Investor Updates: August 03 2022

Y Combinator slashes startup accelerator class size by 40%

Highlights

• Silicon Valley-based startup accelerator Y Combinator has reportedly slashed its summer startup batch by 40%, in response to a downturn in the economy and in venture capital funding.
• The Y Combinator’s Summer 2022 cohort now has nearly 250 companies, down 40% from the previous class which had 414 startups.
• The downsizing follows mounting criticism that Y Combinator had grown too large, damaging its reputation for churning out Silicon Valley’s best startups.

Source: The Information

Our Takeaway

In Africa, YC has had a major impact on the burgeoning tech ecosystem. The accelerator’s alumni feature high-growth startups such as Flutterwave, Paystack, and Kobo360 as well as Cowrywise, MarketForce, Kudi, and 54gene. It also recently increased its standard deal size to $500,000 from $125,000 for 7% equity and also now invests an additional $375,000 on an uncapped SAFE with “Most Favoured Nation” (MFN) terms. Although it makes admission tougher, YC’s decision to cut its class size could benefit startups admitted, in the sense that, competition for investor attention would reduce.

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SA gaming startup Skrmiish secures $2.5m seed

Highlights

• South Africa-based Skrmiish, a mobile “play-to-earn” app that enables gamers of every level to earn cash in every match they play across the AAA+ games they love, has raised a $2.5 million seed round to speed its global growth.
• Launched in 2021, Skrmiish has developed a feature called MoneyMatch that allows players to earn real cash in every match they play, without having to wait for a tournament or find a peer to challenge.
• The startup has already acquired over 100,000 players across over 100 jurisdictions around the globe the seed funding will enable it to accelerate scalability and expand its team.

Source: Disrupt Africa

Our Takeaway

Having a combination of the world’s fastest-growing youth population and an exponential increase in digital skills transfer and connectivity amongst the youth puts young Africans in pole position to be both the leading consumers and creators of content in the competitive video gaming world by 2030. Many startups have emerged in recent times to tap into the huge market for skill-based games.

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SWVL terminates $100 million acquisition of UK’s Zeelo

Highlights

• Egypt-founded transport and mobility solutions provider SWVL has canceled the proposed acquisition of Zeelo, a UK-based B2B smart bus operator. The deal dates back to April this year and was worth $100 million.
• The company said in a statement that the decision came as a response to the current turmoil in the global financial markets and it’s previously invested a total of $5 million in Zeelo.
• SWVL is one of Africa’s fastest-growing startups. Since its founding, it has rapidly expanded its geographical footprint by acquiring smaller players.

Source: Siliconcanals

Our Takeaway

Prior to the ongoing economic downturn, Swvl had been on an acquisition-led expansion drive. Excluding Zeelo, the company acquired five global startups, the latest addition being Mexico-based mass mobility startup Urbvan. But like many startups, it’s had to make moves to get through this period. Earlier in May, the Nasdaq-listed company sacked 30% of its employees, as part of its plans to achieve profitability in 2023. A month later, it halted certain services in Kenya and Pakistan as well as suspended a number of routes in its home market of Egypt.