African Tech Weekly Recap: August 1 to August 5, 2022

Welcome to our weekly recap where we share the most important news of the African Tech Ecosystem 🌍

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Africa-focused Oui Capital hits first close of $30m fund

Highlights

• Oui Capital, a pan-African VC firm based in Lagos and Massachusetts, has completed the first closing of its $30 million second fund, Oui Capital Mentors Fund II, as it seeks to strengthen its presence on the continent.
• Founded in 2019 by Olu Oyinsan and Francesco Andreoli, Oui Capital made eight investments last year and this second fund signals the VC’s intention to keep up with that pace.
• The $30 million fund will also back sub-Saharan startups in the pre-seed and seed stages. So far, the firm has reached its first close at a little over $11 million and expects to complete the final close by Q4 2022.

Source: TechCrunch

Our Takeaway

Startups in Africa raised more than $5 billion in 2021, a record year. This year, they’ve secured more than $3 billion so far. 2022 should be another record year, going by the rate of activity in Africa’s venture funding space. Oui Capital’s latest fund only further signals a strong investor appetite for opportunities in emerging markets. The firm launched its debut fund at $5 million and since then has made 18 investments in sectors such as fintech, logistics & mobility, e-commerce, healthcare, and enterprise software and startups that include TeamApt, MVX, Akiba Digital, Duplo, Ndovu, Maad, and Pharmacy Marts.

Zedcrest launches $10m fund for African startups

Highlights

• Zedcrest Capital, a firm known for its debt and equity capital markets investments but who recently started dabbling into venture investments, has launched a $10 million fund for pre-Series A stage startups in Africa.
• The fund, dubbed “Knight Fund,” is aimed at providing last-ditch follow-on capital access to local funding required to help startups consolidate on existing operations, growth, and expansion.
• The Knight Fund will see Zedcrest back startups that, for some reason, are finding it hard to raise a Series A round or prefer to rally a bridge round before going to the market for the venture round.

Source: TechCrunch

Our Takeaway

An increasing number of small- to medium-sized funds with $10 million to $50 million of capital to deploy are targeting opportunities in Africa and other frontier markets. At least seven such Africa-focused funds have launched in the past year. Meanwhile, Zedcrest previously had a very-early stage fund — Ventures at Zedcrest — that targets pre-seed and seed companies and from which it has invested in over 20 African startups including TalentQL, Indicina, Simpu, Julaya, and Thndr.

Egypt-based Openner launches Web3-focused Qurious Labs

Highlights

• Egypt-based Openner has launched Qurious Labs, a Web3-focused venture studio, to help develop markets and aid them to access the global technology, talent, and capital pool.
• Founded in 2017 by Ashraf Rofail, Openner is a venture capital firm focused on early-stage startups in the region.
• Qurious Labs will offer an inclusive ecosystem for builders to launch their Web3 ventures and brands to explore Web3 business models through a one-stop shop for them to build and launch their projects.

Source: Wamda

Our Takeaway

Qurious Labs claims to be the first Web3-focused venture studio model to hit the MENA market and looks to back entrepreneurs in the region building web3 companies that utilize blockchain, digital currencies, NFTs, gaming, and exploring the Metaverse and decentralized applications leveraging. In Africa, the emerging blockchain technology is being used in many innovative ways and in essential industries such as finance, tech, agriculture, and mining, to name a few. But funding for this sector remains low as Africa only gets a 0.5% share of total global blockchain venture funding, which stands at $25.2 billion. The venture studio should help Web3 creatives and technologists, who have limited resources, launch potentially valuable products.

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Egypt’s Homzmart raises $23m pre-Series B round

Highlights

• Egypt-based furniture and home supplies marketplace Homzmart has raised a $23 million pre-Series B round, bringing the company’s total funding to $40 million.
• Founded in 2020, Homzmart enables furniture suppliers and retailers to connect directly with consumers and transact through multiple payment solutions.
• In May 2021, it raised a $15 million Series A round and later expanded to the Saudi market, which currently represents 25-30% of its revenues. The new capital will be deployed to continue market expansion and product development as well as improve its logistics operations.

Source: Wamda

Our Takeaway

Being the third-largest startup ecosystem in the Middle East and North Africa and ranked among the top four largest in Africa, startups in Egypt are attracting increasing amounts of venture capital. Hozmart’s fundraising comes amid a boom in the region’s e-commerce industry, making its market opportunity substantial. The market was worth $8.4 billion in 2014, with an annual growth of 25%, and is predicted to reach $28.5 billion by this year. The startup claims it serves 25 million houses in Egypt and Saudi Arabia, with more than 150,000 products on its platform.

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Kenyan insurtech Lami raises $3.7m seed extension

Highlights

• Kenyan insurtech startup Lami Technologies has secured a $3.7 million seed extension raised in a round led by Harlem Capital to offer additional insurance product lines, while also expanding into Egypt and Nigeria. 
• Other investors that participated in the round include Newtown Partners, Peter Bruce-Clark, Caribou Honig, and Jay Weintraub of InsureTech Connect.
• The latest funding adds to the $1.8 million seed funding the insurtech raised last year and will also go towards providing solutions that will digitize agents and brokers to reach a wide customer base and sell online.

Source: TechCrunch

Our Takeaway

Africa has an ever-growing need for innovative insurance solutions to address the significant lack of coverage on the continent. As of 2018, the insurance penetration rate in Africa stood at a meager 1.12% or 3% with South Africa. Efforts to scale quality insurance services affordably across 

Africa, led by startups, have seen sufficient backing from venture investors. Apart from Lami, at least two other startups offering insurance-focused tech solutions announced funding over the past week. 

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Nigeria’s Youverify extends seed funding to $2.5m

Highlights

• Youverify, a Lagos and San Francisco–based identity verification company helping African banks and startups automate KYC and other compliance procedures, has secured a $1 million seed round extension, bringing its total seed to $2.5 million. 
• Africa-focused VCs Orange Ventures and LoftyInc Capital, the two investors who co-led its initial seed round, also led the extension.
• Over the next 18 months, Youverify plans to cover 30 countries, especially in southern, eastern, and francophone Africa, increase IDs it can verify from 400 million to 2 billion, and develop new products for gaming, travel, healthcare, and telecommunications industries.

Source: TechCrunch

Our Takeaway

Globally, businesses lose up to $1 trillion annually to cybercrime and in Africa, that figure stands at a whopping $4 billion. As digital services, financial and non-financial, providers penetrate the African market at large, there is a need for fintech startups and digital businesses on the continent to carry out stringent Know-Your-Customer (KYC) and verification checks on their customers. Youverify is one of the many platforms powering these crucial KYC processes for other startups.

Y Combinator slashes startup accelerator class size by 40%

Highlights

• Silicon Valley-based startup accelerator Y Combinator has reportedly slashed its summer startup batch by 40%, in response to a downturn in the economy and in venture capital funding.
• The Y Combinator’s Summer 2022 cohort now has nearly 250 companies, down 40% from the previous class which had 414 startups.
• The downsizing follows mounting criticism that Y Combinator had grown too large, damaging its reputation for churning out Silicon Valley’s best startups.

Source: The Information

Our Takeaway

In Africa, YC has had a major impact on the burgeoning tech ecosystem. The accelerator’s alumni feature high-growth startups such as Flutterwave, Paystack, and Kobo360 as well as Cowrywise, MarketForce, Kudi, and 54gene. It also recently increased its standard deal size to $500,000 from $125,000 for 7% equity and also now invests an additional $375,000 on an uncapped SAFE with “Most Favoured Nation” (MFN) terms. Although it makes admission tougher, YC’s decision to cut its class size could benefit startups admitted, in the sense that, competition for investor attention would reduce.

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SA gaming startup Skrmiish secures $2.5m seed

Highlights

• South Africa-based Skrmiish, a mobile “play-to-earn” app that enables gamers of every level to earn cash in every match they play across the AAA+ games they love, has raised a $2.5 million seed round to speed its global growth.
• Launched in 2021, Skrmiish has developed a feature called MoneyMatch that allows players to earn real cash in every match they play, without having to wait for a tournament or find a peer to challenge.
• The startup has already acquired over 100,000 players across over 100 jurisdictions around the globe the seed funding will enable it to accelerate scalability and expand its team.

Source: Disrupt Africa

Our Takeaway

Having a combination of the world’s fastest-growing youth population and an exponential increase in digital skills transfer and connectivity amongst the youth puts young Africans in pole position to be both the leading consumers and creators of content in the competitive video gaming world by 2030. Many startups have emerged in recent times to tap into the huge market for skill-based games.

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SWVL terminates $100 million acquisition of UK’s Zeelo

Highlights

• Egypt-founded transport and mobility solutions provider SWVL has canceled the proposed acquisition of Zeelo, a UK-based B2B smart bus operator. The deal dates back to April this year and was worth $100 million.
• The company said in a statement that the decision came as a response to the current turmoil in the global financial markets and it’s previously invested a total of $5 million in Zeelo.
• SWVL is one of Africa’s fastest-growing startups. Since its founding, it has rapidly expanded its geographical footprint by acquiring smaller players.

Source: Siliconcanals

Our Takeaway

Prior to the ongoing economic downturn, Swvl had been on an acquisition-led expansion drive. Excluding Zeelo, the company acquired five global startups, the latest addition being Mexico-based mass mobility startup Urbvan. But like many startups, it’s had to make moves to get through this period. Earlier in May, the Nasdaq-listed company sacked 30% of its employees, as part of its plans to achieve profitability in 2023. A month later, it halted certain services in Kenya and Pakistan as well as suspended a number of routes in its home market of Egypt.

Tyme Bank acquires SME financing platform

Highlights

• South African digital banking group Tyme Bank has announced today that it will proceed with the acquisition of fintech firm Retail Capital, which provides funding services to SMEs in the country.
• The acquisition, which is still subject to regulatory approvals, would see Retail Capital become a division of TymeBank.
• If approved, the deal would see Retail Capital’s funding expertise and TymeBank’s deposit base and operations combined to serve a broader customer base.

Source: ITNewsAfrica

Our Takeaway

Lack of access to working capital remains a huge problem facing the growing small and mid-sized retail sector in South Africa and the continent at large. Over the past decade, Retail Capital claims to have provided more than 43,000 business owners in the country with over $329 million in working capital, making it the largest SME funder of its kind in the sector. With the Tyme Bank deal, channeling even more funding efficiently to business owners should contribute to the expansion of the historically underserved SMEs sector.

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South Africa’s Teraco acquired by US cloud computing firm

Highlights

• South Africa-based colocation data centers and interconnection platforms provider for Africa, Teraco Data Environments, has been acquired by California cloud computing and data center firm Digital Realty.
• Digital Realty is one of the largest providers of cloud and carrier-neutral data center, colocation, and interconnection solutions in the world. 
• The firm is set to acquire a majority interest in Teraco from a consortium of investors, including Berkshire Partners and Permira.

Source: ITNewsAfrica

Our Takeaway

The acquisition of Teraco now adds South Africa to Digital Realty’s three markets on the continent, including Kenya, Mozambique, and Nigeria. It also further underlines the huge untapped potential in Africa’s cloud computing market, which has pulled big operators like Microsoft, Amazon, Huawei, and Equinix Inc. and huge investments into data centers on the continent. At the start of 2021, Teraco pledged $152 million towards efforts to build Africa’s largest data center facility in South Africa and last August completed construction on a massive hyper-scale data center campus in Johannesburg. The ongoing implementation of Google’s Equiano subsea cable encircling Africa makes the continent even more attractive. 

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Nedbank partners with digital dealmaker for its customers

Highlights

• South Africa’s Nedbank Commercial Banking has partnered with global deal-matchmaking platform Opportunity Network, which is expected to become available for customers from this week.
• The Opportunity Network is a deal-matching platform that connects over 50,000 selected businesses and private investors to business opportunities in over 140 countries with a $500 billion transaction flow.
• The new partnership will enable Nedbank’s clients to grow their business on a trusted and world-recognized platform, and the subscription to be on the Opportunity Network platform will be free to Nedbank Commercial Banking clients.

Source: ITNewsAfrica

Our Takeaway

Both parties to this deal believe the opportunities in South Africa, which are currently estimated to cover 60 different industries, will attract interest from partners around the world. More interestingly, the partnership highlights the rapid digital transformation that’s been playing out in Africa’s traditional financial services industry over the past decade. Embracing new technologies and digital-led solutions is a no-brainer. To compete with digital natives, and survive, banks today must provide an end-to-end digital experience to their customers by integrating necessary technologies.

Beacon Power gets $2.7m to improve electricity access in Africa

Highlights

• Beacon Power Services (BPS), an energy tech company that provides data and grid management solutions to help Africa’s power sector distribute electricity more efficiently, has closed a seed round of $2.7 million.
• The US- and Nigeria-based utility company provides energy management software and analytics for utilities. Its AI-enabled grid management platform, Adora, solves a fundamental problem power distribution companies face in Africa.
• The new funding will enable BPS to improve its current products (product upgrades to add new features and incorporate automation) and expand into new markets beyond Nigeria and Ghana, where it currently operates.

Source: TechCrunch

Our Takeaway

Sub-Saharan Africa’s share of the global population without access to electricity stood at a whopping 77% in 2020. And as economies on the continent grow, the demand for energy increases by the day. This comes with challenges of energy efficiency and depletion, however, many innovators have emerged with energy-focused smart technology, with the backing of investors, to help Africa counter these challenges – by working with existing power distribution companies. 

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Amazon Prime Video launches local service in Nigeria

Highlights

• Amazon Prime Video today announced the launch of the localized version of its streaming service in one of Africa’s biggest markets: Nigeria. 
• Prime Video launched in Africa in 2016 as part of its global push across more than 200 countries worldwide, bringing some serious competition to Netflix’s global plan launched that same year. 
• However, versions of the service available in the region have never featured the local-language interfaces, subtitling, and original content offerings typical in more developed markets.

Source: TechCrunch

Our Takeaway

Africa is increasingly becoming an important growth area for streaming services, which explains why Amazon has launched an aggressive push into the continent. Digital TV Research, an analytics firm, estimates that Amazon Prime Video will add 1.5 million new subscribers in Africa by 2027, from an estimated 600,000 currently. However, Amazon isn’t only the tech giant attempting to boost its subscriber push in new markets like Africa, where other streaming services such as Netflix, Disney+, Canal+, and Showmax are all vying for the region’s on-demand streaming subscribers, projected to reach 15 million by 2026.

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SA’s Anglo American launches incubator program

Highlights

• South African mining company Anglo American has launched an incubator program through its enterprise development arm Zimele.
• The program will assist mainly youth- and women-owned businesses in areas around the firm’s operations. The goal is to help 500 startup businesses in rural communities.
• Participating entrepreneurs will get access to training, mentorship, and tools to help them refine their business models, identify and engage target markets, and test their products and services. Partners include TechnoServe, Summit, and Absa.

Source: Disrupt Africa

Our Takeaway

As Africa catches up with the developed world in terms of technological progress, accelerators, incubators, and pitch competitions help to bridge this gap by providing crucial access to capital and mentorship to startups. Anglo American’s program, yet another example of corporates supporting startups and SMEs in South Africa, is even more crucial considering the need to increase female representation in the startup space, which remains minute against a faster-growing percentage of ventures run by men.

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See you next week 👋