so if capital markets could provide a path to ownership, that could help individuals build assets. So the pair set out to solve this by providing capital to fintechs catering to the needs of these people.

Eyob, a first-generation American from Ethiopia, knows what a lack of access to fair finance does to people and countries. Given the millions of people and businesses not effectively served by banks and MFIs, Eyob joined the team to drive financial inclusion in these markets

“Over a billion people still lack access to financial services and multiple reports indicate that the financing gap for micro and small businesses is trillions of dollars and growing. We believe this is a massive opportunity. So, whilst we started in Africa, the lack of access to fair financing solutions is a problem across all emerging markets, which we want to address,” he said.

Samuel Eyob

Samuel Eyob (Principal, Lendable)

So in 2014, Lendable started as a SaaS platform to democratize access to African capital markets by providing risk and analytics software. “We hoped to do this by bringing the securitization market from the Global North into Africa,” Eyob added

The company built an analytics platform to analyze loans and used machine learning to predict loan portfolio cashflows. In addition to that, they created an automated investment platform helping ventures to raise nondilutive (not equity) capital to help scale their businesses.

After sufficiently proving out its tech, the firm made a pivot. According to Eyob, the previous model wasn’t experiencing enough growth and was incurring unsustainable costs. So the company began raising capital based on its own analytics in 2016. It had only raised $600,000 and was focused on East African startups with SME financing and Pay-Go solar home models. That number has since increased to over $125 million across Africa, Southeast Asia and Latin America.

So why do these companies actually need debt financing? Here’s a clearer picture of the instance used at the beginning of this piece.

Imagine a VC-backed startup whose ultimate goal is to help scale up female-founded SMEs with one-year loans. The startup could easily use its equity to provide the capital for all the one-year loans. The payoff from the loans, after one year, would be the interest due to them. Or, it could put that capital into hiring developers, build a go-to-market strategy, hire a CTO, all of which would likely have payoffs that are up to a 100x multiple of the interest they would have made on the single SME loan that is tied up for an entire year.

So ultimately, debt would be an ideal source of nondilutive capital for the startup as they wouldn’t have to tie up equity for one year. Therefore, debt would be a much cheaper source of capital to scale up their operations, especially if it has scaled up to having tens of thousands of one-year loans. If it were equity, they would have to raise an endless amount with constant dilution as they scale.

In its five years of official operations, Lendable has given debt facilities to more than 20 startups. While the stage at which Lendable gives money differs, it is particular about startups that are post Series A. 

Apart from Carbon and FairMoney, some startups to have raised debt from Lendable include Tugende, Uploan, KoinWorks, Planet42, TerraPay, Watu Credit, Trella, Amartha, Payjoy, Solar Panda, Cars45 and MFS Africa. Collectively, Eyob said, Lendable has reached 1.2 million end borrowers through its partners and helped finance up to 290,000 SMEs.

Of the $125 million disbursed so far as debt, Eyob said the company has a default rate of about 0.01%. The reason behind this low number, Eyob reckons, is because Lendable ensures to be in constant conversation with the companies offering help, advice or connections when necessary.

“We view lending as a partnership and typically when both parties act in good faith, there are ways to solve problems,” Eyob said

The debt facilities start at $2 million but can go up to over $15 million, Eyob said. But while the global standard at which lenders pay back their debt investments is typically 4 to 6 years, Lendable expects the companies it gives cash to do so in 3 to 4 years

Eyob pushes that founders in emerging markets should be willing to take more debt financing to scale their startups. These days, startups tend to be high on giving out equity instead of weighing options on effectively using debt in critical points when scaling.

Equity could be used to help attract the best talent or expand into new markets. Still, debt proves essential when scaling up capital-intensive operations like working capital or pre-funding activities. More often than not, debt and equity are complementary to one another, and Lendable is hoping to use the new funds it’s raising to push that notion

I think, just like everywhere else in the world, debt and equity are tools that should be used to support one another, supporting the venture’s ultimate mission. We have lasting relationships with multiple VC teams across emerging markets that we work with to ultimately support one another’s partner investees.”

 

#africa, #asia, #carbon, #debt, #fairmoney, #finance, #latin-america, #lendable, #money, #nairobi, #planet42, #private-equity, #singapore, #southeast-asia, #tc, #trella, #tugende, #venture-capital

0

Kenya’s Ajua acquires WayaWaya to consolidate consumer experience play in African SMEs

Kenyan consumer experience platform for businesses in Africa, Ajua today announced that it has acquired WayaWaya, a Kenya-based AI and ML messaging and payments company.

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.

Ajua, formerly mSurvey, was founded in 2012 by Kenfield Griffith. The company is solving a consumer data problem for African businesses to understand their business better and drive growth.

“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.”

Teddy Ogallo (Founder, WayaWaya) & Kenfield Griffith (CEO, Ajua)

Teddy Ogallo (Founder, WayaWaya) & Kenfield Griffith (CEO, Ajua)

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.

#africa, #airtel, #artificial-intelligence, #cchub, #ceo, #customer-experience, #customer-relationship-management, #enterprise, #exit, #interswitch, #kenya, #lagos, #ma, #messenger, #nairobi, #nigeria, #tc, #uganda

0

YC-backed Kidato raises $1.4M seed to scale its online school for K-12 students in Africa

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.

Kidato

Image Credits: Kidato

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.

Image Credits: Sam Gichuru

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.” 

#africa, #funding, #homeschooling, #kenya, #kidato, #nairobi, #tc, #united-states, #y-combinator

0

Closing on $103M, MaC VC is changing the face of venture capital

The partners at MaC Venture Capital, the Los Angeles-based investment firm that has just closed on $103 million for its inaugural fund, have spent the bulk of their careers breaking barriers.

Formed when M Ventures (a firm founded by former Washington DC mayor Adrian Fenty); the first Black talent agency partner in the history of Hollywood, Charles D. King; and longtime operating executive (and former agent) Michael Palank joined forces with Marlon Nichols, a co-founder of the LA-based investment firm Cross Culture Capital, MaC Venture Capital wanted to be a different kind of fund.

The firm combines the focus on investing in software that Fenty had honed from his years spent as a special advisor to Andreessen Horowitz, where he spent five years before setting out to launch M Ventures; and Nichols’ thesis-driven approach to focusing on particular sectors that are being transformed by global cultural shifts wrought by changing consumer behavior and demographics.

“There’s a long history and a lot of relationships here,” said King, one of Hollywood’s premier power players and the founder of the global media company, Macro. “Adrian and I go back to 93 [when] we were in law school. We went on to conquer the world, where he went out to Washington DC and I became a senior partner at WME.”

Palank was connected to the team through King as well, since the two men worked together at William Morris before running business development for Will Smith and others.

“There was this idea of having connectivity between tech and innovation… that’s when we formed M Ventures [but] that understanding of media and culture… that focus… was complimentary with what Marlon was doing at Cross Culture,” King said.

Few firms could merge the cultural revolutions wrought by DJ Herc spinning records in the rec room of a Bronx apartment building and Sir Tim Berners Lee’s invention of the internet, but that’s exactly what MaC VC aims to do.

And while the firm’s founding partnership would prefer to focus on the financial achievements of their respective firms and the investments that now comprise the new portfolio of their combined efforts — it includes StokeGoodfairFinessePureStream, and Sote — it’s hard to overstate the significance that a general partnership that includes three Black men have raised $103 million in an industry that’s been repeatedly called out for problems with diversity and inclusion.

MaC Venture Capital co-founders Marlon Nichols, Michael Palank, Charles King, and Adrian Fenty. Image Credit: MaC Venture Capital

“Our LPs invested in us… for lots of different reasons but at the top of the list was that we are a diverse team in so many ways. We’re going to show them a set of companies that they would not have seen from any [other] VC fund,” said Fenty. “We also, in turn, have the same investing thesis when we look at companies. We want to have women founders, African American founders, Latino founders… In our fund now we have some companies that are all women, all African American or all Latino.”

The diversity of the firm’s ethos is also reflected in the broad group of limited partners that have come on to bankroll its operations: it includes Goldman Sachs, the University of Michigan, Howard University, Mitch and Freada Kapor, Foot Locker, and Greenspring Associates.

“We are thrilled to join MaC Venture Capital in this key milestone toward building a new kind of venture capital firm that is anchored around a cultural investment thesis and supports transformative companies and dynamic founders,” said Daniel Feder, Managing Director with the University of Michigan Investment Office, in a statement. “Their unified understanding of technology, media, entertainment, and government, along with a successful track record of investing, give them deep insights into burgeoning shifts in culture and behavior.”

And it extends to the firm’s portfolio, a clutch of startup companies headquartered around the globe — from Seattle to Houston and Los Angeles to Nairobi.

“We look at all verticals. We’re very happy to be generalists,” said Fenty.

A laser focus on software-enabled businesses is complemented by the thesis-driven approach laid out in position papers staking out predictions for how the ubiquity of gaming; conscious consumerism; new parenting paradigms; and cultural and demographic shifts will transform the global economy.

Increasingly, that thesis also means moving into areas of frontier technologies that include the space industry, mixed reality and everything at the intersection of computing and the transformation of the physical world — drawn in part by the firm’s close connection to the diverse tech ecosystem that’s emerging in Los Angeles. “We’re seeing these SpaceX and Tesla mafias spin out, entrepreneurs who have had best-in-class training at an Elon Musk company,” said Palank. “It’s a great talent pool, and LA has more computer science students graduating every year than Northern California.”

With its current portfolio, though early, the venture firm is operating in the top 5% of funds — at least on paper — and its early investments are up 3 times what the firm invested, Nichols said. 

“The way to think about it is MaC is essentially an extension of what we were building before,” the Cross Culture Ventures co-founder said. “We’re sticking with the concept that talent is ubiquitous but access to capital and opportunity is not. We want to be the source and access to capital for those founders.”

#adrian-fenty, #andreessen, #andreessen-horowitz, #california, #co-founder, #computing, #cross-culture-ventures, #finance, #finesse, #foot-locker, #goldman-sachs, #greenspring-associates, #houston, #investment, #king, #laser, #los-angeles, #louisiana, #m-ventures, #mac-venture-capital, #macro, #marlon-nichols, #mayor, #media, #michigan, #money, #nairobi, #seattle, #sote, #spacex, #stoke, #tc, #tesla, #tim-berners-lee, #university-of-michigan, #venture-capital, #washington-dc, #will-smith

0

How Pariti is connecting founders with capital, resources and talent in emerging markets

According to Startup Genome, Beijing, London, Silicon Valley, Stockholm, Tel Aviv are some of the world’s best startup ecosystems. The data and research organisation uses factors like performance, capital, market reach, connectedness, talent, and knowledge to produce its rankings.

Startup ecosystems from emerging markets excluding China and India didn’t make the organisations’ top 40 list last year. It is a known fact that these regions lag well behind in all six factors, and decades might pass before they catch up to the standards of the aforementioned ecosystems.

However, a Kenyan B2B management startup founded by Yacob Berhane and Wossen Ayele wants to close the gap on three of the six factors — access to capital, knowledge, and talent.

These issues, specifically that of access to capital, is heightened in Africa. For instance, only 25% of funding goes to early-stage startups in Sub-Saharan Africa compared to more than 50% in Latin America, MENA, and South Asia regions.

“We wanted to build a solution that will help startups be successful that otherwise would not have been able to get the resources they needed,” said CEO Berhane to TechCrunch. “This problem is especially acute in Africa because it’s particularly nascent, but this platform is designed for founders across emerging markets. So basically anywhere that doesn’t have a mature, healthy startup ecosystem.”

So, how is the team at Pariti setting out to solve these problems? Ayele tells me that in one sense, Pariti is like an unbundled accelerator.

In a typical accelerator, founders will need to go through an intense program where they are loaded with information on all the things a startup will likely need to know at some point in their growth. Whereas with Pariti, founders get the needed information or resources that are immediately relevant to helping them get to the next stage of the business.

A three-way marketplace

When a founder joins Pariti, they run their company through an assessment tool. There, they share pitch materials and information about their business. Pariti then assesses each company across more than 70 information points ranging from the team and market to product and economics.

After this is done, Pariti benchmarks each company against its peers. Companies in the same industry, product stage, revenue, fundraising are some of the comparisons made. The founder gets a detailed assessment with feedback on their pitch materials, the underlying metrics that they can use to develop their business and, their ability to raise capital down the line.

“This approach gives us an extremely granular view of their businesses, its strengths, weaknesses and allows us to triage the right resources to the founder based on their particular needs.”

It doesn’t end there. Pariti also connects the founders for one-on-one sessions with members of its global expert community. Their backgrounds, according to Ayele, run the gamut from finance and marketing to product and technology across a range of sectors. Pariti also provides vetted professionals for hire from its community if a founder needs more hands-on support building a product.

Ayele says founders can continue to go through this process multiple times, getting assessed, implementing feedback, and connecting with resources and talent.

On another end, Pariti allows investors to sign up on its platform, thereby collating data on their preferences. So once a startup wants to raise capital, the platform matches them with investors based on their profile and preferences.

“We’ve built an algorithm-based matching platform where we curate relevant deals to VC investors. We also simplify the investor reach-out process for founders, which is a huge pain point — especially in this ecosystem.”

Pariti’s investor platform

In a nutshell, Pariti helps founders connect with affordable talent, access capital and develop their businesses. Professionals can find interesting opportunities to mentor startups and get paid gig opportunities. They also get more exposure to the early stage ecosystem while tracking their progress, verifying their skills and increasing earning potential. Investors can run extremely lean operations with access to proprietary deal flow, automated deal filtering and on-demand experts to support due diligence, research and portfolio support.

According to the COO, the company has seen a tremendous amount of value built through the platform so far. A testament to this is an experience shared by Kiiru Muhoya, founder of Kenyan fintech startup Fingo Africa with TechCrunch, on how the platform helped him raise a $250,000 pre-seed round.

He said that after going through Pariti’s assessment ahead of a planned fundraiser, he realized that the market he was targeting was too small. Also, he needed to learn more about what VCs were looking for to be successful.

Muhoya decided to switch to being at the other end of things. Joining the expert platform on Pariti, he began to review companies and provided feedback to other founders. This led him to take some months off to pivot his business based on Pariti’s first feedback and what he had learned from the expert platform. He took his startup through another assessment on the platform and thus closed the round.

The company has made significant strides since launching in 2019. It has over 500 companies across 42 countries, 100 freelance experts, and 60 investors using its platform. Berhane also adds that five funds currently use Pariti’s operating system for their deal management.

“For us, I think we’re building the rails for how ventures are built and scaled in emerging markets. We have partners in place across emerging markets, including Latin America and India. We also have a strong interest in the United States, where we see a real need for our platform.” Berhane said.

It charges a subscription model for investors, but Berhane wouldn’t disclose the numbers. He says that Pariti will begin to charge a subscription fee for founders as well. Another revenue stream comes when investors or founders pay a certain transaction fee when using Pariti’s freelance experts for projects. The same happens when there’s any fundraise executed from the platform.

Talking about fundraising, the company recently secured an undisclosed pre-seed capital from angels and VCs like 500 Startups, Kepple Africa and Huddle VC.

But it hasn’t been smooth sailing for Pariti as one issue that has stood out in dealing with founders and investors is trust. Berhane says founders have shared some horror stories about engaging with investors, while investors have shared trust concerns about founders reporting false numbers.

Pariti tries to address this by providing NDAs for both parties where the company will not share founders data with investors until they want it to be.  And investors won’t get deals that Pariti hasn’t thoroughly vetted.

Both founders of East African descent — Berhane from Eritrea and Ayele from Ethiopia — crossed paths a couple of times but took different routes to be where they are now.

Wossen Ayele (COO) and Yacob Berhane (CEO)

Ayele started his career at a consulting shop with offices across East Africa before moving back to the U.S. for law school. There, he got his first exposure to the early-stage startup world and worked with an emerging markets-focused VC fund.

“I could see how technology and innovation could play a role in helping communities – whether it’s through financial inclusion, access to essential goods and services, connecting people at the base of the pyramid to markets,” he said.

Upon graduation and completion of his legal training, Ayele headed back to Nairobi to get involved with its growing African startup ecosystem, where he and Berhane founded the company.

The CEO who studied finance and investment banking in the U.S. moved back to Africa to start a pan-African accelerator in Johannesburg, South Africa. While he has worked in managerial positions for companies like the African Leadership University and Ajua, Berhane spent most of his time brokering deals for them which ultimately led him to start Pariti. 

“After helping businesses raise more than $20m and seeing how that money led to job creation and upward mobility for employees, I knew there was a path I could have that would be meaningful within finance. I continued to think about the growing asymmetry of access to capital, talent and knowledge in the startup ecosystem and the lack of infrastructure addressing it. Pariti was how we wanted to solve it.”

#africa, #diversity, #enterprise, #finance, #nairobi, #pariti, #startup-ecosystem, #startups, #talent, #tc

0

SunCulture wants to turn Africa into the world’s next bread basket, one solar water pump at a time

The world’s food supply must double by the year 2050 to meet the demands from a growing population, according to a report from the United Nations. And as pressure mounts to find new crop land to support the growth, the world’s eyes are increasingly turning to the African continent as the next potential global breadbasket.

While Africa has 65% of the world’s remaining uncultivated arable land, according to the African Development Bank, the countries on the continent face significant obstacles as they look to boost the productivity of their agricultural industries.

On the continent, 80% of families depend on agriculture for their livelihoods, but only 4% use irrigation. Many families also lack access to reliable and affordable electricity. It’s these twin problems that Samir Ibrahim and his co-founder at SunCulture, Charlie Nichols, have spent the last eight years trying to solve.

Armed with a new financing model and purpose-built small solar power generators and water pumps, Nichols and Ibrahim, have already built a network of customers using their equipment to increase incomes by anywhere from five to ten times their previous levels by growing higher-value cash crops, cultivating more land and raising more livestock.

The company also has just closed on $14 million in funding to expand its business across Africa.

“We have to double the amount of food we have to create by 2050, and if you look at where there are enough resources to grow food and a lot of point — all signs point to Africa. You have a lot of farmers and a lot of land, and a lot of resources,” Ibrahim said.

African small farmers face two big problems as they look to increase productivity, Ibrahim said. One is access to markets, which alone is a huge source of food waste, and the other is food security because of a lack of stable growing conditions exacerbated by climate change.

As one small farmer told The Economist earlier this year, ““The rainy season is not predictable. When it is supposed to rain it doesn’t, then it all comes at once.”

Ibrahim, who graduated from New York University in 2011, had long been drawn to the African continent. His father was born in Tanzania and his mother grew up in Kenya and they eventually found their way to the U.S. But growing up, Ibrahim was told stories about East Africa.

While pursuing a business degree at NYU Ibrahim met Nichols, who had been working on large scale solar projects in the U.S., at an event for budding entrepreneurs in New York.

The two began a friendship and discussed potential business opportunities stemming from a paper Nichols had read about renewable energy applications in the agriculture industry.

After winning second place in a business plan competition sponsored by NYU, the two men decided to prove that they should have won first. They booked tickets to Kenya and tried to launch a pilot program for their business selling solar-powered water pumps and generators.

Conceptually solar water pumping systems have been around for decades. But as the costs of solar equipment and energy storage have declined the systems that leverage those components have become more accessible to a broader swath of the global population.

That timing is part of what has enabled SunCulture to succeed where other companies have stumbled. “We moved here at a time when [solar] reached grid parity in a lot of markets. It was at a time when a lot of development financiers were funding the nexus between agriculture and energy,” said Ibrahim.

Initially, the company sold its integrated energy generation and water pumping systems to the middle income farmers who hold jobs in cities like Nairobi and cultivate crops on land they own in rural areas. These “telephone farmers” were willing to spend the $5000 required to install SunCulture’s initial systems.

Now, the cost of a system is somewhere between $500 and $1000 and is more accessible for the 570 million farming households across the word — with the company’s “pay-as-you-grow” model.

It’s a spin on what’s become a popular business model for the distribution of solar systems of all types across Africa. Investors have poured nearly $1 billion into the development of off-grid solar energy and retail technology companies like M-kopa, Greenlight Planet, d.light design, ZOLA Electric, and SolarHome, according to Ibrahim. In some ways, SunCulture just extends that model to agricultural applications.

“We have had to bundle services and financing. The reason this particularly works is because our customers are increasing their incomes four or five times,” said Ibrahim. “Most of the money has been going to consuming power. This is the first time there has been productive power.”

 SunCulture’s hardware consists of 300 watt solar panels and a 440 watt-hour battery system. The batteries can support up to four lights, two phones and a plug-in submersible water pump. 

The company’s best selling product line can support irrigation for a two-and-a-half acre farm, Ibrahim said. “We see ourselves as an entry point for other types of appliances. We’re growing to be the largest solar company for Africa.”

With the $14 million in funding, from investors including Energy Access Ventures (EAV), Électricité de France (EDF), Acumen Capital Partners (ACP), and Dream Project Incubators (DPI), SunCulture will expand its footprint in Kenya, Ethiopia, Uganda, Zambia, Senegal, Togo, and Cote D’Ivoire, the company said. 

Ekta Partners acted as the financial advisor for the deal, while CrossBoundary provided additional advisory support, including an analysis on the market opportunity and competitive landscape, under the United States Agency for International Development (USAID)’s Kenya Investment Mechanism Program

#africa, #agriculture, #alternative-energy, #articles, #co-founder, #east-africa, #economist, #electricity, #energy, #ethiopia, #financial-advisor, #food, #food-supply, #food-waste, #kenya, #nairobi, #new-york, #new-york-university, #renewable-energy, #senegal, #solar-energy, #solar-power, #tanzania, #tc, #uganda, #united-nations, #united-states

0

Nigeria’s Autochek raises $3.4M for car sales and service platform

Nigeria based startup Autochek looks to bring the sales and servicing of cars in Africa online. The newly founded venture has closed a $3.4 million seed-round co-led by TLcom Capital and 4DX ventures toward that aim.

The raise comes fresh off of Autochek’s September acquisition of digital car sales marketplace Cheki in Nigeria and Ghana. It also follows the recent departure of Autochek CEO Etop Ikpe from Cars45 — the startup he co-founded in 2016, now owned by Amsterdam based OLX Group.

That’s a lot of news in a short-time for Ikpe. His new company will likely be in direct competition with his previous venture (also located in Nigeria). Still, the Nigerian entrepreneur — who built his early tech credentials at e-commerce startups DealDey and Konga — says Autochek is a new model.

“It’s different in the type of technology we’re building and that it’s asset light. I don’t have any inventory. I don’t buy cars. I don’t transact any [physical] cars. I don’t own any inspection locations. I don’t own any dealerships,” Ikpe told TechCrunch on a call from Lagos.

Autochek’s model, according to its CEO, is aimed at creating the digital infrastructure for a new system to better coordinate sales, servicing, and vehicle records of the car market in Nigeria and broader Africa.

Autochek CEO Etop Ikpe, Image Credit: Autochek

Ikpe characterizes that market as still largely informal and fragmented. “We’re basically focused on technology solutions to build the rails of [Africa’s] automotive sector to run on. We’re focusing on three foundations of the market: transactions and trading, maintenance, and financing,” he said.

Autochek’s platform — managed by a developer team in Lagos and Nairobi — is a network for consumers and businesses to buy cars, sell cars, service cars, and finance cars sales.

On the financing side, the startup launched with 10 bank partnerships in Nigeria and two in Ghana, according to Ikpe. Creating more financing options is both a big opportunity for the startup and consumers, he explained. “The used car market in Africa is a $45 billion a year market that has only a 5% financing penetration rate…so there’s huge upside for growth.”

Image Credit: Autochek

Across its core product offerings, Autochek has created a network of partners and standards. The company generates revenues through fees charged on consumer transactions and commissions paid by dealers and service shops on the platform. Consumers can sign up and use the Autochek app for free.

On the sudden departure from his previous startup, Cars45, “I left because I wanted to build something else,” explained Ikpe. There’s been plenty of speculation in local tech press as to what happened, including reports of forced exits by investors. Ikpe declined to get into the details except to say, “I’ve resigned. I’ve moved on and I’m focused on doing what I’m doing right now.”

In addition to its operations in Nigeria — Africa’s most populous nation, largest economy and top VC destination — Autochek plans to use its seed-financing to expand services and geographic scope. The startup will add associated auto related services, such as insurance and blue book pricing products. Autochek is also eying possible entry in new countries such as Ivory Coast, Senegal, South Africa, Kenya, Egypt and Algeria. More M&A could also be in play. “Acquisitions are going to be a core part of our expansion strategy,” said Ikpe.

TLcom Capital Partner Andreata Muforo confirmed the fund’s co-lead on the $3.4 million seed round. Speaking to TechCrunch on a call from Nairobi, she named Autochek’s asset light model, Ikpe’s repeat founder status, and the fund’s view of auto sales and service as an underserved market in Africa as reasons for backing the venture. Golden Palm Investments, Lateral Capital, MSA Capital, and Kepple Africa Ventures also joined the investment round.

While fintech gains the majority of VC financing across Africa’s top tech hubs — such as Nigeria, Kenya and South Africa — mobility related startups operating on the continent have attracted notable support. Drone delivery venture Zipline and trucking logistics company Kobo360 have both received backing from Goldman Sachs. In 2019, FlexClub, a South African startup that matches investors and drivers to cars for ride-hailing services, used a $1.3 million round to expand to Mexico in partnership with Uber.

#africa, #berlin, #cars45, #ceo, #entrepreneur, #entrepreneurship, #ghana, #goldman-sachs, #kenya, #kobo360, #lagos, #mexico, #nairobi, #nigeria, #private-equity, #south-africa, #startup-company, #tc, #tlcom-capital, #uber

0

African payment startup Chipper Cash raises $13.8M Series A

African cross-border fintech startup Chipper Cash has closed a $13.8 million Series A funding round led by Deciens Capital and plans to hire 30 new staff globally.

The raise caps an event filled run for the San Francisco based payments company, founded two years ago by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled.

The two came to America for academics, met in Iowa while studying at Grinnell College and ventured out to Silicon Valley for stints in big tech: Facebook for Serunjogi and Flickr and Yahoo! for Moujaled.

The startup call beckoned and after launching Chipper Cash in 2018, the duo convinced 500 Startups and and Liquid 2 Ventures — co-founded by American football legend Joe Montana — to back their company with seed funds.

Two years and $22 million in total capital raised later, Chipper Cash offers its mobile-based, no fee, P2P payment services in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya.

“We’re now at over one and a half million users and doing over a $100 million dollars a month in volume,” Serunjogi told TechCrunch on a call.

Chipper Cash does not release audited financial data, but does share internal performance accounting with investors. Deciens Capital and Raptor Group co-led the startup’s Series A financing, with repeat support from 500 Startups and Liquid 2 Ventures .

Deciens Capital founder Dan Kimmerling confirmed the fund’s lead on the investment and review of Chipper Cash’s payment value and volume metrics.

Parallel to its P2P app, the startup also runs Chipper Checkout: a merchant-focused, fee-based mobile payment product that generates the revenue to support Chipper Cash’s free mobile-money business.

The company will use its latest round to hire up to 30 people across operations in San Francisco, Lagos, London, Nairobi and New York — according to Serunjogi.

Image Credits: Chipper Cash

Chipper Cash has already brought on a new compliance officer, Lisa Dawson, whose background includes stints with the U.S. Department of Treasury’s Financial Crimes Enforcement Network and Citigroup’s anti-money laundering department.

“You know in the world we live in the AML side is very important so it’s an area that we want to invest in from the get go,” said Serunjogi.

He confirmed Dawson’s role aligned with getting Chipper Cash ready to meet regulatory requirements for new markets, but declined to name specific countries.

With the round announcement, Chipper Cash also revealed a corporate social responsibility component to its business. Related to current U.S. events, the startup has formed the Chipper Fund for Black Lives.

“We’ve been huge beneficiaries of the generosity and openness of this country and its entrepreneurial spirit,” explained Serunjogi. “But growing up in Africa, we’ve were able to navigate [the U.S.] without the traumas and baggage our African American friends have gone through living in America.”

The Chipper Fund for Black Lives will give 5 to 10 grants of $5,000 to $10,000. “The plan is to give that to…people or causes who are furthering social justice reforms,” said Serunjogi.

In Africa, Chipper Cash has placed itself in the continent’s major digital payments markets. As a sector, fintech has become Africa’s highest funded tech space, receiving the bulk of an estimated $2 billion in VC that went to startups in 2019.

Africa Top VC Markets 2019

Image Credits: TechCrunch

Those ventures, and a number of the continent’s established banks, are in a race to build market share through financial inclusion.

By several estimates — including The Global Findex Database — the continent is home to the largest percentage of the world’s unbanked population, with a sizable number of underbanked consumers and SMEs.

Increasingly, Nigeria has become the most significant fintech market in Africa, with the continent’s largest economy and population of 200 million.

Chipper Cash expanded there in 2019 and faces competition from a number of players, including local payments venture Paga. More recently, outside entrants have jumped into Nigeria’s fintech scene.

In 2019, Chinese investors put $220 million into OPay (owned by Opera) and PalmPay — two fledgling startups with plans to scale first in West Africa and then the broader continent.

Over the next several years, expect to see market events — such as fails, acquisitions, or IPOs — determine how well funded fintech startups, including Chipper Cash, fare in Africa’s fintech arena.

#africa, #african-tech, #america, #chipper-cash, #citigroup, #deciens-capital, #entrepreneurship, #ghana, #ham-serunjogi, #iowa, #joe-montana, #kenya, #lagos, #liquid-2-ventures, #london, #nairobi, #new-york, #nigeria, #p2p, #paga, #private-equity, #rwanda, #san-francisco, #south-africa, #startup-company, #tanzania, #tc, #tech-in-africa, #uganda, #united-states, #west-africa, #yahoo

0

Africa Roundup: DHL invests in MallforAfrica, Zipline launches in US, Novastar raises $200M

Events in May offered support to the thesis that Africa can incubate tech with global application.

Two startups that developed their business models on the continent — MallforAfrica and Zipline — were tapped by international interests.

DHL acquired a minority stake in Link Commerce, a turn-key e-commerce company that grew out of MallforAfrica.com — a Nigerian digital-retail startup.

Link Commerce offers a white-label solution for doing online-sales in emerging markets.

Retailers can plug into the company’s platform to create a web-based storefront that manages payments and logistics.

Nigerian Chris Folayan founded MallforAfrica in 2011 to bridge a gap in supply and demand for the continent’s consumer markets. While living in the U.S., Folayan noted a common practice among Africans — that of giving lists of goods to family members abroad to buy and bring home.

With MallforAfrica Folayan aimed to allow people on the continent to purchase goods from global retailers directly online.

The e-commerce site went on to onboard over 250 global retailers and now employs 30 people at order processing facilities in Oregon and the UK.

Folayan has elevated Link Commerce now as the lead company above MallforAfrica.com. He and DHL plan to extend the platform to emerging markets around the world and offer it to companies who want to wrap an online stores, payments and logistics solution around their core business

“Right now the focus is on Africa…but we’re taking this global,” Folayan said.

Another startup developed in Africa, Zipline, was tapped by U.S. healthcare provider Novant for drone delivery of critical medical supplies in the fight against COVID-19.

The two announced a partnership whereby Zipline’s drones will make 32-mile flights on two routes between Novant Health’s North Carolina emergency drone fulfillment center and the non-profit’s medical center in Huntersville — where frontline healthcare workers are treating coronavirus patients.

Zipline and Novant are touting the arrangement as the first authorized long-range drone logistics delivery flight program in the U.S. The activity has gained approvals by the U.S. Federal Aviation Administration and North Carolina’s Department of Transportation.

The story behind the Novant, Zipline UAV collaboration has a twist: the capabilities for the U.S. operation were developed primarily in Africa. Zipline has a test facility in the San Francisco area, but spent several years configuring its drone delivery model in Rwanda and Ghana.

Image Credits: Novant Health

Co-founded in 2014 by Americans Keller Rinaudo,  Keenan Wyrobek and Will Hetzler, Zipline designs its own UAVs, launch systems and logistics software for distribution of critical medical supplies.

The company turned to East Africa in 2016, entering a partnership with the government of Rwanda to test and deploy its drone service in that country. Zipline went live with UAV distribution of life-saving medical supplies in Rwanda in late 2016, claiming the first national drone-delivery program at scale in the world.

The company expanded to Ghana in 2016, where in addition to delivering blood and vaccines by drone, it now distributes COVID-19-related medication and lab samples.

In addition to partner Novant Health, Zipline has caught the attention of big logistics providers, such as UPS — which has supported (and studied) the startup’s African operations back to 2016.

The presidents of Rwanda and Ghana  — Paul Kagame and Nana Akufo-Addo — were instrumental in supporting Zipline’s partnerships in their countries. Other nations on the continent, such as Kenya,  South Africa and Zambia, continue to advance commercial drone testing and novel approaches to regulating the sector.

African startups have another $100 million in VC to pitch for after Novastar Ventures’ latest raise.

The Nairobi and Lagos-based investment group announced it has closed $108 million in new commitments to launch its Africa Fund II, which brings Novastar’s total capital to $200 million.

With the additional resources, the firm plans to make 12 to 14 investments across the continent, according to Managing Director Steve Beck .

On demand mobility powered by electric and solar is coming to Africa.

Vaya Africa, a ride-hail mobility venture founded by Zimbabwean mogul Strive Masiyiwa, launched an electric taxi service and charging network in Zimbabwe this week with plans to expand across the continent.

The South Africa-headquartered company is using Nissan Leaf EVs and has developed its own solar-powered charging stations. Vaya is finalizing partnerships to take its electric taxi services on the road to countries that could include Kenya, Nigeria, South Africa and Zambia, Vaya Mobility CEO Dorothy Zimuto told TechCrunch.

The initiative comes as Africa’s on-demand mobility market has been in full swing for several years, with startups, investors and the larger ride-hail players aiming to bring movement of people and goods to digital platforms.

Uber and Bolt have been operating in Africa’s major economies since 2015, where there are also a number of local app-based taxi startups. Over the last year, there’s been some movement on the continent toward developing EVs for ride-hail and delivery use, primarily around motorcycles.

Beyond environmental benefits, Vaya highlights economic gains for passengers and drivers of shifting to electric in Africa’s taxi markets, where fuel costs compared to personal income is generally high for drivers.

Using solar panels to power the charging station network also helps Vaya’s new EV program overcome some of challenges in Africa’s electricity grid.

Vaya is exploring EV options for other on-demand transit applications — from min-buses to Tuk Tuk taxis.

In more downbeat news in May, Africa-focused tech talent accelerator Andela had layoffs and salary reductions as a result of the economic impact of the COVID-19 crisis, CEO Jeremy Johnson confirmed to TechCrunch.

The compensation and staff reductions of 135 bring Andela’s headcount down to 1,199 employees. None of Andela’s engineers were included in the layoffs.

Backed by $181 million in VC from investors that include the Chan Zuckerberg Initiative, the startup’s client-base is comprised of more than 200 global companies that pay for the African developers Andela selects to work on projects.

There’s been a drop in the demand for Andela’s services, according to Johnson.

More Africa-related stories @TechCrunch  

African tech around the ‘net

#africa, #andela, #articles, #auto-rickshaw, #ceo, #chris-folayan, #delivery-drone, #department-of-transportation, #dhl, #dorothy-zimuto, #east-africa, #electricity, #emerging-technologies, #ghana, #healthcare, #internet-service, #investment, #jeremy-johnson, #keenan-wyrobek, #keller-rinaudo, #kenya, #lagos, #link-commerce, #nairobi, #nigeria, #nissan, #north-carolina, #novant-health, #novastar-ventures, #online-sales, #online-stores, #oregon, #retail, #rwanda, #san-francisco, #south-africa, #steve-beck, #tc, #technology, #transport, #uber, #united-states, #ups, #zimbabwe, #zipline

0

Kenya’s Apollo Agriculture raises $6M Series A led by Anthemis

Apollo Agriculture believes it can attain profits by helping Kenya’s smallholder farmers maximize theirs.

That’s the mission of the Nairobi based startup that raised $6 million in Series A funding led by Anthemis.

Founded in 2016, Apollo Agriculture offers a mobile based product suit for farmers that includes working capital, data analysis for higher crop yields, and options to purchase key inputs and equipment.

“It’s everything a farmer needs to succeed. It’s the seeds and fertilizer they need to plant, the advice they need to manage that product over the course of the season. The insurance they need to protect themselves in case of a bad year…and then ultimately, the financing,” Apollo Agriculture CEO Eli Pollak told TechCrunch on a call.

Apollo’s addressable market includes the many smallholder farmers across Kenya’s population of 53 million. The problem it’s helping them solve is a lack of access to the tech and resources to achieve better results on their plots.

The startup has engineered its own app, platform and outreach program to connect with Kenya’s farmers. Apollo uses M-Pesa mobile money, machine learning and satellite data to guide the credit and products it offers them.

The company — which was a TechCrunch Startup Battlefield Africa 2018 finalist — has served over 40,000 farmers since inception, with 25,000 of those paying relationships coming in 2020, according to Pollak.

Apollo Agriculture Start

Apollo Agriculture co-founders Benjamin Njenga and Eli Pollack

Apollo Agriculture generates revenues on the sale of farm products and earning margins on financing. “The farm pays a fixed price for the package, which comes due at harvest…that includes everything and there’s no hidden fees,” said Pollak.

On deploying the $6 million in Series A financing, “It’s really about continuing to invest in growth. We feel like we’ve got a great product. We’ve got great reviews by customers and want to just keep scaling it,” he said. That means hiring, investing in Apollo’s tech, and growing the startup’s sales and marketing efforts.

“Number two is really strengthening our balance sheet to be able to continue raising the working capital that we need to lend to customers,” Pollak said.

For the moment, expansion in Africa beyond Kenya is in the cards but not in the near-term. “That’s absolutely on the roadmap,” said Pollak. “But like all businesses, everything is a bit in flux right now. So some of our plans for immediate expansion are on a temporary pause as we wait to see things shake out with with COVID.”

Apollo Agriculture’s drive to boost the output and earnings of Africa’s smallholder farmers is born out of the common interests of its co-founders.

Pollak is an American who who studied engineering at Stanford University and went to work in agronomy in the U.S. with The Climate Corporation. “That was how I got excited about Apollo. I would look at other markets and say “wow, they’re farming 20% more acres of maize, or corn across Africa but farmers are producing dramatically less than U.S. farmers,” said Pollak.

Pollak’s colleague, Benjamin Njenga, found inspiration in his experience in his upbringing. “I grew up on a farm in a Kenyan village. My mother, a smallholder farmer, used to plant with low quality seeds and no fertilizer and harvested only five bags per acre each year,” he told the audience at Startup Battlefield in Africa in Lagos in 2018.

Image Credits: Apollo Agriculture

“We knew if she’d used fertilizer and hybrid seeds her production would double, making it easier to pay my school fees.” Njenga went on to explain that she couldn’t access the credit to buy those tools, which prompted the motivation for Apollo Agriculture.

Anthemis Exponential Ventures’ Vica Manos confirmed its lead on Apollo’s latest raise. The UK based VC firm — which invests mostly in the Europe and the U.S. — has also backed South African fintech company Jumo and will continue to consider investments in African startups, Manos told TechCrunch.

Additional investors in Apollo Agriculture’s Series A round included Accion Venture Lab, Leaps by Bayer, and Flourish Ventures.

While agriculture is the leading employer in Africa, it hasn’t attracted the same attention from venture firms or founders as fintech, logistics, or e-commerce. The continent’s agtech startups lagged those sectors in investment, according to Disrupt Africa and WeeTracker’s 2019 funding reports.

Some notable agtech ventures that have gained VC include Nigeria’s Farmcrowdy, Hello Tractor — which has partnered with IBM and Twiga Foods, a Goldman backed B2B agriculture supply chain startup based in Nairobi.

On whether Apollo Agriculture sees Twiga as a competitor, CEO Eli Pollak suggested collaboration. “Twiga could be a company that in the future we could potential partner with,” he said.

“We’re partnering with farmers to produce lots of high quality crops, and they could potentially be a great partner in helping those farmers access stable prices for those…yields.”

#accion-venture-lab, #africa, #agriculture, #agtech, #apollo, #articles, #bayer, #ceo, #e-commerce, #entrepreneurship, #europe, #farmcrowdy, #flourish-ventures, #hello-tractor, #ibm, #kenya, #lagos, #machine-learning, #nairobi, #nigeria, #private-equity, #stanford-university, #startup-battlefield, #startup-battlefield-africa-2018, #startup-company, #tc, #techcrunch, #the-climate-corporation, #twiga-foods, #united-kingdom, #united-states

0

Novastar Ventures becomes $200M African VC fund after $108M raise

African startups have another $100 million in VC to pitch for after Novastar Ventures’ latest raise.

The Nairobi and Lagos based investment group announced it has closed $108 million in new commitments to launch its Africa Fund II, which brings Novastar’s total capital to $200 million.

With the additional resources, the firm plans to make 12 to 14 investments across the continent, according to Managing Director Steve Beck. He spoke to TechCrunch on Novastar Ventures’ plans for the new fund.

A notable update to Novastar’s VC focus is geographic scope. The firm was originally co-founded in Kenya by Beck and British investor Andrew Carruthers and built its first portfolio largely around companies based in East Africa. Novastar Ventures made 15 investments with its first fund, including companies such as Uganda and Kenya focused energy startup SolarNow and agtech venture M-Farm.

“The second fund is basically the same strategy as the first, but…the biggest difference is that we opened up a second front in West Africa — more particularly to be in and around the entrepreneurial system in Lagos,” Beck told TechCrunch on a call.

Before closing its Africa Fund II, Novastar Ventures had already made several investments in West Africa, including leading a round in Nigerian on demand motorcycle transit startup Max.ng and backing Ghanaian health company, MPharma. Novastar opened an office Lagos in 2019.

On the types of startups Novastar will target with its new fund, the focus is more on mission than industry silos, according to co-founder Steve Beck. “We’re sector agnostic. I would describe us more as a segment fund than a sector fund,” he said.

“We really try to look for businesses called breakthrough businesses, [those] that are addressing the biggest problems in the largest markets.”

That has led Novastar Ventures to invest in digital companies in education, information access, agtech, mobility and off-grid energy.

“Essentially what we’re doing is looking for those businesses that are addressing the basic needs, basic goods and services across the true mass markets of the continent,” said Beck.

On whether the firm is a dedicated impact fund, Beck said, “The way we characterize ourselves is we’re a commercial venture fund with an impact screen.”

On investment amounts and types, Novastar Ventures is fairly flexible on ticket size, from seed to later stage.

“We’re gonna…have some portfolio companies where we put to work a million dollars or less or were going to have some where we put $8 or $9 million dollars in through capital rounds. That’s…the deployment strategy,” Beck said.

Novastar Ventures works closely with its portfolio companies, according to its co-founder.

“We’re very active investors and always take a board seat to be close to the entrepreneurs. We often are the first institutional investor that they have.”

Africa Top VC Markets 2019

Image Credits: TechCrunch

Startups who want to pitch to the company can reach out to the fund’s founders and directors via the website or LinkedIn, according to Beck. He added that Novastar Ventures is recruiting to add another member to its investor team in 2020.

The firm’s latest raise and $200 million capital amount creates another high value fund focused on African startups.

On the high end of estimates, the continent’s tech ecosystem reached $2 billion in VC to startups in 2019, compared to less than half a billion dollar five years ago.

Other large Africa focused VC shops include TLcom Capital — which closed a $71 million fund in February —  and Partech, which doubled its Africa fund to $143 million in 2019. The venture arms of major global companies have also become more active in African tech recently, including that of Goldman Sachs and Visa.

#africa, #articles, #co-founder, #companies, #east-africa, #economy, #entrepreneurship, #goldman-sachs, #investment, #kenya, #lagos, #max-ng, #nairobi, #nigeria, #novastar-ventures, #partech, #private-equity, #startup-company, #tc, #techcrunch, #tlcom-capital, #uganda, #visa, #west-africa

0

Goldman backed ventures Jumia and Twiga partner on produce in Kenya

Pan-African e-commerce company Jumia and B2B agtech startup Twiga Foods are partnering to deliver produce in Kenya using adaptive measures during COVID-19.

In 2019, Jumia became the first VC funded tech company in Africa to list on a major exchange, the NYSE. Based in Nairobi, Twiga raised a $30 million Series B round in October and announced plans to expand its food supply-chain business to West Africa.

Both companies are backed by venture capital from U.S. investment bank Goldman Sachs .

Per the partnership, Jumia will sell bundles of Twiga’s fresh produce on its e-commerce website. Jumia’s delivery fleet will pick up orders from Twiga’s sorting and distribution centers and then complete last mile, contact free delivery. The transactions will be cash only using Jumia’s JumiaPay app, according to Jumia Kenya CEO Sam Chappatte.

Image Credits: Jumia Kenya’s website

The arrangement is meant to leverage the strengths of both companies, while providing a safer and more affordable way for households to obtain foodstuffs through the coronavirus crisis, which started to hit East Africa last month.

Co-founded in Nairobi in 2014 by Peter Njonjo and Grant Brooke, Twiga Foods is focused primarily on connecting the produce of Kenya’s farmers more efficiently to pricing and marketplaces. The company serves around 3,000 outlets a day with produce through a network of 17,000 farmers and 8,000 vendors.

Twiga will benefit from Jumia’s B2C e-commerce platform and Twiga from Jumia’s B2B produce network, according to Jumia’s Kenya CEO.

On the product offerings, “We pulled together the core basics that a family would need for a week or two weeks,” Chappatte told TechCrunch on a call from Nairobi.

“It’s 28 kilograms of fruit and vegetables. It’s delivered in an hour and a half and they save 50% versus supermarkets.”

Image Credits: Jumia

The partnership comes as the coronavirus has hit Africa and actors across the continent’s tech ecosystem have begun to develop practices to maintain operations and stem the spread.

By WHO stats Tuesday there were 21,388 COVID-19 cases in Africa and 877 confirmed virus related deaths, up from 345 cases and 7 deaths on March 18. Kenya ranks 13th in coronavirus cases on the continent.

Countries such as South Africa, Kenya  and Nigeria — which happen to be Africa’s top tech hubs — have imposed social distancing and lockdown practices.

Chappatte believes the virus in Kenya is likely under-counted. Jumia is approaching what could become a worsening COVID-19 scenario in Kenya from two angles.

“One of the ways in which we’re facing up to the crisis and trying be as useful as possible to our communities is to remain an everyday service,” he said.

“The second piece is around the right to operate…engaging the government on how home delivery can be cashless, contactless and safe and therefore a useful service over this period.”

Like many tech ventures in Africa, Jumia needs to adapt to the health and economic realities of the coronavirus to continue to generate revenues. Since going public in April 2019 —  and being required to report quarterly financial performance — the company has faced increased pressure to demonstrate profitability.

Continued losses, a short-sell assault and an employee fraud scandal in 2019 led Jumia’s share price to plummet more than 50% since its April IPO, from  $14.50 on listing to $4.43, as of Monday.

The company weathered these events and CEO Sacha Poignonnec highlighted a bright spot in the 2019 results. Jumia finally got into the black on one key indicator, reaching a gross profit of €1.0 million after deducting fulfillment expenses in Q4 of last year.

The online retailer’s next earnings call is scheduled for May 13. It could provide a unique window into the extent COVID-19 in Africa has impacted the performance of one of the continent’s most visible tech companies.

#africa, #ceo, #countries, #e-commerce, #east-africa, #food-supply-chain, #goldman-sachs, #grant-brooke, #jumia, #kenya, #nairobi, #nigeria, #online-retailer, #peter-njonjo, #rocket-internet, #sacha-poignonnec, #sam-chappatte, #south-africa, #tc, #techcrunch, #twiga-foods, #united-states, #west-africa, #world-health-organization

0

Nigeria’s Okra raises $1M from TLcom connecting bank accounts to apps

A new Nigerian fintech venture, Okra, has racked up a unique mix of accomplishments in less than a year.

The Lagos based API developer created a product that generates revenues from both payment startups and established financial institutions.

Okra has raised $1 million in pre-seed funding from TLcom Capital — a $71 million Africa focused VC firm that rarely invests in early-stage companies or fintech.

The startup is also poised to enter new markets and it’s hiring.

Founded in June 2019 by Nigerians Fara Ashiru Jituboh and David Peterside, Okra casts itself as a motherboard for the continent’s 21st century financial system.

“We’re building a super-connector API that…allows individuals to connect their bank accounts directly to third party applications. And that’s their African bank accounts starting in the largest market in Africa, Nigeria,” said Ashiru Jituboh.

As a sector, fintech has become the continent’s highest funded tech space, receiving the bulk of an estimated $2 billion in VC that went to African startups in 2019. Those ventures, and a number of the continent’s established banks, are in a race to build market share through financial inclusion.

By several estimates — including The Global Findex Database — the continent is home to the largest percentage of the world’s unbanked population, with a sizable number of underbanked consumers and SMEs.

With 54 countries, 1.2 billion people and thousands of relatively young startups, there are a lot of moving parts in Africa’s fintech space. Similar to U.S. company Plaid, Okra is shaping a platform that connects accounts and financial data to banking apps into a revenue generating product.

With Africa’s largest population of 200 million people, Nigeria serves as a major financial hub — but there’s still a disconnect between fintech apps and banks, according to Okra’s Ashiru Jituboh.

“Here in this market there’s no way to directly connect your bank account through an API or directly to an application,” she said.

Okra offers several paid packages for those types of integrations and opens up the code to its five product categories —  authorization, balance, transactions, identity and accounts — to developers.

Image Credits: Okra

Okra has already created a diverse client list that includes mobile payments startup PalmPay, insurer Axa Mansard and Nigerian digital lender Renmoney.

The startup generates revenues through product fees and earns each time a user connects a bank account to a customer, according to Ashiru Jituboh.

On how the Okra differs from other well-funded fintech companies in Nigeria, such as Flutterwave or Interswitch, “The answer is we’re not doing payments, but what we’re doing is making processes with [payment providers] even smoother,” she said.

Ashiru Jituboh comes to her CEO position with a software engineering background and a strong connection to the U.S. Born in Nigeria, she grew up in and studied computer science in North Carolina.

She did stints in finance — JP Morgan Chase and Fidelity Investments — and then in tech companies before making the leap to founder. “I went to work in startups, but I was always employee number two or three,” said Ashiru Jituboh.

She decided to go all in on Okra after returning to Nigeria and noting the need for linking together the country’s emerging digital financial infrastructure.

“When we knew that it was a big addressable market is when we realized that all these fintech CEOs and CTOs were struggling with this use case,” she said.

Shortly after its launch, Okra attracted the attention of TLcom Capital in second quarter 2019, according to VC Andreata Muforo.

With offices in London, Lagos, and Nairobi, the group closed its $71 million Tide Africa fund this year. TLcom has focused primarily on Series A and later investments, including backing Kenyan agtech startup Twiga Foods and Nigerian trucking logistics company Kobo360.

In an interview last year, the fund’s managing partner, Maurizio Caio, explained that TLcom was steering more toward investments in infrastructure oriented tech companies and away from Africa’s more commoditized payments and lending startups.

The VC firm was attracted to Okra for its ability to serve the continent’s broader financial sector. “It’s a service that other fintechs can plug into and utilize, so it’s accelerating the growth of fintech across the continent…That to us was a big hook,” TLcom’s Andreata Muforo told TechCrunch on a call.

Founder Fara Ashiru Jituboh was also a factor in the fund making a $1 million pre-seed investment in Okra. “We found her to be very strong and also liked the fact that she’s a technical founder,” said Muforo. As part of the investments, she and TLcom Capital partner Ido Sum will join Okra’s board.

In addition to hiring fresh engineering talent, the startup aims to take its product offerings that connect bank accounts to apps to new African countries — though it would not disclose where or when.

“We’re looking at three target markets that our clients are already in,” said Ashiru Jituboh. Okra investor Andreata Muforo named Kenya — with one of the highest mobile money penetration rates in the world — as a likely candidate for the startup’s product services.

#africa, #african-business, #african-tech, #api, #axa, #bank, #banking, #ceo, #david-peterside, #early-stage-funding, #economy, #fara-ashiru-jituboh, #fidelity-investments, #finance, #financial-inclusion, #financial-technology, #ido-sum, #jp-morgan-chase, #kenya, #kobo360, #lagos, #london, #managing-partner, #maurizio-caio, #money, #nairobi, #nigeria, #north-carolina, #okra, #palmpay, #tc, #tech-in-africa, #techcrunch, #tlcom-capital, #twiga-foods, #united-states

0

Africa Roundup: Africa’s tech ecosystem responds to COVID-19

In March, the virus gripping the world — COVID-19 — started to spread in Africa. In short order, actors across the continent’s tech ecosystem began to step up to stem the spread.

Early in March Africa’s coronavirus cases by country were in the single digits, but by mid-month those numbers had spiked leading the World Health Organization to sound an alarm.

“About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference on March 19. “It’s has been an extremely rapid…evolution.” 

By the World Health Organization’s stats Tuesday there were 3671 COVID-19 cases in Sub-Saharan Africa and 87 confirmed deaths related to the virus — up from 463 cases and 8 deaths on March 18.

As the COVID-19 began to grow in major economies, governments and startups in Africa started measures to shift a greater volume of transactions toward digital payments and away from cash — which the World Health Organization flagged as a conduit for the spread of the coronavirus.

Africa’s leader in digital payment adoption — Kenya — turned to mobile-money as a public-health tool.

At the urging of the Central Bank and President Uhuru Kenyatta, the country’s largest telecom, Safaricom, implemented a fee-waiver on East Africa’s leading mobile-money product, M-Pesa, to reduce the physical exchange of currency.

The company announced that all person-to-person (P2P) transactions under 1,000 Kenyan Schillings (≈ $10) would be free for three months.

Kenya has one of the highest rates of digital finance adoption in the world — largely due to the dominance of M-Pesa  in the country — with 32 million of its 53 million population subscribed to mobile-money accounts, according to Kenya’s Communications Authority.

On March 20, Ghana’s central bank directed mobile money providers to waive fees on transactions of GH₵100 (≈ $18), with restrictions on transactions to withdraw cash from mobile-wallets.

Ghana’s monetary body also eased KYC requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers, according to a March 18 Bank of Ghana release.

Growth in COVID-19 cases in Nigeria, Africa’s most populous nation of 200 million, prompted one of the country’s largest digital payments startups to act.

Lagos based venture Paga made fee adjustments, allowing merchants to accept payments from Paga customers for free — a measure “aimed to help slow the spread of the coronavirus by reducing cash handling in Nigeria,” according to a company release.

In March, Africa’s largest innovation incubator, CcHub, announced funding and engineering support to tech projects aimed at curbing COVID-19 and its social and economic impact.

The Lagos and Nairobi based organization posted an open application on its website to provide $5,000 to $100,000 funding blocks to companies with COVID-19 related projects.

CcHub’s CEO Bosun Tijani expressed concern for Africa’s ability to combat a coronavirus outbreak. “Quite a number of African countries, if they get to the level of Italy or the UK, I don’t think the system… is resilient enough to provide support to something like that,” Tijani said.

Cape Town based crowdsolving startup Zindi — that uses AI and machine learning to tackle complex problems — opened a challenge to the 12,000 registered engineers on its platform.

The competition, sponsored by AI4D, tasks scientists to create models that can use data to predict the global spread of COVID-19 over the next three months. The challenge is open until April 19, solutions will be evaluated against future numbers and the winner will receive $5,000.

Zindi will also sponsor a hackathon in April to find solutions to coronavirus related problems.

Image Credits: Sam Masikini via Zindi

On the digital retail front, Pan-African e-commerce company Jumia announced measures it would take on its network to curb the spread of COVID-19.

The Nigeria headquartered operation — with online goods and services verticals in 11 African countries — said it would donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa.

The company has also offered African governments use of of its last-mile delivery network for distribution of supplies to healthcare facilities and workers.

Jumia is reviewing additional assets it can offer the public sector. “If governments find it helpful we’re willing to do it,” CEO Sacha Poignonnec told TechCrunch.

More Africa-related stories @TechCrunch

African tech around the ‘net

#africa, #articles, #artificial-intelligence, #bank, #bosun-tijani, #broadband, #ceo, #coronavirus, #e-commerce, #east-africa, #economy, #ghana, #italy, #jumia, #kenya, #lagos, #leader, #m-pesa, #machine-learning, #mobile-payment, #mobile-phone, #morocco, #nairobi, #nigeria, #p2p, #president, #sacha-poignonnec, #safaricom, #tc, #telecommunications, #uganda, #united-kingdom, #vodafone, #world-health-organization

0