SEPTEMBER 03, 2022
16 min Read
African Tech Weekly Recap: August 29 to September 2, 2022
Welcome to our weekly recap where we share the most important news of the African Tech Ecosystem 🌍
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Grey secures $2m for its cross-border payments service
Highlights
- Grey, a Nigerian startup that provides virtual international bank accounts to African freelancers and remote workers, has raised $2 million in seed funding.
- Idorenyin Obong and Femi Aghedo founded Grey in July 2020. Last year, the startup raised an undisclosed pre-seed investment and got accepted into YC’s winter batch this March.
- The Nigerian fintech has since expanded into East Africa, starting with Kenya, anchored on partnerships with payments giant Cellulant and edtech upstart Moringa.
Source: TechCrunch
Our Takeaway
Africa is the most expensive region to send money to, with 10.6% in average transaction fees. Although most of the traditional players that charge high commission rates still dominate the space, controlling as much as 80% of the market, a number of digital-first platforms like Grey, have sprung up in recent years offering lower rates to Africans looking to receive foreign currencies. Grey claims to have about 100,000 individual users, and since the beginning of the year, its transaction volumes have increased by 200%.
Nigerian embedded finance platform Anchor raises $1m
Highlights
- Anchor, a Nigeria-based banking-as-a-service (BaaS) platform, has raised over $1 million in pre-seed funding from a host of venture capital firms and angel investors.
- With the funding, Anchor is launching its public beta API infrastructure to make it easier for African businesses to build, embed, and launch financial products, starting in its first market, Nigeria.
- The startup was also accepted into Y Combinator Summer 2022 Batch as the first African BaaS and embedded finance platform.
Source: TechCrunch
Our Takeaway
Across Africa, it reportedly takes an average of $500,000 and 18 months to build and go to market with financial products; companies need to go through the hurdles of rigorous licensing and compliance processes, multiple integration layers, complex banking and third-party relationships, and invest in complicated core-banking infrastructure. Banking-as-a-service platforms like Anchor help reduce the time and financial costs of building through their API infrastructure. We believe this is the next phase of fintech innovation in Africa and should aid digital financial services in capturing the sizeable financial inclusion opportunity on the continent.
Egypt’s enterprise SaaS provider Zeew closes $630k seed round
Highlights
- Egypt-based e-commerce SaaS startup Zeew has raised a $630,000 seed round from Plug and Play, Poland Prize, and a group of angel investors, bringing the total funds it has raised in the past couple of years to $1 million.
- Founded by Mohamed Ghaith in 2017, Zeew lets companies launch their on-demand delivery businesses, enabling them to track and control their operations through its customizable, hyperlocal SaaS solution.
- The startup plans to use the newly acquired funding to grow its team to serve more customers worldwide.
Source: Wamda
Our Takeaway
The enterprise software as a service (SaaS) space is one of the rapidly rising sectors in the Egyptian, and broadly African, startup ecosystem. More companies within the space are scaling up and piquing investor interest. Specifically, the Middle East and Africa’s enterprise software industry is expected to grow to $31.4 billion by 2026, from $14.2 billion in 2021. Currently, Zeew is present across 100 countries, with merchants in different verticals including logistics, food and grocery, restaurants, pharmacy, etc.
Kenya’s Pezesha raises $11m for pan-African expansion
Highlights
- Kenya’s embedded finance fintech Pezesha has expanded into Nigeria, Rwanda, and francophone Africa following an $11 million pre-Series A round. The round also included a $5 million debt.
- Founded in 2017 by Hilda Moraa, Pezesha has built a scalable digital lending infrastructure that allows both traditional and non-traditional financial institutions to offer working capital to millions of micro, small medium-sized enterprises (MSMEs).
- The fintech’s new growth strategy follows its plan to power its embedded finance offering beyond its current markets including Uganda and Ghana, to bridge the financing gap affecting MSMEs across these markets.
Source: TechCrunch
Our Takeaway
Access to capital remains a significant barrier to the growth of many small businesses in Africa—available data shows a $330 billion financing deficit for the small enterprises that make up 90% of businesses on the continent—and it’s a problem several startups and foreign investors are particularly keen to address as it promises attractive returns. Pezesha claims to have over 20 partner companies that have enabled it to extend loans to over 100,000 businesses. The fintech is able to extend loans of up to $10,000 at single-digit interest rates, and a repayment period of one year.
Egypt-based KarmSolar announces new minority stake round
Highlights
- Egypt-based solar energy company KarmSolar has initiated a round of capital increase, supported by US-based Synergy Consulting as the sell-side advisor.
- Founded in 2011, KarmSolar aims to enlarge Egypt’s private solar energy market, offering its integrated solutions across the industrial, agricultural, commercial, and tourism sectors.
- The investment will fund KarmSolar’s local and regional expansion plans, support its existing power generation and distribution businesses, and enable new business verticals such as solar water desalination solutions provider KarmWater, and electric mobility venture KarmCharge to flourish.
Source: Wamda
Our Takeaway
Most businesses in Africa grapple with expensive electricity tariffs, frequent power outages, and load shedding. These issues limit production and increase operating and maintenance costs, thereby hindering growth. The decreasing costs of solar systems, relative to either grid or diesel generators, have helped solar solutions—provided by companies like KarmSolar—become economically viable alternatives for commercial and industrial use. Access to reliable power not only saves costs but also expands the number and variety of business and job opportunities available in an economy.
Egyptian e-commerce startup Sharwa closes $2m pre-seed round
Highlights
- Egypt-based social commerce platform Sharwa has closed a $2 million pre-seed funding round, co-led by Nuwa Capital and Hambro Perks Oryx Fund, among other investors.
- Founded in 2022, Sharwa allows customers to purchase their essential household items like groceries and appliances at affordable prices through its app. Customers can club their baskets into a group order and place them through Sharwa using WhatsApp or directly on its app, unlocking wholesale prices from manufacturers for next-day delivery.
- Sharwa plans to deploy proceeds from the investment to develop the platform’s technology and obtain further talent.
Source: Disrupt Africa
Our Takeaway
Across the continent, startups are springing up with different e-commerce business models built around social networking and messaging sites like Facebook and WhatsApp that consumers already use. Facebook and Instagram are used for online shopping more than e-commerce marketplaces by Africans, per a 2019 GeoPoll survey. This emerging social commerce sub-sector is set to witness exponential growth in the coming years as more startups emerge and consumers embrace making purchases via social media platforms.
Duplo gets $4.3m seed to digitize African B2B payments
Highlights
- Duplo, a B2B payments startup that enables African enterprises to collect payments from their clients and partners and make payments to their suppliers and vendors, has raised $4.3 million in seed funding.
- The news comes just seven months after Duplo announced its $1.3 million pre-seed investment. The YC-backed startup has received $5.6 million since Yele Oyekola and Tunde Akinnuwa launched last September.
- The seed funding, raised to help the company launch new products and expand into new business verticals in Nigeria, included participation from several new investors like Y Combinator and existing investor Oui Capital.
Source: TechCrunch
Our Takeaway
The informal business sector in Africa offers a lot of promise for startups looking to digitize B2B payment flows. The cash-dominated space is rife with late payments and stunts the growth of commerce. A survey covering 3,500 companies across 6 countries found that 23% of small businesses experience delayed payments. This explains why merchant acquisition is proving to be the “new” scramble for payment services in Africa. Duplo claims to have seen an increase in the number of businesses on its platform by 1,000% over the last three months while total payment volume (TPV) processed in the past five months has grown by 4,200%.
Wasoko launches innovation hub for startups in Zanzibar
Highlights
- African e-commerce company Wasoko has launched the Wasoko Innovation Hub in partnership with the Zanzibar government.
- Located in Fumba Town, the new hub will focus on building technology solutions and become a home for more than 500 engineers, product managers, UX designers, and researchers.
- In addition to strengthening Wasoko’s operational efficiency, the new hub will specialize in developing tools to personalize customer experiences, improve delivery metrics, expand financial services options as well as collect key data and insights from across the value chain.
Source: Ventureburn
Our Takeaway
The launch of the innovation hub marks the latest milestone in Wasoko’s rapid growth, which saw the startup named Africa’s fastest growing company by the Financial Times in May 2022. This followed its $125 million series B equity round in March—the largest venture financing round ever raised for a non-fintech startup in Africa. Since its launch in 2016, Wasoko claims to have delivered three million orders to over 75,000 informal retailers across Kenya, Tanzania, Rwanda, Uganda, Côte d’Ivoire, and Senegal.
Zapper partners Stitch to enable one-click payments in SA
Highlights
- South African mobile payments platform Zapper is teaming up with the payments and data API platform Stitch to enable Zapper’s more than one million customers to make secure instant electronic fund transfers (EFTs) payments at points of sale (POS).
- The service will be available via Stitch’s LinkPay product which offers secure one-click Instant EFT payments from a linked financial account.
- Launched in April, LinkPay is the first payment solution in Africa that tokenizes user financial accounts to enable one-click, verified payments and seamless payouts for returning customers.
Source: TechCabal
Our Takeaway
Across Africa, payment services lead the fintech pack, as foreign and local startups look to digitize payments on the continent. It’s thus no surprise to see payment innovations like one-click checkout and even more significant for the ecosystem is the collaboration among leading players within the space. With the majority of financial transactions still cash-based, there remains a massive under-tapped market, especially in South Africa, where over $10 billion is moved annually in peer-to-peer transactions. Stitch launched its payments and financial data API there and in Nigeria in February 2021 and recently raised $21 million in Series A funding.
Mobile Power raises $1.1m from All On to scale its services
Highlights
- All On, a Shell-funded independent impact investing firm, has announced that it has invested $1.1 million in Mobile Power Limited, to increase the growth of its pay-per-use battery sharing platform in Nigeria.
- Mobile Power provides clean and affordable energy to the off-grid market across sub-Saharan Africa through its innovative and affordable solutions such as MOPO, an energy distribution platform.
- All On, through the All On Hub, has been providing non-financial support to Mobile Power to support its Nigeria market entry since 2021.
Source: TechCabal
Our Takeaway
Being a fast-growing continent, Africa is experiencing a heightening usage of energy among companies, homeowners, and industries. This development comes with the challenges of rising energy costs, climate change, and energy depletion. In response, many innovators and startups are springing up across the continent with smart solutions to help counter these challenges. Investors as well see the opportunity in backing Africa’s energy-focused founders with millions of dollars pouring into startups playing in that space.
Jumia partners with Zipline to launch drone delivery in Ghana
Highlights
- Pan-African e-commerce company, Jumia, has partnered with Zipline, to launch on-demand drone delivery in Ghana, with plans to expand the service to Nigeria and Côte d’Ivoire in the near future.
- Jumia plans to integrate its existing distribution network with Zipline’s automated on-demand delivery system for rapid home deliveries, especially to shoppers in remote areas.
- The partnership follows a growing uptake of Jumia in Africa’s rural areas due to the expansion of its distribution and logistics networks. Data shows that these regions accounted for 27% of orders on its site last year.
Source: TechCrunch
Our Takeaway
Based on its increasing adoption, drone delivery looks set to be very much a part of the future of last-mile delivery. Moreover, Africa is a good fit for the system. The continent suffers from inefficient and unsustainable infrastructure, which has long been a barrier to reaching remote areas. That creates the opportunity for a solution like drone delivery, which requires only a digital infrastructure and is fast gaining prominence on the continent spearheaded by startups like Zipline, Astral Aerial in Kenya, Drone Africa Service in Niger, UAV Industries in South Africa, etc.
Global accelerator MassChallenge launches program in Benin
Highlights
- The MassChallenge accelerator, a global, non-profit network for innovators, has launched its program in the Benin Republic, and is calling for applications from entrepreneurs.
- MassChallenge plans to work closely with local entities to support startups that are helping to bolster the country’s economy.
- With a particular focus on agriculture and food systems, MassChallenge is looking to bring the next generation of entrepreneurs from Benin into its global network to provide mentorship and zero-equity funding for these founders to scale their ideas.
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. MassChallenge’s accelerator is even more crucial for the Beninese ecosystem, which is one of the least known in the francophone Africa region. The program could open more opportunities for Beninese entrepreneurs who may be limited in their growth potential in the smaller entrepreneurial ecosystem of their country.
SA startup Octiv raises Series A round from Knife Capital
Highlights
- South African gym management software platform Octiv has closed an eight-figure Series A funding round led by venture capital firm Knife Capital.
- The startup previously raised seed capital from South African angel investors and this round also included an angel investment from an executive at the crypto-powered banking platform BVNK.
- The investment will allow Octiv to fast-track its global expansion drive, add product enhancements, and scale customer service to keep up with its aggressive growth.
Source: TechCabal
Our Takeaway
Per a report by Mordor Intelligence, the global fitness industry is valued at $96 billion with 205,000 fitness facilities worldwide and a cumulative annual growth rate (CAGR) of 7.1% for the forecast period 2022-2027. Octiv is currently present in 27 countries, with a predominant presence in Europe, and its ability to shift into international markets and gain traction in multiple countries demonstrates that its scaling potential is significant.
Crypto startup Vella launches to enable cross-border transfers
Highlights
- Nigerian fintech startup Vella has launched its platform, which it says enables borderless transfers and remittances across the world, powered by crypto.
- Launched in beta late last year, Vella has since onboarded more than 250 users and successfully completed over 230 transactions worth over US$12,000.
- The bootstrapped startup is for now only active in Nigeria but aims to expand into Ghana, Kenya, and South Africa in the future. It makes revenues from commissions on transactions and fiat-crypto swap spreads.
Source: Disrupt Africa
Our Takeaway
Despite the mostly hostile reception African governments have given cryptocurrencies, ordinary citizens on the continent continue to interact with crypto in very different ways. In fact, Africa accounts for some of the most important use cases and opportunities for digital currencies. Vella’s solution is a perfect example. While the fintech industry in Africa has grown rapidly over the past few years, a truly cross-border payments infrastructure has not been achieved.
Nigerian unicorn Flutterwave receives new payment license
Highlights
- Nigerian payment unicorn, Flutterwave, has secured a Switching and Processing Licence from the Central Bank of Nigeria (CBN). The license will allow it to facilitate transactions between financial service providers, merchants, customers, and other stakeholders without intermediaries.
- The approval also allows Flutterwave to offer new services such as transaction switching, card processing, non-bank acquiring, agency banking, and payment gateway services.
- Despite facing licensing issues in Ghana and Kenya, Flutterwave received this new license, dubbed as the Nigerian central bank’s most valuable payments processing license, to strengthen its hold on the country’s financial space.
Source: TechCabal
Our Takeaway
Flutterwave, valued at more than $3 billion, is one of the most funded startups operating in Africa with $475 million raised in six years. In addition to being the continent’s largest startup, it is perhaps the biggest within the online payments space. Currently, Flutterwave has an infrastructure reach across 34 countries on the continent with over 900,000 businesses globally using its solution to process payments in 150 currencies and across different payment modes.
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See you next week 👋
