Afridigest Week in Review: BNPL's beachhead
+Digitizing informal retail +Copying and pasting without context +Startup of the week +Thinking exponentially +Disposable income +Fintech is not enough +Podcasts (54gene, Amitruck, Medsaf) +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! I didn’t publish an essay on Saturday unfortunately—blame it on the first dose of the Moderna vaccine💉—and I may be traveling this upcoming weekend so heads up: there’s only a 50/50 chance of a new essay this upcoming weekend.
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 35 2021
📰 Deal of the week
GLOBAL BNPL PLAYERS TARGET AFRICA
The first and largest BNPL player in South Africa (according to the company), Payflex has grown from a base of 70 merchants in 2019 to over 1K active merchants today; it’s served over 135K customers to date, up from a customer base of 25K just a year ago.
💡 Why it’s the deal of the week: While Klarna and other major global BNPL providers expand their presence in the West, Zip is taking advantage of their limited presence in African markets.
BNPL solutions have been gaining momentum globally for a while now, accentuated by Square’s $29B purchase of Afterpay one month ago. And as BNPL and alternative credit options continue to become widespread, major global players have two main avenues for growth: expansion into other sectors beyond traditional retail and expansion into untapped global markets with large appetites for credit.
⛏️ Go deeper:
The Zip playbook: This acquisition reflects Zip’s traditional modus operandi — expansion to new markets via acquisitions rather than directly. In May, for example, Zip acquired UAE’s Spotii and the Czech Republic’s Twisto.
Harbinger of what’s to come: Payflex/Zip South Africa could be the beachhead for pan-African expansion to markets like Nigeria and/or Egypt.
Other players in Africa’s BNPL space: Carbon, Shahry, M-Kopa, CredPal, CDCare, Pavelon
🔦 Other deals
DIGITIZING INFORMAL RETAIL & MORE
Agricorp, a Nigerian tech-enabled spices exporter raised a $17.5M Series A comprised of $11.5M in equity from Vami Nigeria, and $6M in working capital financing from One Capital LLC and AFEX — While Agricorp’s aims to be the largest player in Africa’s traditional spices export market, the company has also developed proprietary technology that includes Farmbase, a platform that collates hard-to-obtain agtech data by registering and paying farmers for produce sold
Sabi, a Nigerian B2B platform targeting Africa’s informal retail sector, raised an undisclosed seed round from CRE Ventures, Janngo Capital, Atlantica Ventures, Waarde Capital, and others — Sabi disclosed that it has 10,000+ agents and 150,000+ SMEs who have recorded over US$1.2B worth of sales via Sabi’s MyShop platform since mid-2020
Bumpa, a Nigerian provider of mobile-first tools for SMEs & the informal retail sector, raised a $200k pre-seed from Greencap Equity, HoaQ Club, Whogohost Venture Arm, Rizq Investment Group, Microtraction, DFS Labs, Aidi Ventures, and others — Launched in February 2021, Bumpa disclosed that it has onboarded over 7,000 merchants who have recorded over $500,000 worth of transactions
Ridelink, an Ugandan e-logistics platform that makes use of trucks, tuk-tuks, and boda-bodas (motorcycles), raised a $150k pre-seed from Ortus Africa Capital, Omidyar Network, and African Leadership Academy’s Young Entrepreneurs Fund (Anzisha) — Founded in 2017, Ridelink connects SMEs to transport operators and disclosed that it has over 2000 drivers across East Africa
Lacaisse.ma, a Moroccan provider of POS & digital payment solutions for informal retailers, raised an undisclosed amount from WitaMax — Lacaisse also operates lalivraison.ma, a Moroccan food delivery platform
FWRun, an Egyptian provider of e-commerce storage & fulfillment solutions, was acquired for an undisclosed amount by Diggipacks, a Saudi Arabian delivery & logistics provider
📚 Read of the Week
THE LIMITATIONS OF EMERGING MARKETS COPY-AND-PASTE: CONTEXT IS KING
Rest of World’s Alizeh Kohari pens a perceptive piece on factors that inhibit digital payments in Mexico, and why copying & pasting, even from one emerging market to another, has its limitations.
“Gupta … is trying to replicate [Paytm]’s successes and build a mobile payments company in a country that’s still stoically clinging onto cash.… They aren’t looking to cater to the vast number of Mexicans who remain unbanked. Rather than targeting ‘the next billion users,’ they want to reach middle-class Mexicans who already have bank accounts and use the internet for communication and entertainment.”
🥇 “Why payment apps that thrive in India struggle to succeed in Mexico” by Alizeh Kohari
🚀 Startup of the Week
FINTECH — BEYOND PAYMENTS & LENDING
Accrue is a “wealth-technology app that uses dollar-cost averaging to help users spread risk while they invest in volatile assets like stocks and cryptocurrencies.”
What problem does this solve?
Cryptocurrency curiosity & adoption is growing rapidly, particularly in emerging and developing markets, but many users are put off by the price volatility and the complexity of existing exchanges.
Accrue simplifies crypto & stock investing for the masses by helping users invest fixed amounts into targeted assets at pre-defined intervals; it helps users gain exposure to volatile assets while managing risk.
Accrue’s dollar-cost averaging approach takes the emotion out of investing, reduces the emotional toll of price volatility, and helps users build wealth over the long haul.
With a product pipeline that includes allowing users to fund Accrue with stablecoins, users anywhere across Africa and the world will soon be able to use Accrue.
Uphold — the global “multi-asset digital money platform” whose mission is “to make it easy and frictionless for anyone, anywhere to move, convert, hold and transact in any form of money.”
📢 Afridigest is the industry newsletter for Africa’s startup ecosystem.
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📚 Quick Hits
FOR YOUR READING PLEASURE
A founder’s exponential toolset: Wright’s Law, Moore’s Law, & more — how founders can bridge the gap between emerging tech and the ‘'invisible needs’ of the market in today’s exponential age
8 Product hurdles every founder must clear — What should I build? Who’s my ideal customer? How do I validate my idea? How should I scope my MVP? How do I iterate quickly? Why can't I find PMF? How do I figure out founder-led sales? What should I build next?
The history of Google messaging apps — Because no single company has ever failed at something this badly, for this long, with this many different products, the time has come to outline the history of Google messaging
The NFT Canon — a go-to resource from Andreesen Horowitz for those seeking to understand or do more with non-fungible tokens
SCMP China Internet Report 2021 — following a period of rapid growth and innovation, the China internet sector has entered a new phase of development
Companies that create value from thin air — the next wave of value will be created by innovation that helps capture market externalities in a way that truly grows the pie for society
Bonus: The people who believe plants can talk — Plants can clearly respond to acoustic stimuli of certain kinds and at the very least can sometimes communicate chemically with various forms of life
Visual of the week
"DISPOSABLE INCOME IN AFRICA IS A MYTH"
Disposable income levels across African markets (excluding S. Africa) are generally 15%-30% of the world average, according to Euromonitor. Source: Global Consumer Trends in Sub-Saharan Africa
“All this necessitates consumers to further stretch already lean financial resources, making value-for-money offerings the most attractive….The search for value plays out in different ways…. In South Africa, where consumers tend to have higher disposable incomes and stronger spending power, bulk offers and private label commodities have gained prominence… In Nigeria where traditional and informal retail channels dominate, consumers have leveraged credit sales by their neighborhood grocery retailers. In Kenya, value-offerings entailed process improvements other than price cuts and product discounts.” — Euromonitor International
🕵️♀️ In case you missed it
NEWS & ANNOUNCEMENTS
Pavelon, a Ghanaian fintech provider, announced that it powers Creditmall’s BNPL solution in the country — Pavelon, formerly a provider of smartphone insurance and on-demand mobile repairs, has since pivoted to become a “full technology stack [provider] for building and running consumer finance programs in Africa”
OPay embroiled in $58.7m money-laundering scandal in India — This comes after the company became Africa’s third confirmed private unicorn last week
LoftyInc Capital launched its third fund targeting $10M by Q4 and reached a first close of $5.5M — The firm operates its three funds simultaneously and its portfolio includes Flutterwave, Andela, Trella, Odiggo, and RelianceHMO
Nigeria-based VC firm EchoVC co-led (alongside Frontier Ventures and Ugrowth) a $10M round in Trade X at a $250M pre-money valuation — Trade X is a Canada-based automated B2B platform for the sale and purchase of used and new vehicles. This comes after Damilola Thompson left EchoVC to join Trade X as VP & Global Head of Emerging Markets
MFS Africa was granted a Payment Service Provider license by the Bank of Tanzania — This allows MFS to provide domestic payment services, including disbursements, collections, and aggregation, in the country
The YC S21 batch featured the largest group of African startups yet — With 377 startups across 47 countries, the batch is the largest cohort ever and 90% larger than last year's, which featured 198 companies
Elo Umeh, Founder & CEO of Nigerian martech platform Terragon, writes “Fintech is not enough: Why startup investments in Africa must diversify across sectors”
"Investor insights and expert opinion may point to certain sectors as high potential, informing the rush to fund these categories of companies. However, blind spots exist in data, and context often changes."
Dr. Abasi Ene-Obong, Founder & CEO of 54gene discussed human genomics infrastructure in Africa on the Meb Faber Show
Mark Mwangi, Founder & CEO of Amitruck discussed his entrepreneurial journey on the Fiftyfaces Focus podcast
Vivian Nwakah, Co-Founder & CEO of Medsaf, discussed whether technology disrupt Nigeria's open drug markets on the African Tech Roundup podcast
The link between open banking and financial inclusion (TechCabal)
Chinese investors are again pouring millions into Africa’s fintech start-ups (South China Morning Post)
Experts explain how founders can strategically avoid the pitfalls of business partnerships (Techpoint)
Meet the 12 former Careem, Uber employees who run successful MENA startups (Forbes Middle East)
Gossy Ukanwoke: Bringing innovation to BetKing (The Guardian)
“Angel investing is more than just writing a cheque” — Biola Alabi, Nollywood producer and tech investor (Techpoint)
Tech in Africa is taking off (OZY)
🗣️ A final word
“There is nothing in a caterpillar that tells you it's going to be a butterfly.” — R. Buckminster Fuller
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