SEPTEMBER 12, 2022
17 min Read
African Tech Weekly Recap: September 12 to September 16, 2022
Welcome to our weekly recap where we share the most important news of the African Tech Ecosystem 🌍
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Janngo Capital reaches first close of $63 million fund
- The Fatoumata Bâ-founded Janngo Capital has announced the first close of its Startup Fund (JCSF) with $36 million in capital commitments.
- Launched in Davos in 2020, Janngo Capital’s latest fund will invest half of its proceeds in companies founded, co-founded, or benefiting women.
- Backed by global financial institutions as well as leading private corporations, the fund management company plans to invest a total of $63 million in startups leveraging technology to leapfrog development and achieve SDGs in Africa.
Women in Africa are the most entrepreneurial globally with a total entrepreneurship activity rate of 26%. Yet, they face a $42 billion funding gap and have minimal access to growth capital. As one of the very few female-founded, female-owned, and female-led fund management companies in Africa, Janngo Capital has moved to address this gap, with a plan to invest 50% of its proceeds in companies founded, co-founded, or benefiting women.
Nigeria’s Kippa bags $8.4m in a seed funding round
- Kippa, the Nigerian startup improving the lifecycle of small businesses across the country with its financial management and payments platform, has raised $8.4 million in an oversubscribed seed round.
- The startup provides digital business and financial management solutions, such as digital bookkeeping and debt recovery, to Nigeria’s small and medium enterprises (SMEs).
- Founded in June 2021, Kippa raised pre-seed funding of $3.2 million in November 2021. It has now garnered backing from international investors to develop products that will help SMEs grow their businesses.
Even as tens of millions of Africans have come online in the past decade, most merchants in Nigeria still run their businesses offline—from managing money to keeping track of inventory, business records, staff, and suppliers. These manual processes can be time-consuming and error-prone. Kippa provides a suite of services that enable small-sized business owners to incorporate digital tools in day-to-day operations. Although it’s just one of the many platforms offering such services in sub-Saharan Africa. Similar providers include Pastel, Bamba, OZÉ, and Bumpa.
Touch and Pay plans continental expansion after $3m funding
- Nigerian fintech startup Touch and Pay is planning an expansion into a number of other African markets after securing a seed funding round of $3 million.
- Founded in 2019, Touch and Pay has developed a suite of near-field communication (NFC)-based payment solutions for micro-payments, such as payment of transportation fares or a cup of coffee, in an attempt to move towards a truly ‘cashless’ society.
- Participants in the W22 batch of the Silicon Valley-based Y Combinator accelerator, Touch and Pay operates in four states in Nigeria and plans to roll out to Ghana and Senegal.
Source: Disrupt Africa
Micro-payments account for the bulk of financial transactions in Africa today. Touch and Pay’s solution presents an interesting blend of software and hardware to take digital financial services to the very last mile on the continent. And, according to company figures, the startup currently helps 350,000 people pay for bus fares daily in Nigeria, with over 2.3 million users. It takes a percentage of the transactions it processes and currently makes around $270,000 monthly.
Kenya’s HotelOnline acquires hospitality SaaS HotelPlus
- HotelOnline, a Kenya-based travel technology scale-up that fashions itself as an e-commerce and digital marketing enabler in the hospitality industry, has acquired HotelPlus, a software provider with clients in 22 countries.
- The full terms of the transaction were not disclosed. Eric Muliro, who founded HotelPlus in Kenya 13 years ago is getting a payout and $1.9 million in shares in HotelOnline, which was valued at $24 million before the deal.
- HotelOnline said the deal has increased its customers by over 2,200 and opened the door for additional customers and unique offerings like payment solutions, AI-driven pricing, and revenue management.
Africa’s growing hospitality industry took a beating from Covid-triggered national lockdowns and movement restrictions but is recovering strongly. Amid the rebound, players within the space have an opportunity to re-establish their positions. Realizing this, HotelOnline plans an aggressive expansion across Africa, where it currently has over 6,000 clients spread across 27 countries. The acquisition comes months after it closed a Series A funding backed by Yanolja, giving the startup the necessary financial muscle to cut deals and make investments that will help it scale and expand in its current and target markets.
British DFI earmarks $100m for Egyptian startups
- The UK’s development finance institution, British International Investment (BII), unveiled plans to inject $100 million in investments into Egyptian startups, according to a recent official statement.
- At a business reception launching its new name in Egypt, BII announced its future plans for the country and reaffirmed its commitment to strengthen its partnership with Egypt and increase climate finance to support the country’s green growth.
- Earlier this year, the British institution announced investments in Egyptian venture capital (VC) firms Algebra Ventures and Endure Capital to support early-stage companies.
Source: Disrupt Africa
British International Investment’s planned investments in Egyptian startups is part of a broader ambition to invest up to $6 billion in Africa over five years. Beyond that, the move illuminates a trend that’s been on for the past couple of years—development finance institutions (DFIs), which account for the bulk of available capital in Africa, are looking to tech startups to support development goals and find returns. This is good news for the African tech ecosystem as DFIs can plug existing venture market gaps and anchor key funds, resulting in more capital for startups across the continent.
Egypt’s med training platform 5 Quarters raises seed round
- Egypt-based edtech 5 Quarters has raised an undisclosed seed round from a Saudi angel investor.
- Founded in 2016 by Mohamed Salah and Noha Emad, 5 Quarters offers healthcare professionals online courses to improve their capabilities.
- The startup plans to use the investment to fuel its expansion plans in Saudi Arabia and add new services for medical sector professionals.
Startups like 5 Quarters are crucial to the African economy and it’s a positive development to see investors back healthcare-focused players. The region’s healthcare industry has for decades been plagued with several challenges that prevent universal access, from a lack of infrastructure to a shortage of qualified doctors. Importantly, increasing investor backing for startups shows one of Africa’s most crucial socio-economic problems can be tackled without forgoing returns.
Brazil’s Ebanx expands into Africa with an eye on mobile money
- Brazilian fintech unicorn Ebanx S.A. has expanded into Africa, where it hopes to replicate its fast growth in Latin America and plans to initially focus on mobile money.
- The company started operations in Kenya, South Africa, and Nigeria in late August amid soaring demand for payments via mobile phones in recent years.
- The Brazilian startup, valued at over $1 billion, also aims to reach agreements with major e-commerce stores to provide payment services on the continent. Without disclosing names, Ebanx plans to focus on partnerships with global merchants.
Per a GSMA report, Africa now accounts for 70% of the world’s $1 trillion mobile money value after mobile money transactions on the continent rose 39% to $701.4 billion in 2021 from $495 billion in 2020. It’s widely believed that Africa’s fintech-powered digital economy is only in its early days and Ebanx’s move seeks to tap into Africa’s fast-growing digital payments space and broader digital economy, driven by the rise of fintech companies like Flutterwave, MFS Africa, and OPay, the very payments startups which are about to face competition from the Brazilian unicorn.
Egypt’s Cairo Angels welcomes Biola Alabi as a venture partner
- Egypt-based VC Cairo Angels Syndicate Fund (CASF) has announced having the Nigerian businesswoman Biola Alabi join as a Venture Partner. Biola will take the lead on origination, investments, portfolio management, and investor relations.
- Alabi is an active angel investor and advisor to African technology and media companies. She is also the founder of Grooming for Greatness (G4G), a program aimed at cultivating leadership skills in aspiring entrepreneurs.
- Founded in 2012 by Hossam Allam, CASF is a micro VC fund launched by the Cairo Angels that invests in Seed-stage startups across the Middle East and North Africa region.
In what was a record year for venture funding in Africa, startups on the continent raised more than $5 billion in 2021. This year, they’ve secured over $3.6 billion. For Cairo Angels, it sees an opportunity in the fact that despite this growth, early-stage African startups still only draw a fraction of the funding available. It has so far backed four startups on the continent, including Nigeria’s CredPal, South Africa’s Finclusion Group, and Kenya-based Flexpay. With Biola joining the team, CASF is arguably better positioned to expand further across the continent and bring regional ecosystems together.
De Novo Dairy secures investment from UM6P Ventures
- South African startup De Novo Dairy has secured an undisclosed investment from UM6P Ventures to produce animal-free dairy products that provide the same sensory experience and nutrition as their traditional dairy alternatives.
- De Novo Dairy specializes in the production of milk proteins using precision fermentation of yeast strains. This technology allows them to extract essential cruelty-free milk proteins used within a wide range of products to improve and boost human nutrition.
- The startup targets various industries, including food, health, sports nutrition, and baby formula, and with the funding, plans to accelerate both R&D and scale-up efforts.
With the huge strides made by startups like De Novo, Africa is fast becoming a global leader in the agritech space. Between 2016 and 2019, the industry grew by 44% year-on-year, and the continent has registered the highest number of agritech services in the developing world reaching more than 30 million smallholder farmers as of 2021. The global agritech sector will reach nearly $200 billion by 2025. How much value Africa can tap from the vast and dynamic market will be determined by how well startups and companies capitalize on the challenges in agriculture on the continent.
Kenya’s Turaco secures $10m Series A funding
- Turaco, a Kenyan insurtech driving mass market insurance adoption, has closed a $10 million Series A equity round led by AfricInvest, via the Cathay Africinvest Innovation Fund, and existing investor, Novastar Ventures.
- Founded in 2019, Turaco is a distributor, broker, and key customer interface between the underwriter and the end consumer. The insurtech company’s mission is to free people from the fear of financial shocks caused by unexpected health risks.
- The latest round of funding places Turaco in a strong position to address Africa’s untapped insurance market, doubling down its expansion efforts through strategic partnerships.
With insurance still very much in its infancy and penetration in Africa currently below 3%, up to 90% of people have no formal safety net for when they get sick or are in an accident. Most African insurance underwriters and intermediaries use rigid systems that do not allow for integration with external partners, with many still using paper-based processes. Turaco is building in a largely untapped sector, opening up an extremely large market and innovating for mass market consumers by providing a cutting-edge solution that will drive inclusive insurance.
MVP Match raises $5m to expand into Africa
- Tech-talent marketplace MVP Match has raised $5 million in seed funding from Stage 2 Capital to double down its strategy for pairing companies with talent from across the globe.
- The Germany-based startup plans to use the funding to build new hubs in Africa and Europe, grow its team, and re-launch its proprietary platform to make “finding and working with tech talent easier than ever before.”
- The plan to grow its reach follows the launch of a new hub in Egypt that MVP Match will use to tap talent in Africa — with the aim of creating more networks in the region.
Tech companies and giants are increasingly looking to Africa in search of software engineers to meet the growing demand for tech-savvy employees globally. A report by the US Bureau of Labor Statistics revealed that the demand for software engineers is expected to grow by 22% between 2020 and 2030. Already, 38% of African developers work for at least one company based outside of the continent, per a Google survey. While this bodes well for the engineers themselves, the trend could worsen the shortage of tech talent available to indigenous startups. Although several players like Manara and Alt School are working to expand the continent’s tech talent pool.
Egypt’s ECC Group acquires majority stake in Source Beauty
- Egypt-based cosmetics company ECC group has acquired a majority stake in beauty products marketplace Source Beauty, for an unknown amount.
- Founded in 2018 by Lydia Schoonderbeek, Source Beauty is a female-led one-stop shop that provides users with multiple choices of local and international beauty brands. ECC is an Egypt-based specialized contract manufacturer for the cosmetics and personal care industries, led by Mohamed Salah and Ahmed Abo El Hamail.
- Lorax Capital Partners recently acquired a minority stake in ECC and is supporting the company’s expansion plans.
ECC’s acquisition of Source Beauty is timely. The beauty industry in Egypt is growing exponentially and is expected to reach a market volume of $188 million by 2025. This growth is driven by factors such as the increasing customs on international beauty products and high demand for variety, which have made customers less dependent on imported beauty products and given way to local manufacturers.
Cellulant, Orange partner to enable wallet transfers in Bostwana
- Orange Money, the mobile money service of Orange, and leading payments company, Cellulant have partnered to enable card-to-wallet transfers for eight banks in Botswana.
- While most banks in Botswana have mobile apps, not all provide this option for their customers. This solution will allow bank customers to move money from their bank accounts to their Orange Money wallets through the Orange Botswana website, a process that Tingg, a product by Cellulant, powers.
- The partnership further solves the long queues that bank customers have to make to access the agents and gives them easier options in moving money seamlessly.
Africa accounted for 70% of worldwide mobile money transaction value in 2021 with instant digital payment solutions significantly increasing across the continent by the year. However, mobile wallets/money products aren’t equally adopted across the continent with countries like Kenya and Ghana far ahead of others in terms of widespread use. Available data shows Orange Money currently leads the mobile money industry in Botswana with a 30% market share and over $350 million in transactions since its launch in 2011. That makes it well positioned to drive further adoption in the East African country.
Mastercard-backed incubator seeks to support Ethiopian startups
- The Mastercard Foundation, Ethiopia’s Ministry of Innovation and Technology (MInT), and iceaddis have launched a five-year project that aims to provide startups with funding and acceleration support.
- The aim of the program is to enable over 56,000 people experiencing poverty with access to direct jobs by creating 100 startups and more than 3,000 small businesses.
- Seed funding will be awarded to all selected startups, while 10 companies will receive up to $50,000. Entry to the incubator is free and open to teams or companies in Ethiopia with innovative ideas, products, or ventures that can solve real-life problems.
Source: Disrupt Africa
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. The Mastercard-backed program in Ethiopia is yet another example of corporates supporting startups and SMEs in Africa. Such efforts are even more important when one considers the alarmingly high rates of unemployment across the continent.
Kenya’s banking regulator goes after unlicensed digital lenders
- Earlier this year, Kenya’s central bank pushed companies—even unicorn startups—out of the country’s market of payment operators for their lack of compliance.
- Now, the tide has turned to digital lenders, who have been given a 3-day ultimatum to comply with the country’s regulation for digital lending or face a bitter extinction.
- Before this move, anyone in Kenya could easily operate a digital lending company. They were only required to register the businesses to begin operations in the country.
More than 100 lending apps—including renowned names like Tala, Branch, Okash, and Opesa—operate in Kenya, providing unsecured and instant loans through mobile phones. While these companies offer much-needed consumer financing, there are concerns over how most operate, including the use of exploitative interest rates and debt-shaming recovery tactics, hence the need for regulation. A more organized digital economy is a win for all parties involved—the government, consumers, startups, and investors looking to bet on the country.
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