Afridigest Week in Review: Africa mints its third privately held unicorn
+Piloting at scale +A deal deluge +An under-the-radar multi-billion dollar acquisition +Pan-African expansion +Crypto adoption in Africa + Netflix strategy +Five $1B African tech companies
The Afridigest Week in Review is a must-read weekly recap for Africa-focused founders, executives, and investors, as well as interested observers.
Welcome back! Thanks to Angela, Chinedu, Ibrahim, Lamide, IK, Jim, Isaac, & Chidi for thoughtful discussions over the last week. And thanks in advance to you for sharing today’s digest — it’s a meaty one.
If you’re new, welcome 🙌 — you’ll (generally) receive 2 weekly Afridigest emails: the weekly digest (every Monday) and an original essay/article (generally on Saturdays). For past essays and digests, visit the archive.
Week 34 2021
📰 Deal of the week
BLITZSCALING DONE WELL
OPay, the Chinese-backed mobile payment fintech company, raised a $400M Series C at a $2B valuation. Softbank led the round, with Sequoia Capital China, DragonBall Capital (Meituan’s VC arm), Redpoint China, Source Code Capital, SoftBank Ventures Asia, and 3W Capital also participating.
💡 Why it’s the deal of the week: With this mega-round, OPay becomes Africa’s third confirmed private unicorn, after Interswitch and Flutterwave. Notably, OPay is the fastest to do it, achieving the feat in 4 years, compared to 5 years for Flutterwave and 17 years for Interswitch.
In July 2020, Afridigest covered OPay’s history and its shift away from previous super app ambitions, concluding: "By focusing on its core, & shifting away from a cash-burning blitzscaling approach, OPay should be able to build upon its payment strengths and come out better positioned for the future. It’s certainly still the early days for OPay in Africa."
It seems that OPay did quite well here indeed. The company disclosed that it currently processes over $3B in transactions per month, up from previously disclosed figures of ~$2B in December 2020, and ~$150M in July 2019. And Kentaro Matsui, Managing Director at SoftBank Group shared that “OPay is the leading payments platform in Nigeria.”
⛏️ Go deeper:
Piloting at scale: “I think the difference between OPay and a lot of people that came into this market is that OPay basically piloted at scale, which a lot of new entrants into Nigeria don't do. Most people come into Nigeria and they want to get their toes wet before they get their feet wet. That is what made OPay very scary. They had a lot of money. They piloted everything they were doing at scale. So you've got to watch them. Anybody who has the guts to pilot at scale, and has the money, and has the will, and has the drive is someone you really have to watch...Anybody who comes into a market and has the resources and the innovation and the drive to pilot at scale will always be a real threat.” — Segun Agbaje, CEO of GTBank, Nigeria’s most valuable bank, during GTB’s H1 2020 earnings call
A harbinger of what’s to come: This is the famous/infamous Softbank Vision Fund’s first foray on the continent. And smart money worldwide is likely watching. (Note: while this deal has been reported loosely as Softbank’s first Africa bet, Softbank first invested in OPay’s Series B via its Ventures Asia fund. This is SVF’s first Africa deal to be precise.)
🔦 Other deals
A DEAL DELUGE
MaxAB, an Egyptian B2B food & grocery platform, raised a $15M Series A extension from existing investors: RMBV, IFC, Flourish Ventures, Crystal Stream Capital, Rise Capital, Endeavour Catalyst, Beco Capital, and 4DX Ventures — MaxAB’s $40M July Series A was Week 27’s deal of the week and this brings its total funding to over $60M.
PawaPay, an Africa-focused payments company spun off from African online sports betting provider betPawa, raised a $9M seed round co-led by 88mph and MSA Capital, with Zagadat Capital, Kepple Ventures, and Vunanai Capital participating — unlike some in the space who work across various payment types, PawaPay is a pure mobile money play.
Odiggo, an Egyptian & Dubai-based auto tech platform, raised a $2.2M seed round — Y Combinator, 500 Startups, Plug and Play Ventures, Seedra Ventures, LoftyInc Capital, and others participated — Odiggo last appeared in Week 27’s Digest as one of the initial nine African startups selected for Y Combinator’s S21 batch.
Plentywaka, a Nigerian bus sharing startup, raised a $1.2M seed round. Canada’s The Xchange led the round, with SOSV, Shock Ventures, Techstars Toronto, Argentil Capital Partners, ODBA & Co Ventures, and others participating — this comes after the startup’s participation in the Techstars Toronto accelerator.
Ear1, a Ghanaian social media platform allowing users to reach influencers and professionals via paid messages, raised a $520K pre-seed round led by Danny Oyekan of Dan Ventures, with Alkesh Thavrani of Stellar International and Prosper Otemuyiwa (CTO of EdenLife) participating — ear1 is currently available in Nigeria & Ghana.
Awabah, a Nigerian micro-pension platform for Africa’s informal sector, announced that it raised a $200k angel round last month from ODBA & Co Ventures and Correlation Capital — the startup also raised an additional $120k this week via its selection into the Techstars London accelerator program.
MarketForce, a Kenyan B2B retail distribution platform, added an additional $100k to its $2M pre-Series A from the Harambeans Prosperity Fund — MarketForce’s pre-series A was first mentioned in Week 27’s Digest.
Kai Senegal (Yeeg), a Senegalese ride-hailing & vehicle financing startup, raised an undisclosed pre-Series A round from Mobility 54, the corporate venture capital subsidiary of Toyota Tsusho Corporation & CFAO SAS — Mobility 54 also backed Ivory Coast’s Moja Ride early this year.
Suplias, a Nigerian B2B retail marketplace, raised an undisclosed amount from Atacama Ventures, Soma Capital, and others — this comes after Suplias’ participation in Y Combinator’s S21 batch.
Quro Medical, a South African digital health company offering premium hospital-at-home services, raised an undisclosed amount from Life Healthcare, South Africa’s largest private hospital chain — the startup previously raised a $1.1M seed round led by Enza Capital and Mohau Equity partners in April.
Viebeg, a Rwandan health-care focused logistics platform, raised an undisclosed pre-seed round from impact venture capital firm Beyond Capital Ventures, Beyond Capital Fund, and Eckenstein Geigy Stiftung — this is Beyond Capital Ventures’ maiden investment and General Partner Eva Yazhari joins Viebeg’s Board.
Kimoyo Insights, a testing tool that helps companies get feedback from African users, raised an undisclosed pre-seed round from Visible Hands
Tingo Mobile, a Nigerian device & service technology company focused on agritech & fintech, was acquired by tech development company iWeb for $3.7B in an all-stock deal — Tingo Mobile’s 2020 revenue and EBITDA were $616M and $220M respectively (based on a 360 NGN/USD exchange rate); the company has over 9M subscribers and has supplied almost 30M mobile devices since 2014
Swvl, an Egyptian shared mobility platform, acquired European mass transit platform Shotl for an undisclosed sum — the deal accelerates Swvl’s European entry (one year ahead of schedule) and more than doubles its footprint with 10 additional countries in Europe, APAC, & LATAM.
OneCart, a South African grocery delivery platform, is in talks to be acquired by South African retailer Massmart, Africa’s leading retailer of general merchandise and leading wholesaler of basic foods — this comes after the sale, earlier this week, of several non-core Massmart businesses to the Shoprite Group for $91M
Chari, a Morocco-based B2B marketplace, acquired Moroccan fintech app Karny.ma
MaxAB announced its acquisition of Morocco’sWaystoCap for an undisclosed sum in conjunction with its $15M fundraise mentioned in the previous section
Plentywaka announced its acquisition of Ghana’s Stabus for an undisclosed sum in conjunction with its $1.2M seed round mentioned in the previous section
📚 Reads of the Week
THE EVOLUTION FROM 'THE STREAMING WARS' TO 'THE LEISURE WARS'
Matthew Ball, Managing Partner of early-stage venture fund EpyllionCo, writes a long read on: why gaming is important to Netflix; the challenges it faces in entering gaming; Netflix’s overall gaming strategy; and what the future might hold.
“The most threatening problem for Netflix is the generational changes that are making ‘where to watch’ the second question, not the foundational one. For hundreds of millions, the question is now ‘what to do.’ Leisure, in other words, defaulted to TV for decades. It no longer does. This means that fighting for leisure time via video means losing share one way or another. And it’s likely this share is lost to gaming.”
🥇 “Netflix and Video Games” by Matthew Ball
IN CASE YOU MISSED IT
A look at the billion-dollar tech companies on the African continent — those confirmed & those next up.
“With OPay's $400M Series C earlier this week, a new unicorn was born in Africa, and the continent now has 3 confirmed private unicorns & 5 tech companies valued at over $1 billion, excluding telco mobile money subsidiaries.”
“Unicorns are becoming less rare globally and in Africa too” by Emeka Ajene
🔮 Trend Watching
EARLY GEOGRAPHIC EXPANSION IN AFRICAN MARKETS = DEFENSE (RISK MITIGATION) + OFFENSE (SCALE)
Exactly a year ago today, Afridigest published “Venture scale startups targeting Africa should start with a multi-country mindset,” where we argued that “one way startups can reduce th[e] ‘uncertainty risk’ in a given [African] market is by pursuing geographic diversification.”
With the Central Bank of Nigeria’s recent decision to freeze the accounts of fintech startups Chaka, Risevest, Bamboo, and Trove, there seems to be a new/renewed focus across the ecosystem on risk mitigation via a multi-country mindset.
TechCabal @TechCabalJUST IN: The Central Bank of Nigeria has just frozen the bank accounts of Nigerian fintech platforms Risevest, Bamboo, Trove and Chaka for the next six months. https://t.co/g7ORa0WXyg
It’s against this backdrop that startups facilitating expansion across the continent’s fragmented markets are beginning to take root.
Sidebrief, for example, is building Stripe Atlas for Africa and helping startups navigate company formation, tax issues, and business compliance across African borders. Norebase does much of the same, helping “de-risk innovation through pan-African expansion.” And, for its part, Eversend, is working on an Eversend for Business product that it says will provide startups in Africa with the “rails needed for expansion.” Worth a mention here also is San Francisco’s Deel, which was recently valued at $1.25B; active across African markets, it helps startups “compliantly hire, onboard, and process payroll for their international teams.”
Watch this space. 💡
📢 Afridigest is the industry newsletter for Africa’s startup ecosystem.
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📚 Quick Hits
FOR YOUR READING PLEASURE
An inside look at the memo On Deck used to raise a $20 million Series A — An example of a successful alternative to a pitch deck
Measuring Culture — Company culture is widely recognized to be a key intangible asset, yet few investors have attempted to formally measure it
23 habit-making insights for product-minded founders — Behind every great product is an insight into human psychology
Tug of War: Balancing What’s Best for the User vs. Business — In the short-run, orgs can extract business value at the expense of user value and are incentivized to do so, but, over the long-run, business metrics always follow user metrics
UX moats: the three components of defensible UX — UX moats are a form of customer and brand loyalty that plenty of startups should be tapping into
Visual of the week
GLOBAL CRYPTO ADOPTION IS BEING LED BY EMERGING MARKETS
Kenya (#5), Nigeria (#6), and Togo (#9) are among the top 10 countries worldwide for “cryptocurrency adoption by ordinary people”, according to Chainalysis’ 2021 Global Crypto Adoption Index.
“Many emerging markets face significant currency devaluation, driving residents to buy cryptocurrency…in order to preserve their savings. Others in these areas use cryptocurrency to carry out international transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell. Many emerging markets…limit the amount of the national currency that residents can move out of the country. Cryptocurrency gives those residents a way to circumvent those limits so that they can meet their financial needs.”
Pair this with:
How bitcoin met the real world in Africa (Reuters, Sep 2020)
Africa now has the largest volume of bitcoin peer-to-peer trading worldwide (Nasdaq.com, Aug 2021)
🕵️♀️ In case you missed it
NEWS & ANNOUNCEMENTS
Africa’s oldest insurer, Old Mutual, and VC firm Anthemis Group have formed a partnership that will see Old Mutual “act as the exclusive strategic investor for Africa” in an Anthemis fund focused on Series B & C insurtech companies across Africa and worldwide — Anthemis’ portfolio companies include Jumo & Apollo Agriculture
WorldRemit is raising funds at a $5B valuation — In Aug 2020, WorldRemit announced its acquisition of Sendwave for $500M in cash & stock; at the time, Bloomberg’s sources suggested the valuation of the combined company was ~$1.5B. What a difference a year makes.
Omoniyi Kolade, Founder & CEO of Nigerian payment processing platform Seerbit writes “Why paytech is the key to unlocking Africa's new free trade zone”
“The success of continent-spanning global actors like Amazon and Uber show[s] the clear need for digital technology to take an international, rather than national or continental, approach. By optimizing African payment systems for global trade, African businesses will be empowered to transact and expand globally. ”
Elo Umeh, Founder & CEO of Nigerian martech company Terragon, discussed reaching African customers on the Marketing Trends podcast
Maya Horgan-Famodu, Founder & MD of Ingressive Capital ($10M Fund 1 & $50M Fund 2), spoke with Future Africa Co-founder Olabinjo Adeniran on the Invest in the Future podcast
The Afrobility podcast discussed Helium Health: how the health tech infrastructure platform supplies services to health care providers across Africa
Retail trading apps in Nigeria face a defining moment (Quartz Africa)
Zero to scale: Tolu Adetuyi, Head of growth at Moniepoint (BenjaminDada.com)
🗣️ A final word
“The opportunity cost of holding on [to an opportunity past its time] is missing the next big hit.” — Iyin Aboyeji
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