Afridigest Week in Review: Is healthcare the new fintech? 👩⚕️
+Has Africa’s unicorn lost its horn? +Ridehailing roadblocks. +Shifts and pivots at Andela. +Pinduoduo. +Business strategy for startups.
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The Afridigest Week in Review aspires to be a must-read weekly recap of notable Africa-related business & innovation news and events. It’s a more digestible appendage of sorts to Afridigest.com—but living on Substack—and is designed to pique especially the interests of founders, operators, & investors in African markets. Support this effort by sharing it and subscribing below, and leave a comment or send a Twitter DM: @eajene
Week 19 2020
📰 Deal of the week
Helium Health raised a $10M Series A (at a rumored pre-money valuation of ~$30M). The round was co-led by Global Ventures and Asia Africa Investment & Consulting, with Tencent, Y Combinator, Ohara Pharmaceutical Co, HOF Capital, VentureSouq, Chrysalis Capital, Kairos Angels and Flying Doctors Healthcare Investment Co. also participating.
💡 The big question: Is healthcare Africa’s new fintech?
Fintech has dominated the ecosystem’s attention in recent years, attracting up to 40% of all 2018 investment in Africa and remaining the top sector in 2019. Does Helium Health’s raise signal a turning point, especially given the new COVID-19 landscape?
Noor Sweid, GP and Founder at Global Ventures, seems to think so: “Now what we are excited about is health tech. That, for the next five years, is what fintech was for the last five years.”
The deal also marks further exposure to Africa’s healthcare sector for Japan’s Ohara Pharmaceuticals which acquired a 20% stake in a leading publicly-listed Nigerian pharmaceuticals company (PDF) less than a year ago.
🤝 Other deals
Instabug, an Egyptian provider of bug & crash reporting software, raised $5M led by Accel Partners with participation from angel investors including Amr Awadallah, co-founder of Cloudera, and Jim Payne, founder/CEO of MoPub.
East Africa Fruits Co., a Tanzanian distributor of organic produce, closed a $2.05M series A round, led by Goodwell Investments with participation from FINCA Ventures and elea.
Pravica, a Cairo-based privacy-focused email service provider, raised $500k led by 500 Startups & joined by Modus Capital and DYRES Ventures.
🦄 Has Africa’s unicorn lost its horn?
Jumia, the NYSE-listed e-commerce company operating in Africa, IPOed in April 2019 at $14.50 a share. Since the IPO, it traded as high as $49.77 and reached a market cap of $3.68B. Today howver, the company trades under $5 with a market cap of roughly $360M.
To mark the one year anniversary of its IPO, Larry Madowo published this piece via the BBC featuring such choice quotes as “Jumia's first year on the NYSE is a proper reflection of the value of the company.” (ouch!) and “Their business is still fundamentally broken, they have no way out.”
Nigeria’s most wanted man (😉), Marek Zmyslowski, Co-Founder of what’s now called Jumia Travel, took offense with what he perceives to be schadenfreude, writing in a blog post:
“There is only a handful of companies in Sub Saharan Africa that did even remotely as much good for the ecosystem as Jumia. The IPO itself validated the market and many fund managers got their investments thanks to that. Hundreds of Jumia employees went on to become founders…More hustling, less hating.”
Jumia reports Q1 2020 earnings on Wednesday the 13th. As Zmyslowski says, “At the end of the day, numbers will show us everything.”
🏍️ Ridehailing roadblocks
Careem, the MENA ride-hailing player acquired by Uber for $3.1 billion at the start of the year, announced layoffs of 31% of its workforce noting that its “business is down by more than 80%.” This is in line with public reports of the impact of COVID-19 on the ride-hailing sector.
Lyft CEO & Co-Founder Logan Green, May 6th: “For the month of April, rideshare rides were down 75% year-over-year…rides last week were still down more than 70% year-on-year. We cannot predict the trajectory or timing of the eventual recovery, but it is clear that macro trends will continue to negatively impact our business.”
Uber CEO Dara Khosrowshahi, May 7th: “I want to talk about what we're seeing in our Rides business today, and I won't sugarcoat it. COVID-19 has had a dramatic impact on Rides with the business down globally around 80% in April.”
In sub-Saharan Africa, various reports (TechCabal, Techpoint, WeeTracker) suggest to different degrees that Nigeria’s OPay, a mobile payment service and consumer platform (i.e. ‘super-app’) that has raised over $150M has laid off large numbers of employees and is pivoting away from it’s motorcycle-based ride-hailing service, ORide. However, Ridwan Olalere, former Senior Director of Operations at ORide (rumored to now be Uber’s new Country Manager in Nigeria) suggests on Twitter that the reports are not entirely accurate:
But there are some striking narratives floating around nonetheless:
Elsewhere in sub-Saharan Africa, Gozem, a ride-hailing platform operating in Francophone Africa with ambitions to be Africa’s super-app announced a mobile-money partnership in Benin with Etisalat (part of Maroc Telecom Group).
(Disclosure: your humble author is affiliated with Gozem.)
And in Uganda, SafeBoda will enjoy strong regulatory tailwinds.
🔀 Pivots, shifts, and strategic transitions
Andela, the remote engineering-as-a-service company with offices in Lagos, Nairobi, Kampala, Kigali, and Cairo announced layoffs of ~10% of the company. In a Medium post, CEO & Co-Founder Jeremy Johnson also announced a new strategy that involves creating a ‘long-term engineering talent network’ composed of external developers, as opposed to its current model of placing full-time Andela employees with its client partners. This comes after a previous September 2019 ‘strategic shift’ that saw the company move away from its prior focus on training & hiring junior developers. The startup has raised over $180M since its 2014 founding.
🌏 Asia Read of the Week
Your humble author has long posited that innovators in Africa should pay attention to business models being developed in the Far East. In that vein, this case study on NASDAQ-listed PDD is presented.
Pinduoduo is one of the first companies to successfully create a social shopping experience online, and has accelerated the transition of commerce from offline to online in China. In our view, Pinduoduo’s rapid success in social commerce will be replicated by others globally, which will continue to drive commerce in social-driven categories online. And so, to understand the success of Pinduoduo is to understand the future of global e-commerce.
💡 “Pinduoduo and The Rise of Social E-Commerce” by Anu Hariharan and Nic Dardenne
⚔️ Strategy Read of the Week
A thoughtful look at business strategy. But for startups.
Creating a strategy for a startup is fundamentally different than creating a strategy for a large, established company in a relatively stable market. The uncertainty that startups must have as their moat, the uncertainty that dominates so many aspects of starting, running, and planning in a startup makes the strategy taught in business schools around the world almost entirely beside the point. If we want to talk about strategy for startups we need to talk about a different kind of strategy than Porter’s. We need to pull apart the very idea of business strategy, get to its core, and then rebuild it with the presence of uncertainty baked in.
💡 “Strategy Under Uncertainty” by Jerry Neumann
🕵️♀️ In case you missed it
Interview with Okra CEO, Fara Ashiru Jituboh.
Okra is an API platform that connects bank to third party apps (think: ‘Plaid for Africa’) that recently raised $1M.[Video] Crisis Management for African Business Leaders. From Africa.com. Featuring Acha Leke, McKinsey Africa Chairman, Funke Opeke, MainOne Founder/CEO, Rob Shuter, MTN Group Preseident and CEO, and others.
[Video] The Bull Case: Why this is the best time to invest in Africa. From TechCabal.com. Featuring Eghosa Omoigui and Tomiwa Aladekomo.
[Infographic] The Universe of European & North American DFIs focused on Africa's private sector. From AsokoInsight.com.
The details of the Future Collective investment syndicate are now available:
Membership dues of $1000 per year that give access to 5 deals per quarter
20% carry paid to FC upon exit
$10000 minimum investment (exclusive of legal fees) to participate in a given deal
🕵️♂️🐤 In case you missed it - Twitter edition
This tweet on the need & opportunity for contextual business models given certain peculiarities:
This tweet on building customer loyalty:
This thread on traction in Nigerian fintech:
This thread on the potential pitfalls of emerging market investing:
This follow-up to the above thread:
The thing about this game is whether you like it or not you must pay your school fees. I remember losing $40K investing in these famous entrepreneurs’ ICO only for the guys to go to school after raising $10m. I was like talk about paying school fees
Igwe @Thesasquatch_
Up here at 5:30am reminiscing on the times I burned money by deploying capital to some really unfortunate businesses lol. VC/PE in Naija is really the ghetto. Thankfully, I learned my lessons the hard way & have become better at avoiding mistakes. Please allow me rant small...This follow-up to the follow-up above, from an entrepreneur who raised via an ICO:
A lot of people have contacted me about this. I thought it’ll be good to speak to it. It's the crypto market, and I understand how people can feel disappointed especially when things are in the red.
E @iaboyeji
The thing about this game is whether you like it or not you must pay your school fees. I remember losing $40K investing in these famous entrepreneurs’ ICO only for the guys to go to school after raising $10m. I was like talk about paying school fees https://t.co/2P6mJ67x5LCoincidentally, your humble author wrote about the ostensible ICO in question in the above tweets in a 2018 review of bitcoin and blockchain technology across Africa.
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Man YOU are the plug! Been in here for over 2 hours now.
Great job!