JUNE 18, 2022
16 min Read
African Tech Weekly Recap: June 13 to June 17, 2022
Welcome to our weekly recap where we share the most important news of the African Tech Ecosystem 🌍
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IFC to invest $26m in Partech’s Africa Fund II
- The International Finance Corporation (IFC), the private sector arm of the World Bank, plans to make an equity investment of up to $26 million into the Partech Africa Fund II (PAF II) by the Paris-based VC firm Partech.
- The PAF II will invest in seed to Series D rounds and follow-on rounds in top portfolio companies although it is not clear how much Partech was looking to raise.
- Still, it is expected to be larger than Fund I, which closed at $143 million in 2019 and had the participation of the IFC and some other major institutions.
African startups stand to gain significantly from increasing amounts of venture capital available in the continent, which has grown immensely since 2016. For the IFC, the investment is part of its strategy to support Africa’s booming tech ecosystem. The IFC is eyeing a stake not exceeding 20% and also plans to commit a further $15.9 million for future co-investment opportunities together with the fund. The corporation has invested twice in Algebra Funds, and earlier this year, directly invested $5 million in Brimore and $20 million in the Ezdehar Fund to help smaller businesses access finance.
Egypt’s DXwand raises $1m pre-Series A round
- Egypt-based AI startup DXwand has closed a pre-Series A investment round of $1 million, led by Huashan Capital, US-based VC firm SOSV, with commitments from angel investors.
- Founded in 2018 by Ahmed Mahmoud, DXwand is an AI-driven software that automates text and voice conversations between customers and businesses in call centers, Facebook Messenger, WhatsApp, SMS, or on a website.
- DXwand will use the new investment to accelerate its growth across the region, expand its market share and accelerate its AI research to further differentiate its solutions in the market.
Artificial intelligence (AI) systems that enable customer engagement via SMS, speech, or chat applications such as Facebook Messenger and WhatsApp are increasingly becoming a popular method for organizations to interact with their consumers. As with developed regions, such solutions are growing in Africa. In addition, AI-based startups in Africa are increasingly attracting VC dollars. A surprising entry into the top three African tech sectors by funding raised in May is artificial intelligence (AI)/deeptech, with startups playing in this space raising $47 million (11%) led by Instabug’s $46 million Series B raise.
Cairo Angels backs Nigerian fintech CredPal
- Egypt-based VC fund The Cairo Angels Syndicate Fund (CASF) has invested an unknown amount in the Nigerian fintech CredPal, which is backed by Y-Combinator and Google.
- Launched in 2018 by Fehintolu Olaogun and Olorunfemi Jegede, CredPal is a buy-now-pay-later (BNPL) fintech that allows businesses and individuals to buy anything and pay for it in installments with online and offline merchants.
- The CASF funding will be used to expand CredPal’s services across Africa with a focus on key markets, namely Egypt, Kenya, Ghana, and Cameroon.
BNPL options are sweeping the global e-commerce sector. In 2020, they accounted for 2.1% of global e-commerce transactions. That figure is expected to double by 2024 when it will make up 4.2% of global e-commerce sales. But in Africa, where most people are credit-averse, activity is just beginning to pick up through the efforts of startups like CredPal. The CredPal funding is CASF’s fourth investment in Africa after backing the likes of South Africa’s Finclusion Group and Kenya-based Flexpay.
MFS Africa raises $100m Series C extension
- Pan-African digital payments network, MFS Africa, has raised $100 million in equity and debt, additional funding that takes its Series C round to $200 million. It raised the first tranche last November.
- Investors from its first Series C round doubled down while the fintech also received capital from new investors. Debt financing came from Stanbic IBTC Bank and Symbiotic.
- The new investment will allow MFS Africa to continue its expansion plans across Africa; further integrate into the global digital payment ecosystem; expand into Asia and create cross-border payments synergies with Africa, and carry out its growth plans for Baxi.
MFS Africa is one of the continent’s largest and fastest-growing fintech startups, having raised hundreds of millions in VC funding. Known for its acquisition-led expansions, it recently bought US-based GTP, a deal that came after the purchase of Baxi, an agent banking platform in Nigeria. Buying GTP—a very rare deal that sees an African tech company buy up a US-based one—was its first acquisition beyond the continent. The acquisition marked a further evolution of Africa’s rapidly growing fintech scene and its Series C extension sets the company on a path to further growth.
Launch Africa Ventures closes first fund at $36.3m
- Pan-African venture capital fund Launch Africa Ventures today is announcing the close of its $36.3 million fund, which it has primarily used to invest in B2B and B2B2C startups across Africa.
- Following the successful closure, Fund 1 announced its 100th investment at the end of May, with $24 million so far invested in early-stage tech and tech-enabled companies.
- Launch Africa claims to have backed 108 startups across 21 African countries, including the likes of Nigerian neobank Kuda, Kenyan B2B e-commerce retail platform MarketForce and Tunisian ed-tech startup GOMYCODE.
Launch Africa’s fund close only further signals a strong investor appetite for opportunities in emerging markets, especially Africa. An increasing number of small- to medium-sized funds with $10 million to $50 million of capital to deploy are targeting opportunities in the continent. Uncovered Fund, LoftyInc Capital, Savannah Fund, and Ventures Platform are some of such Africa-focused firms that have launched in the past year.
Nigeria’s VeendHQ raises $330k in pre-seed funding round
- VeendHQ, an embedded finance technology company that enables micro-lenders, banks, and merchants to embed credit into various ecosystems, has raised a $330,000 pre-seed fund.
- The funding round saw participation from Magic Fund, The Oak Capital, Future Africa, Berrywood Capital, and other angel investors.
- With the fund, the startup plans to expand its operation and scale significantly in line with its goal of building an embedded finance infrastructure for Africa. It plans to integrate with more ecosystems and financial institutions and build products.
Source: Disrupt Africa
Access to credit remains out of reach of many Africans and is a major barrier to the growth of many small businesses. There’s an estimated trade finance gap of $81 billion on the continent. It’s also a problem investors are particularly keen to address as they get attractive returns as evident in VeendHQ’s fundraising. It is address this problem by providing easy and fast access to credit, leveraging a credit infrastructure platform that automates lending processes for lenders and connects them to borrowers through various origination channels.
Egyptian digital logistics startup Khazenly raises $2.5m seed
- Khazenly, a Cairo-based on-demand digital warehousing and fulfillment platform, has announced its successful seed fundraise of $2.5 million.
- Founded in mid-2021, Khazenly offers a subscription-based, omnichannel solution that helps merchants digitize their fulfillment processes.
- The funding round was co-led by leading regional venture capitalists and proceeds will be used to develop Khazenly’s products and services, quadruple its existing facilities, and expand its geographical footprint.
Small and medium-sized businesses in Africa make up 90% of all businesses on the continent and are essentially the backbone of the continent’s economy but they still struggle with logistics and fulfillment. Khazenly is one of many startups addressing these challenges and its ascent comes at a time when e-commerce is booming in Egypt. The sector is one of the driving forces of the Egyptian economy and is expected to grow by 30% in 2022, spurred by a growing number of younger shoppers and rising incomes. The estimated formal market size in Egypt for e-commerce will reach $7.5 billion in 2022.
Africa Data Centres invests in new Ghana, South Africa facilities
- Africa Data Centres, a pan-African technology firm that forms part of the Cassava Technologies Group, has announced the building of a second data center in Cape Town, South Africa after launching one in Accra, Ghana.
- The new 20MW facility will cover 15,000 square meters in eight data halls and is situated on the northern periphery of Cape Town’s city center.
- In Ghana, the company announced a 30MW data center facility, which lays the groundwork for its hyper-scale partners to expand digital services and solutions to more countries in West Africa.
The rising demand for faster computing from African giant corporations is attracting investment into the African data center market, which is largely untapped. Microsoft was the first to launch data centers in South Africa, followed by Amazon and Huawei. Recently, US-based Equinix Inc. acquired MainOne, a West Africa-focused connectivity and data solutions company, for $320 million. Research estimates that the market for data centers in Africa is expected to reach between $3 billion and $5 billion in the next four years, growing at a compound annual growth rate of between 12 and 15%.
Nigeria’s Flutterwave appoints new CFO to drive further growth
- Flutterwave, a Nigeria-based African payments technology company, today announced the appointment of Oneal Bhambani as its new chief financial officer.
- He joins the company from American Express and Kabbage, where he managed fintech businesses operating at scale and helped lead the sale of Kabbage and its integration within the American Express Global Commercial Services segment.
- As its new CFO, Oneal will serve a key function in enabling the company’s expansion with “discipline, operational controls, and financial rigor,” Flutterwave said.
Source: BusinessDay Nigeria
Having recently completed its $250 million in Series D funding, valuing the company at over $3 billion, Flutterwave is going through a period of rapid growth. Since it was founded in 2016, investments secured by the company total $475 million. The payment processing fintech, one of Africa’s fastest-growing and most funded startups, has an infrastructure reach across 34 countries on the continent and processes 200 million transactions worth over $16 billion. More than 900,000 businesses globally use its solution to process payments in 150 currencies and across different payment modes.
Microsoft, BofA back Kenya’s Crossboundary in $25m fundraising
- CrossBoundary Energy Access (CBEA), a financing facility for mini-grids, has raised $25 million in new funding commitments from ARCH Emerging Markets Partners Limited, Bank of America, and Microsoft Climate Innovation Fund.
- This investment will leverage an additional $25 million in senior debt to deploy $50 million of capital into CBEA’s near-term pipeline of solar-powered mini-grids.
- CBEA plans to deploy a total of $150 million over the next two years to bring clean energy to one million people in Africa.
As African economies grow, the demand for energy by companies, homeowners, and industries increases by the day. This comes with challenges of climate change and energy depletion, however, many innovators and investors believe renewable energy can help Africa counter these challenges. Financiers mostly are skeptical about funding ventures in the renewable energy space, which has hindered growth in the sector, but recent successful fundraising rounds by Kenyan duo Crossboundary and Sun King suggest the perception toward the renewable energy opportunity in Africa could be changing.
Egypt’s Boyot raises funding to digitize real estate payments
- Egypt-based Boyot has raised a pre-seed round from a Kuwait-based real estate firm.
- Founded in 2020 by Mahmoud El Sabongy (CEO) and Khaled El Refaay (CTO) and Mohamed Sayed, Boyot offers an end-to-end SaaS solution for payments tailored to real estate businesses.
- The startup intends to use the acquired funds to expand operations and grow its team.
Heavy cash reliance and poor cash flow management are some key challenges hurdling the growth of small and medium-sized businesses (SMBs) operating in the local real estate market in Egypt. That’s what Boyot has set out to address with its software, as digitization continues to gain ground among traditional sectors in Africa, driving growth in the SaaS market. Of $3 billion raised by startups in the Middle East and North Africa region (Mena) last year, SaaS startups scooped a total of $176.35 million across 31 deals.
Ghana launches $700m development bank to support SMEs
- After having been first conceived in 2017, the Development Bank Ghana (DBG) was finally launched this week to help catalyze growth in the country’s small and medium enterprise sector.
- The DBG has an initial $700m to loan to private financial institutions – including CalBank, CBG, GCB, and Fidelity Bank – who in turn will on-lend to SMEs.
- The bank is financed through a consortium of loans from international lenders including the World Bank ($250 million), the European Investment Bank ($170 million), the German state-owned development bank KfW ($46.5 million), the African Development Bank ($40 million) and the government of Ghana ($253 million).
Source: African Business
Around one to two million SMEs, comprising about 80% of businesses in Ghana, are estimated to generate some 70% of GDP but struggle to secure loans, especially long-term lending. Ghana wants the new bank to ease the access to credit and finance for its small businesses by providing loans with tenors greater than three years. The importance of making credit facilities available for small businesses can’t be overstated due to their contribution to the economy, both in terms of output and provision of employment. While laudable, it remains to be seen the impact of Ghana’s latest move on its economic fortunes.
Moroccan staffing platform Jobop raises $1m seed round
- Morocco-based Jobop has raised a $1 million Seed round, led by Azur Innovation Fund, with participation from Plug and Play, and business angels. The round was closed back in April this year.
- Founded in 2020 by Adil Zghaoui and Salim El Merrassi, Jobop deploys AI technologies to match temporary workers to prospective employers.
- With the newly acquired capital, the startup will be able to improve its technology and expand to new markets, with plans to launch in Egypt by the end of this year.
With the economic uncertainty brought on by the Covid-19 pandemic forcing several companies to turn to temporary workers, Jobop cofounders spotted a market opportunity in simplifying and accelerating the experience of companies in finding qualified and vetted workers. And since the platform launched in 2021, the company has seen a positive response from the market and claims to have recorded a growth of over 80% on a quarterly basis.
Kenyan construction tech startup Jumba raises $1m pre-seed round
- Kenya’s Jumba, a tech startup playing in the construction supply chain, has raised a $1 million pre-seed funding round to build a digital business-to-business platform for the predominantly offline construction sector.
- Launched in April, Jumba connects manufacturers of construction materials to hardware stores. Hardware store owners who place orders through Jumba’s platform benefit from standardized pricing, product selection, and reliable delivery.
- Currently in Nairobi, the startup plans to expand to other urban centers across Kenya and scale its work with suppliers to improve the availability of construction materials in East Africa.
Source: Disrupt Africa
As digitization continues to gain ground among traditional sectors in Africa, driving growth in the Software-as-a-Service market, many SaaS providers targeting niche markets like construction, restaurants, freight forwarding, etc. are springing up all over the continent. Inconsistent pricing and delay in deliveries are some key challenges hurdling the growth of businesses operating in the local construction market, which Jumba has set out to tackle. The SaaS market in the Middle East and Africa is expected to record an 18.25% CAGR between 2018-2023.
Prudential taps Vodafone, Airtel to deepen insurance in Ghana
- Global insurance group Prudential wants to expand its Ghanaian partnerships with Vodafone and Airtel to drive increased African insurance penetration, especially in informal markets.
- Prudential operates in eight African countries, Uganda, Zambia, Cameroon, Togo, Côte d’Ivoire, Nigeria, and Kenya, as well as Ghana, and aims to extend its telecoms partnerships across those countries.
- Insurance penetration rates in most African countries remain stubbornly low but Emmanuel Mokobi, Prudential’s CEO for sub-Saharan anglophone markets, is optimistic that a breakthrough can be achieved because of the rise of an educated and tech-savvy middle class.
Source: The Africa Report
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 meagre 1.12% or 3% with South Africa. The partnership between Prudential and the network operators adds to a growing list of deals involving African insurance companies looking to capture the continent’s huge informal market. Earlier this year, Kenyan insurtech startup Lami Technologies acquired Bluewave Insurance Agency for an undisclosed amount to make insurance covers accessible to more people across Africa.
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