Investor Updates: January 20 2022 - Gaming startup Carry1st raises $20m from A16z and Google

Story 1: Gaming startup Carry1st raises $20m from A16z and Google

Highlights

• South Africa-based Carry1st has raised $20 million from marquee investors, led by Andreessen Horowitz (a16z), for its mobile game publishing platform built for the African market.
• Founded in 2018, Carry1st allows game developers to publish and distribute their work, manage operations, and receive payments through multiple channels in Africa.
• This is a16z’s first investment in an Africa-headquartered company. The round, an extension of Carry1st’s Series A raise last May from Riot Games and others, also saw participation from Avenir, Google, and legendary American rapper Nas.

Source: Disrupt Africa

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Africa, home to a largely young and digital-savvy population, is the fastest-growing region for mobile game downloads, according to data from App Annie. The trend is set to continue at least for a decade, according to research. A 2021 report by Newzoo and Carry1st predicts the number of gamers in sub-Saharan Africa (SSA) will increase by 275% over a 10-year period. The continent is thus poised to attract global players in the game-focused venture capital space and Carry1st’s funding is most likely the first of many.

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Story 2: Angel investors consider Africa-focused SPAC

Highlights

• Africa-focused early-stage investors Vishal Agarwal and Raj Kulasingam are planning to list a special purpose acquisition company (SPAC) that will target technology startups from the continent.
• The pair have made 5x returns from financing African startups since 2017, with their biggest gain being a 14.5-fold return from a $600,000 investment in Nigeria’s Kuda Bank. They’ve backed over 50 startups and Acuity Ventures, an early-stage VC fund that had stakes in Flutterwave and Paystack. 
• The planned SPAC is expected to help fill a funding gap for African startups that need capital to expand rapidly, similar to Egypt’s Swvl’s merger with Queen’s Gambit Growth Capital, a SPAC.

Source: Bloomberg

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SPACs are newly formed companies listed for the purpose of acquiring or combining with another entity and have surged in popularity over the last couple of years. While tech startups in Africa secured a record $5 billion in venture investments in 2021, with most of this coming from the US, the continent has so far missed out on the SPAC boom. As foreign investor interest in Africa’s startup ecosystem grows, SPACs would offer African startups faster routes to become publicly traded without undergoing a traditional initial public offering, and investors in public markets to invest in growth-stage companies.

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Story 3: Nigeria’s Frain gets $473,000 pre-seed to build developer tools

Highlights

• Nigerian developer-tooling startup, Frain Technologies, has closed a $473k pre-seed. The round was led by Rally Cap Ventures, with participation from Musha Ventures and Future Africa. 
• Founded in February 2021, Frain Technologies builds webhooks—software that does something automatically after a predefined condition. 
• The startup plans to use the funding to develop its flagship webhook product, Convoy, used by Buycoins, Termii, GetWallets, Dojah, etc., as well as fund the creation of more tools for developers.

Source: Disrupt Africa

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Most tech startups in Africa are focused on solving problems for either end consumers or businesses while quite a few build tech infrastructure such as application programming interface (API). Frain’s webhooks are a core infrastructure component that makes APIs work. When they fail, a digital bank user wouldn’t see a top-up despite receiving a debit alert. Prior to Convoy, engineers had to build and maintain webhooks in-house but now, they have one less item to figure out and can focus on the API. As Africa’s tech ecosystem matures, we expect to see startups building for backend infrastructure pull more funding.