Afridigest Week in Review: Another unicorn from Africa
+Storytelling is a superpower +Transsion's strategy +Startup spotlight: Kaoshi +Early innings of VC across Africa +Andela mafia +Starting lean in Africa +more
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, friends! I'm still looking for an intern to help with things here at Afridigest so please reach out if you know someone :) And thanks for the great recent exchanges Joe, Laurie, Biola, Andile, Kamso, & Samora!
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Week 39 2021
📰 Deal of the weekAFRICA’S LATEST UNICORN
Andela, a global talent network connecting companies with engineering talent in emerging markets, raised a $200M Series E round led by Softbank Vision Fund 2 at a $1.5B valuation. Whale Rock, a Boston-based hedge fund, Generation Investment Management, Spark Capital, and the Chan Zuckerberg Initiative also participated.
“The company now boasts over 200 international clients and has more than 2,500 vetted experts in its network. Around 60% of its developers are in Africa, with the rest in Europe and Latin America,” according to Rest of World Africa reporter Abubakar Idris.
💡 Why it’s the deal of the week: Andela got its start in Lagos, Nigeria, and is the latest unicorn to come from Africa; it’s also the only current non-fintech unicorn on the continent.
⛏️ Go deeper:
Going global pays off: In Week 19’s Digest last year, we noted Andela’s pivot away from employing African engineers that saw it close physical offices across the continent and espouse a new future as a global “talent network;” that pivot came after a previous strategic shift in September 2019 that saw it lay off ~400 junior engineers in Nigeria, Uganda, and Kenya to focus on senior engineers. As CEO Jeremy Johnson said at the time: No story of growth is perfectly smooth. Indeed.
Early indicators: This makes the third investment on the continent for Softbank, the globally recognized investor, who has backed OPay, Shyft Power, and now Andela, via different vehicles
A look back — dreams do come true:
🔦 Other dealsFINTECH, LOGISTICS, EDTECH, SOLAR
Yellow Card, a Pan-African cryptocurrency exchange, raised a $15M Series A, led by Valar Ventures, Third Prime, and Castle Island Ventures with participation from Jack Dorsey’s Square, Blockchain.com Ventures, Coinbase Ventures, Polychain Capital, BlockFi, Fabric Ventures, Raba Partnership, MoonPay, GreenHouse Capital, Audacity Fund, and others — the company is present in 12 African countries, with 110 employees worldwide, & has seen a ~30X increase in users across Africa since Covid-19 began
Verto, a UK- and Nigeria-based B2B payments platform raised a $10M Series A led by Quona Capital, with participation from Treasury, Middle East Venture Partners (MEVP), TMT Investments, Unicorn Growth Capital, Zrosk Investment Management, and P1 Ventures — today, businesses can exchange money in over 200 countries across 39 currencies on Verto; it currently “facilitates billions of dollars” in annual transaction volume
SunExchange, a South Africa-based crypto-enabled peer-to-peer solar leasing platform, raised a $2.5M convertible from ARCH Emerging Markets Partners Limited’s Africa Renewable Power Fund (ARPF) — this follows the company’s $4M Series A in 2020, led by a $3M investment from ARPF
Yobante Express, a Senegalese logistics platform, raised a $1.2M seed round from Grenfell Holdings, Launch Africa Ventures, R-Ventures, Aguila Investments, and others — the startup has carried 1.2M packages and is on an $8M annual revenue run rate
Edves, a Nigerian software platform digitizing teaching & learning processes in schools & colleges, raised a $575K seed round led by Beta.Ventures, with Launch Africa Ventures, Chinook Capital, and Future Africa participating — Edves is active in almost 800 schools across Nigeria, Ghana and Zimbabwe, and planning further expansion
Cloud Fret, a Moroccan logistics startup connecting loaders and transporters, raised $390K from Azur Innovation Fund
Fin-e, a Ugandan operator of tech-enabled credit solutions to communities transitioning to solar, raised a $300K pre-seed round
📚 Reads of the WeekSTORYTELLING IS STILL A SUPERPOWER
A great long-read on narratives and how they matter for public & private companies.
“The best founders have figured out that owning their narrative gives them meaningful leverage. … Product market fit is just narrative distillation for customers. It only makes sense that this same process is as crucial for investors and employees, too. And just as we have spent so many years reinforcing the primacy of founders focusing on product market fit, so too must founders take distilling their narratives for all audiences equally seriously.”
🥇 “Narrative Distillation” by Kevin Kwok
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ONE PATH TO WINNING IN AFRICAN MARKETS
Chinese phone-maker Transsion dominates across Africa with its three brands—Tecno, Infinix, and Itel—commanding nearly 50% of the continent’s smartphone market in Q2. Here’s a solid read on Transsion's strategy & upmarket shift, its R&D process, and marketing tactics.
"On entering Africa’s cellphone market in 2008, they brought with them feature phones: simple cell phones with no touchscreen... But as time went on, Transsion started to shift its strategy. … They decided they were going to develop the perfect camera for Africa ... [and] hired staff to take more than 10,000 photos a month of people in Nairobi."
“How to sell smartphones fast in Kenya” by Alexandria Sahai Williams
🚀 Startup of the WeekINFRASTRUCTURE FOR CROSS-BORDER FINTECH
The pitch:
Kaoshi is building financial data infrastructure that enables financial services beyond borders: remittances, health insurance, mortgage, lending, etc
What problem does this solve?
Immigrants living in the diaspora generally lack the financial data needed to obtain various financial services, whether it’s getting a bank mortgage for a real estate property in their home country, purchasing health insurance for loved ones back home, or sending money across borders.
The lack of financial data on immigrants limits the financial services that financial institutions in their home countries can offer them.
Kaoshi is building infrastructure that aggregates immigrants' financial data from various sources so that financial institutions in their home country can have user-permissioned, on-demand access that facilitates financial services.
While Kaoshi’s views itself as a financial data platform, users see it currently as a cross-border remittance platform. We asked Kaoshi CEO & Co-Founder Chukwunonso Arinze to explain the company’s focus on cross-border remittances.
“Remittances are the most developed cross-border financial service and that’s why our initial focus is on innovating in this space.”
“We use open banking & financial data to allow immigrants to engage in direct P2P currency swaps that result in disruptively cheap, fast, and convenient cross-border money transfer experiences.”
“Users send money across borders for as low as $1, irrespective of the amount they are sending, with great underlying FX rates & unprecedented speed.”
How is Kaoshi different from the multiple other players in the cross-border payments space?
“We’re the only financial-data-enabled P2P currency exchange platform.”
“P2P currency exchange is a well-known business model, but most players using this model use escrow to secure P2P swaps; using escrow, however, means that these players are basically middlemen and … need to open escrow accounts in each jurisdiction that they operate in — a herculean task with significant operating costs.”
“On Kaoshi there are no escrows; rather, financial data is used to validate P2P swaps and secure the transactions. Users directly swap their currencies and their financial data is utilized to validate these swaps.”
“This means we eliminate the need for any middlemen and their accompanying costs, allowing for far cheaper remittances. This also allows us to scale more rapidly — it’s why we are in over 40 countries in less than a year of operations…and crypto is not involved at all.”
Thanks, Chuwkunonso, and best of luck to the Kaoshi team. 🙏
Sign up for Kaoshi today to exchange naira/cedis for dollars/pounds/euros/etc., and vice versa! — it’s Afridigest approved 😊
📢 Afridigest is the industry newsletter for Africa’s startup ecosystem.
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📚 Quick HitsFOR YOUR READING PLEASURE
The Community Playbook for Founders — strategies & stories for founders seeking to build community as a competitive advantage
Crypto and the Consumer: The Road Ahead — there are emerging technologies that represent a paradigm shift around how businesses operate and how consumers live, crypto—a catch-all term—is one of them
7 things that have changed about SaaS companies in the last 7 or so years — SaaS is bigger & growth is faster. There’s more competition & initial traction is harder. MVPs are much more polished. SaaS is much better understood as a model. SaaS acceptance by customers is higher. SaaS success can happen without a sole focus on large enterprises. Specialized SaaS vendors make things easier.
Bonus:
🙈 Visual of the weekSTILL THE EARLIEST OF INNINGS ACROSS AFRICA
Number of VC deals by region, 1997–2021 (three-point moving average)
🕵️♀️ In case you missed itNEWS & ANNOUNCEMENTS
Tunisian/Egyptian VC firm, Flat6Labs, announced the second close of its Tunisia-based Anava Seed Fund (ASF) at $10M — this follows the $13M close of the Egypt-based Flat6Labs Accelerator Company fund (FAC) in May 2021
The US International Development Finance Corporation approved a $10M investment in Atlantica Ventures Fund I — the Africa-focused fund has secured $22.5M towards a targeted $50M close, according to Jeune Afrique Business
EMURGO Africa, the Africa-focused commercial arm of the Cardano blockchain, will provide strategic capital & incubation to over 300 regional Cardano-focused startups across Africa — EMURGO is splitting $100M between an Africa-focused investment vehicle and one focused on developed markets
Meet the 16 African companies selected for Venture Capital for Africa’s Seed and Series A showcase
ESSAYS
Idris Bello, Founding Partner at LoftyInc Capital, draws attention to an overlooked aspect of the Andela story in ‘An emerging Andela Mafia?’
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“As someone who has seen the ripple effect of the Paypal mafia in the US, and the Uber/Careem mafia in MENAP, … I started asking my Andela people to see if they knew any Andela alumni who had gone on to either start a tech startup themselves or play a lead role at one… [Here’s a] list of over 50 Andela alumni who have since gone on to found companies or lead a startup.”Chuwkuemeka Afigbo writes about new product development & the lean Startup methodology in the African context in ‘On Starting Lean in Africa’
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“When Mark Essien the founder of hotels.ng came up with the idea for the business, there were so many unanswered questions. … He created a simple web page…that had only one thing on it: His mobile phone number. He ended up getting so many phone calls that his battery died. … Now that was real live validation that there was definitely an audience consisting of people looking to book hotels in Nigeria.”Diana Bresendale, Futures Studies graduate of the University of Stellenbosch Business School (USB), asks ‘Is hard cash on its way out in South Africa?’
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"Cash is not only costly but constrains economic growth when compared to more efficient non-cash forms of payment. The economic benefits of going cashless are emphasized but the value proposition of non-cash alternatives has not inspired mass adoption in South Africa."
PODCASTS
Abieyuwa Obaseki, a consultant at Stears Business, speaks with Tayo Akinyemi about sizing consumer markets & enabling consumption in Nigeria on the Trajectory Africa podcast
Dr. Ikpeme Neto, Founder & CEO of Wellahealth, spoke about enabling affordable healthcare in Nigeria with micro-insurance on the Insurtech Business Series podcast
Nadayar Enegesi, Co-Founder & CEO at Edenlife, discussed his journey so far, why Edenlife is important, and his view of the biggest challenges on the Open Africa podcast
VIDEOS
OTHER ARTICLES
How mobile money grew in sub-Saharan Africa in the last 10 years (Quartz)
Mobile money dominates fintech investment in Africa (Brookings)
Close to 6M merchants in South Africa still transact only in cash, says Yoco’s Carl Wazen (PYMNTS)
A new payments platform for African currencies is a push for independence from the dollar (Quartz)
Netflix’s Africa play: Mo Abudu, free access and local partners (Africa Report)
🗣️ A final word“In life, the challenge is not so much to figure out how best to play the game; the challenge is to figure out what game you’re playing.”
LA FIN
Thanks for reading 🙌 If you found this newsletter valuable, share it with a colleague.
Feedback or questions? Or just want to say hi? Feel free to message me on Whatsapp or Twitter (@eajene) or email me.
Thanks Emeka for this discussion about Andela. Startups should be ready to pivot if necessary. The question is when and how. I think that data and gut are needed to take this kind of decision