Investors update: Flat6Labs launches new $95m fund

Flat6Labs launches new $95m fund to back African startups

Highlights

• Egypt-based seed-stage accelerator is setting out on a foray into East and West Africa through a $95 million Africa Seed Fund investment vehicle that will mark its first venture outside the Middle East and North Africa (MENA).
• Flat6Labs, also a seed accelerator, previously administered country-specific funds, including a $10m seed fund in Tunisia. It is only now that it is running a fund for startups in multiple countries.
• The expansion is planned to be gradual, with two-thirds of its allocations still going to enterprises in North Africa.

Source: TechCrunch

Our Takeaway

Africa is a hotbed for venture capital investment. While the global venture capital market took a hit last year, the continent bucked the trend as the only region which saw year-on-year growth. With a population of over 1.2 billion people, a growing middle class, and a thriving tech ecosystem, Africa is ripe for investment opportunities, which explains why several investors and VC firms are still actively investing in startups focused on the region and remain bullish on Africa’s potential for growth, as the next frontier for investment opportunities.

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DRC-based energy startup Nuru raises $1.5m funding

Highlights

• Nuru is on track to build its isolated solar-hybrid grids by mid-2024 after securing an initial $1.5 million from investors in a convertible note round ahead of the close of its Series B funding round.
• Founded in 2020, the Democratic Republic of Congo (DRC)-based energy company deploys and operates renewable energy-powered metrogrids in strategic urban zones of the DRC. and is seeking to provide five million clients with world-class connectivity. 
• The funding is expected to help accelerate the implementation of three nationally strategic late-stage development projects in three cities, with an aggregate installed capacity of 13.7MWp.

Source: Disrupt Africa

Our Takeaway

The DRC is one of the largest countries in Africa, by both land area and population. It’s also one of the least electrified—per the World Bank, only 19% of its 108 million people have access to electricity. The decreasing costs of solar systems, relative to either grid or diesel generators, provide a real chance at closing the energy access deficit while aiding the diversification and decentralization of DRC’s energy mix. We’re already seeing innovative solutions in this area driven by startups like Nuru, which aims to connect more than 120,000 people in the next phase of its project.

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FairMoney acquires PayForce to expand its services

Highlights

• Nigerian credit-led digital banking platform FairMoney has acquired PayForce (a sub-brand of YC-backed CrowdForce), a merchant payment service that serves small businesses.
• Both startups declined to disclose the terms of the deal. However, according to sources, the transaction was a cash-and-stock deal in the range of $15 million to $20 million. 
• As part of the deal, CrowdForce CEO Oluwatomi Ayorinde joins FairMoney, where he will head the company’s payments business unit: PayForce by FairMoney.

Source: TechCrunch

Our Takeaway

In Africa, there’s an undeniably massive opportunity to provide access to financial services to the underbanked. In Nigeria alone, 64 million people don’t have access to formal banking; that’s the market Fairmoney (and others) are going after, by broadening its financial services proposition to merchants. More so, acquisitions have been on the rise in Africa lately. Intra-country acquisitions grew 31% in Q2 to 52% in Q3 2022, per TechCabal Insights, signaling an increasing consolidation trend boosted by falling prices and a venture capital crunch. Despite these pointers, basic exit opportunities could trigger a sale in this current market condition.