Afridigest Week in Review: Africa's most valuable tech startup

+11 other deals +VC fundraises: Atlantica and Janngo +Addressing uncertainty & Minsky moments +Web 3.0 era in Africa +$100K equity-free for blockchain startups +A variety of interesting essays & reads

Emeka Ajene

Feb 21

The Afridigest Week in Review is a must-read weekly recap for Africa-focused founders, executives, and investors, as well as interested observers. Share it liberally. 😊

Welcome back, friends! The most clicked link from last week was Alex Iskold’s '7 tips for founders when negotiating term sheets with VCs.' This week, the race for Africa’s first decacorn is on, let’s get into Week 7.

If you’re new, welcome 🙌 — you’ll receive a weekly digest like this one every Monday and, generally (but not always), an original essay/article on Saturdays. For past essays and digests, visit the archive.

Week 7 2022: Feb 13 - 19

📰 Deal of the Week

AFRICA’S MOST VALUABLE STARTUP

Flutterwave, a Nigerian provider of payments infrastructure, raised a $250M Series D at a valuation of over $3B led by B Capital Group, with participation from Alta Park Capital, Whale Rock Capital, Lux Capital, existing investors Glynn Capital, Avenir Growth, Tiger Global, Green Visor Capital, Salesforce Ventures, and others.

Read B Capital Group’s ‘Why we invested in Flutterwave’

💡 Why it’s the deal of the week: Quoting from the company statement, “Flutterwave has become the highest valued African start-up with this investment. It is a validation of African talent, innovation, and its young inspiring people. It is also a huge endorsement in the growth of the business, innovation, and technology landscape in Africa.”

Flutterwave is among several infrastructure-first startups on the continent. Its core business is enabling merchants across the world to expand their operations across Africa via an API-driven platform that facilitates the processing of local and international cards, mobile wallets, bank transfers, & more.

Read Afridigest’s ‘A potent way to compete in Africa's fragmented markets is by deploying platforms’

It’s now the leading enterprise payments processor for the continent and has since expanded to offer Flutterwave Market, an e-commerce solution with products from over 30,000 merchants, Flutterwave Send, a remittance service that is currently its fastest-growing product (it processed ~5,000 transactions worth over $3.59M in total payments volume in its first full month of launch), Flutterwave Grow, a service that helps African businesses incorporate in the US and the UK, and an ACH payments solution in the US.

⛏️ Go deeper:

Traction: In just five years, Flutterwave has processed over 200M transactions worth over $16B across 34 African countries. Today, it processes over 140 million transactions worth more than $9B annually and serves over 900,000 businesses across the globe including Uber, Netflix, and PayPal
Use of funds:
- Market penetration: “The new funds will drive Flutterwave's ambitious expansion plan to accelerate customer acquisition in existing markets”
- M&A: “We plan to grow inorganically through acquisitions, and it will happen when we … see a company with the same core values or culture and goal of making payments simpler across emerging markets” — Founder & CEO Olugbenga ‘GB’ Agboola
- Product development: The company will also use the funds to “develop complementary products while encouraging new innovations in its products and services development.” At its Flutterwave 3.0 event last week, the company announced a fintech-as-a-service product offering embedded finance solutions, the provision of SME loans, and a solution offering clients the ability to issue virtual and physical cards.
Bloomberg scoops: Gillian Tan first broke this news in an October 2021 article. Another scoop to watch for from the same writer is the Series C round of Nigeria’s TeamApt at a valuation over $1B. Additional news from other Bloomberg writers to be aware of include Paga joining Africa’s unicorn list and Tingo’s search for a $500M private placement.
Early days: Hear the early version of the company’s founding story & solution in this 2016 pitch from then-Managing Director Iyin ‘E’ Aboyeji:

🔦 Other deals

Stitch, a South African API and embedded finance infrastructure provider, raised a $21M Series A led by The Spruce House Partnership, with participation from new investors PayPal Ventures, TrueLayer, and Zinal Growth, existing investors firstminute capital, The Raba Partnership, CRE Venture Capital, and Village Global, and others — Stitch says it’s had 104% m-o-m growth in payments value since launch; its customers include Chipper Cash, Yoco, and FlexClub
PAIX (Pan Africa Internet Exchange), an Amsterdam-headquartered pan-African provider of cloud and carrier-neutral colocation data center services, raised $20M in the first tranche of a Series B round from AfDB-backed Africa50 — PAIX currently operates two data facilities: one in Accra, Ghana, and another in Nairobi, Kenya; earlier this year in Week 3, Africa50 also invested in Kenya’s Poa Internet
Wasla, an Egyptian shopping-optimized browser & desktop extension, raised a $9M strategic investment from Contact Financial Holding (formerly Sarwa Capital) as part of its ongoing Series A — Wasla currently has 1.5M downloads and aggregates deals for a network of over 100 merchants; it’s currently planning to enter the Nigerian market
Earnipay, a Nigerian pay-on-demand/earned wage access provider, raised a $4M seed round led by Canaan Ventures, with participation from XYZ Ventures, Village Global, Musha Ventures, Voltron Capital, Ventures Platform, and others — Since its September 2021 beta launch, Earnipay has served over 20 businesses including Eden Life and Thrive Agric
- For more on the earned wage access vertical, see the ‘Uber for Salaries’ Trend Watching section in Week 29 2021’s Week in Review
Freterium, a Moroccan provider of logistics management software, raised a $4M seed round led by Partech, with participation from CDG Invest, Y Combinator, Flexport, Swiss Founders Fund, Outlierz Ventures, and others — In 2021, Freterium onboarded more than 20 enterprise customers and grew 35% month over month
CrowdForce, a Nigerian agent network focused on the last-mile distribution of financial services, raised a $3.6M pre-series A (debt and equity) led by Aruwa Capital Management, with participation from HAVAÍC and AAIC — CrowdForce currently serves 1.9M customers across 25 Nigerian states with a network of ~7,000 active agents
MoneyHash, an Egyptian payment orchestration & revenue operations platform offering a universal API and a unified checkout system, raised a $3M pre-seed extension led by COTU Ventures, with participation from Ventures Platform, Kepple Africa Ventures, LoftyInc Capital, VentureSouq, VentureFriends, The Continent Venture Partners, Nuwa Capital, First Check Africa, and others — MoneyHash previously announced an undisclosed six-figure pre-seed in June 2021; it has 17 companies using the platform in its test sandbox environment
Zindi, a South African ‘crowd-solving’ competition platform that connects data scientists to data science business challenges, announced a $1M seed round led by Shakti VC, with participation from Launch Africa Ventures, Founders Factory Africa, and five35 — Zindi has a community of over 34,000 data scientists and has run over 100 challenges; the seed round was previously teased in Techcrunch’s December coverage of Zindi
Remedial Health, a Nigerian pharmacy-focused procurement and management platform, raised a $1M pre-seed co-led by Global Ventures and Ventures Platform, with participation from Ingressive Capital, Voltron Capital, Angel Syndicate Fund, and others — Remedial Health currently has over 300 pharmacies using its app for procurement
WafR, a Moroccan loyalty platform that allows users to earn phone recharges when they use the app to pay at retail outlets, raised ~$372K — WafR implied that there are currently 10,000 retail businesses using the platform as a loyalty solution
Boya, a Kenyan employee expense management platform, and Remedial Health (whose pre-seed is discussed above) announced their participation in Y Combinator’s W22 batch — This takes the number of African startups in the batch to 15 so far; Boya and Remedial health join Grey and Duplo from last week and the nine listed in Week 3’s Week in Review

FUNDS

Atlantica Ventures, a pan-African VC firm targeting seed to Series B tech startups, announced a $23.8M (€22M) investment from the European Investment Bank (EIB) and Boost Africa — the Atlantica Ventures portfolio includes Kenyan on-demand logistics platform Sendy, Nigerian embedded finance infrastructure provider OnePipe, and Nigerian insurtech platform Curacel. Jeune Afrique reported in October 2021 that Atlantica had then secured $22.5M towards a $50M target; this fundraise would then mean that Atlantica has effectively reached its target close.
Janngo Capital, a woman-led VC firm focused primarily on West Africa, announced an ~$11.3M (€10M) investment from the European Investment Bank (EIB) into the Janngo Capital Startup Fund — the Janngo portfolio includes Senegalese/French fleet management platform Fleeti, Tunisian B2B e-commerce & logistic platform Kamioun, and Nigerian informal sector B2B platform Sabi; the funds are in addition to a ~$17M (€15M) commitment the EIB signed in December 2020 and Janngo previously announced a ~$68M (€60M) target for the fund

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The Afridigest Week in Review is designed to inform Africa-interested founders, executives, investors, and observers. Share it with those interested in innovation across the continent. 🙏🏽

📚 Quick Hits

FOR YOUR READING PLEASURE

Addressing uncertainty, an overview — Neu VC’s Jerry Neumann writes a longread on uncertainty in high-growth potential startups. “Since uncertainty is what is keeping unbridled competition away, once your startup has mitigated the uncertainty you will face competition unless you have built some other moat. Which moats are available depends greatly on whether the uncertainty the startup is resolving is novelty uncertainty—when you can’t predict something because no one has done it before—or complexity uncertainty—when you can’t predict something because the system you are in is changing in an unpredictable way.”
Minsky moments in venture capital — “The ‘classic’ model of venture assumes that startup outcomes follow a power-law distribution: most startups fail, while a small number of outlier successes generate all the upside. Furthermore, “lemons ripen early” … Meanwhile the outlier successes take time to grow into their full potential. Venture portfolios, therefore, exhibit a J-curve. But this is no longer true. … Higher returns and lower risk means new money floods in… This is the classic template for a Minsky boom”
Talking Shop: The Transformation of Commerce — Index Ventures’ Rex Woodbury briefly explores five aspects of the ongoing transformation of commerce: livestreaming, social commerce, new customer acquisition channels, creator-powered commerce, and creator-led commerce

Bonus:

NFT 101 — Bessemer gathers 3 experts and compiles a beginner’s overview of the NFT movement and the basics to know
Desperation-induced focus — “In my experience, desperation is the single greatest advantage you have as a startup. It takes you down to the lowest level of detail. Desperation inspires creativity and intense focus. It is an essential ingredient to building great products and services.”

🙈 Visual of the week

THE EVOLUTION OF THE WEB IN THE AFRICAN CONTEXT

Not sure if I quite agree 100% but this chart from ePayment Afrique’s Founder is interesting to think about:

Source: Temitope Kogbe - Linkedin post

🕵️‍♀️ In case you missed it

NEWS & ANNOUNCEMENTS

ESSAYS/REPORTS

Investment analyst Olivier Marz explores the value of publicly traded African companies in ‘Tech value quick world tour 3# Africa’
The Mercy Corps Ventures team shares more on their decentralized finance pilot with Sokowatch in ‘Merchant digitization powered by DeFi systems in Rwanda’
The Adaverse Accelerator team writes ‘The emerging crypto space in Africa’
Efayomi Carr, principal at Flourish Ventures, writes for The East African that ‘Embedded finance can help Africa build climate change shield’
A group of policy analysts at The Tony Blair Institute for Global Change published the report, ‘Supercharging Africa’s startups: The continent’s path to tech excellence’ (PDF)
Cathay AfricInvest investors Patricia Rinke, Daniela Weber, and Yassine Oussaifi write ‘How OZÉ empowers African entrepreneurs to reach their full potential’

INTERVIEWS

🗣️ Community Corner

I see you, friends!

Nice CNBC Africa interview on Eversend, Stone 💪🏽
Interested in investing in independent media? Work with Harlan and the MDIF team — they’re hiring an Investment Officer - Africa 💼

LA FIN

Thanks for reading 🙌🏽 As always, I enjoy hearing from you — contact me on Whatsapp, slide in my Twitter DMs, or send me an email, especially if you’re also interested in building/operating/investing in Africa-focused startups or have news to share. Thanks!

— Emeka

Afridigest