Afridigest Week in Review: Cash for cards

+Startup spotlight: Egypt's ON Market +Flutterwave's board turns a blind eye? +Sabi's secret Series A? +The UX opportunity for neobanks +Partech, Cathay-AfricInvest, & Tofino eye new funds +More

Emeka Ajene

Apr 25

The Afridigest Week in Review is a must-read weekly recap for Africa-focused founders, executives, and investors, as well as interested observers. Glad to have you here. 😊

Welcome back, friends! The most clicked link from last week was the a16z article on raising debt for startups. This week we bring the startup of the week back from a long hiatus with a look at the grocery delivery sector in Egypt.

With that said, let’s get into Week 16’s newsletter — it’s a long, comprehensive one, so thanks in advance for sharing with your colleagues and across your social platforms. 🙏🏽

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.

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Week 16 2022: April 17-23

Animated cards GIF — Credit: *Melanie Berberette*

📰 Deal of the Week

CARDS ACROSS THE CONTINENT

Union54, a Zambian debit card issuing platform, raised a $12M seed extension round led by Tiger Global, with participation from new investors Earl Grey Capital and Not Boring Capital, and existing investors Vibe VC and others.

Union 54’s platform offers BIN sponsorship, transaction processing, monitoring, and settlement via one API, enabling users to issue and operate debit cards without a bank or third-party processor.

⛏️ Go deeper:

Traction: Since its October 2021 launch, Union54 has issued over 500K virtual debit cards and has processed ‘double digit’ millions of dollars in transaction volumes. Other public disclosures suggest Union54’s March revenue was roughly $100K.
The Zambian scheme: In addition to card issuing, Union54 plans to create an alternative card scheme to take on Visa and Mastercard.

“When you think about the card networks today, they’re not fit for African merchants because settlement [often takes] three days for a local debit card, maybe … over seven days for an international debit card. There’s a significant opportunity [for] a payments route … developed locally for local use.” — Co-Founder & CEO Perseus Mlambo
Go back in time: Read the original vision for Union54 — at the time a subsidiary of Zazu
Watch the CEO tell the untold story of Union54:

🔦 Other deals

OTHER FUNDRAISES ACROSS THE CONTINENT

The Food Lab, an Egyptian cloud kitchen platform, raised a $4.5M pre-seed co-led by 4DX Ventures, Nuwa Capital, and Shorooq Partners, with participation from Al Faisaliah Group, Samurai Incubate, and others — Launched in Q4 2020, The Food Lab works with over 50 restaurants and food brands and has served over 175,000 end customers
Etap, a Nigerian automotive insurance platform, raised a $1.5M pre-seed led by Mobility 54 with participation from Tangerine Insurance (Etap’s underwriter), Graph Ventures, Newmont, and others — The beta version of the Etap app was launched in November 2021
Jobop, a Moroccan HR platform matching companies and temp workers, raised ~$1M (MAD 10M) — Launched in 2021, Jobop has over 12,000 temp workers in its database, principally across the hospitality, construction, logistics and transport, industry, sales and distribution sectors
Syarpa, a Nigerian cross-border fiat and crypto payment platform, raised a $500K pre-seed from Estonia’s Yolo Investments and others — Since launch, Syarpa has acquired over 2,000 users and processed over $4 million in transactions, generating ~$50K in revenue
Rise.ng, a Nigerian e-commerce platform for booking artisans, raised a $150K pre-seed
Sabi, a Nigerian B2B operating system for informal retailers, seems to be quietly raising or have raised not long ago an unannounced $20M Series A from Norrsken22 and other investors — Bloomberg reported this week that “Norrsken22’s first investment was through a $20 million funding round in Sabi” and previously reported that “Sabi is seeking $125 million in a Series B funding round planned to start in September”; Sabi’s last publicly announced round was a $6M bridge round five months ago in Week 47 2021

VC FUNDRAISING

Partech Partners has officially begun fundraising for its second Africa-focused fund as Dutch development bank FMO considers a $26.8M (€25M) investment in Partech Africa Fund II — This comes three years after its $143M first Africa fund whose LPs include Averroes Finance III, the IFC, the EIB, and the African Development Bank; the Partech portfolio includes Wave Mobile Money, TradeDepot, Yoco, Reliance Health, and Nomba (formerly Kudi)
The Board of Directors of the African Development Bank approved an ~$11M (€9.8M) investment in the Cathay-Africinvest Innovation Fund — CAIF is targeting ~$119M (€110M) to invest in over 20 early-stage startups across sub-Saharan Africa
Eliot Pence and Aubrey Hruby’s Tofino Capital announced the first $5M close of a targeted $10M fund — Tofino plans to invest between $50K and $500K, mostly in pre-seed and seed stages and its LPs include various family offices, WS Investment Company (the investment fund of law firm Wilson Sonsini Goodrich & Rosati), and various American startup executives; while the fund has yet to make its first investment, Pence & Hruby’s angel investing portfolio includes SeamlessHR, Sabi, and Mecho Autotech
FSD Africa is making a $3.3M investment over 4 years in TECA (Triggering Exponential Climate Action), a fintech venture launcher — Created with BFA Global, TECA will focus on launching 100 new ventures at the nexus of fintech and climate resilience by 2026, the majority of which will be in Africa

📚 Quick Hits

FOR YOUR READING PLEASURE

VС’s view on fintech and B2B payments infrastructure startups — Runa Capital’s Gleb Onishchenko: “Guess where the fintech and B2B models collide? Right, in the fintech infrastructure space… Fintech infrastructure is a combination of startups that 1) empower banks to go digital and 2) enable other startups to launch fintech products.”
Software ate the world, it will eat venture capital too — Avichal Garg & the Electric Capital team on why they’re building Electric like a software company, not a VC firm: “Venture capital is just one of many forms of capital deployment in the global capital markets that will get eaten by crypto… Crypto lowers investment barriers and further commoditizes capital, posing an existential threat to venture firms that do not adapt. To compete over the next ten years, venture firms will need to be run like software businesses.”
Why LatAm is on the rise — NFX’s Pete Flint & Anna Pinol explain why the firm has been so active in the region: “A shared vision is often necessary for a new ecosystem to emerge, and that’s what we’re seeing in Latin America. But we’re also seeing a confluence of growth trajectories across markets, mindsets, and networks… There are a few key factors that really separate the opportunities in LatAm: the power of compounding talent, massive underserved markets, and the advantages of homogeneity.”

Bonus:

FT Partners’ Q1 2022 global fintech insights report — Another comprehensive report from FT Partners. Notably, Q1 2022 was apparently the most active quarter ever in terms of the number of fintech deals worldwide, and 4% of these fintech fundraises happened in Africa.

🚀 Startup spotlight

GROCERY DELIVERY IS HEATING UP IN EGYPT

Egypt’s ON Market raised a pre-seed round in Week 13 and Co-Founder & CEO Moatasem Marzouk was generous enough to speak with us in this week’s startup spotlight.

The pitch:

ON Market is an online grocery marketplace that makes it easy for Egyptian customers to transact with their favorite grocery retailers; it enables users to order from multiple stores in a single order.

What problem does it solve?

“We’re helping customers avoid the hassle of shopping for groceries and daily food essentials in person, allowing them to save time by buying online from the retailers around them instead: supermarkets, fruits & vegetable stores, butcheries, bakeries, pastries stores, etc. At the same time, we empower those retailers to build and sustain online commerce, providing them with technology and business solutions.”

What's the business model?

“We employ a marketplace business model — aggregating the retailers in one place and allowing customers to compare pricing, offers, product availability, and other relevant information. And for the first time in Egypt, we allow customers to order from multiple stores and get all items delivered at once.”

The quick commerce model is increasingly popular globally, but it has many skeptics. What's ON Market's view?

“As we allow customers to aggregate items from multiple retailers in a single order, we previously completed a survey specifically to answer this question.

According to our survey, 98% of customers in our market prefer to get their full order delivered all at once even if this means a longer delivery time (up to 60 minutes); only 2% prefer to get separate vendor-by-vendor orders that maximize delivery speed (less than 30 minutes).”
Speed isn’t the only way to deliver value in the e-grocery sector

In Egypt, the grocery delivery landscape is growing rapidly with a variety of players like Rabbit, GoodsMart, Appetito, Breadfast, and others attracting VC investment in recent years. Sometimes increased competition is indicative of a large market opportunity, but what's ON Market's view of what's driving the growth in the space? And how will ON Market win over the long term?

“The grocery market in Egypt is promising. It's evaluated at $35 billion and is expected to grow by 15% over the next 3 years. In 2021 alone, the sector attracted over $150M of venture capital investment, however, it's far from being saturated and there is still no dominant player.
Image provided by ON Market
We believe it's healthy for such a large market to have a variety of competitors. But we offer a differentiated approach and we’re tackling the pains of grocery shoppers and retailers differently.

While most players in the market operate the dark store business model where they sell products directly to customers in direct competition with grocery retailers, our approach is instead to partner with local retailers and empower them to build and sustain their online commerce.

That said, competition will serve to bring about the development & maturation of the market and accelerate not only the adoption of online grocery shopping by consumers but also the digital transformation of retailers which is an important focus for us.”

Thanks again, Moatasem — we’ll be cheering you & the team on. 🙏🏽

🙈 Visual of the week

THE OPPORTUNITY FOR NEOBANKS TO IMPROVE SERVICE DELIVERY

In last week’s deal of the week, we highlighted a quote from Tiernan Kennedy, Co-Founder & CEO of Nigeria-first neobank Umba, about the competitive landscape and market opportunity for digital banks:

“The thing is that the services that are out there today just aren’t that good. It’s not great for the consumer, but it provides a real opportunity to come in and provide a better service…”

Here’s data from a Nigerian research & credit rating agency backing him up — it shows that, according to consumers surveyed across the country, the digital banking user experience of the top ten Nigerian banks is sub-par or worse.

Source: Agusto & Co’s 2021 Consumer Digital Banking Satisfaction Index

Pair with: The king's ransom waiting for African businesses that create magic moments for customers

🕵️‍♀️ In case you missed it

NEWS & ANNOUNCEMENTS

ESSAYS/REPORTS

Efosa Ojomo, Senior Research Fellow at the Christensen Institute, writes ‘Africa’s efficiency innovation problem’
Hafiz Juma, Founder & CEO of Tanzania’s inalipa, writes ‘All the K.E.N.G.S. men’
Lateral Capital’s Samakab Hashi, Shreyas Mishra, and Njuguna Kamau write ‘Open Banking and Embedded Finance in Africa (Part 3)’
Chikamso Nwani, VC Analyst at LoftyInc, writes ‘Opportunities in the hierarchy of markets’
Osahon Akpata, Head of Consumer Payments at Ecobank, writes ‘How should banks respond to the digitization of consumer financial services in Africa?’
FMO, in partnership with Dalberg, published the report, ‘Catalyzing investment in electric mobility: The case for Africa and the Middle East’
Future Africa & TechCabal published the report, ‘African Tech: How regulation can shape the future’
Chris Quintero and Stack Shift released the results of their Africa Web3 salary survey

THE ONGOING FLUTTERWAVE SAGA

Flutterwave CEO addresses alleged misconduct claims in email to employees (Techcrunch)
Flutterwave is both dismissing and reviewing allegations against its CEO (Quartz)
The scandal shaking Africa's tech ecosystem (Communiqué)
More allegations against Flutterwave as CEO, Board, and investors turn a blind eye (iAfrikan)
Source: iAfrikan

INTERVIEWS/PROFILES

🗣️ Community Corner and Opportunities

I see you, friends!

Congrats to Kyane Kassiri and Hayden Simmons — things continue to heat up with Kyane officially joining Rally Cap
Congrats to Ashley Lewis for a successful five-year tenure at Accion Venture Lab — we’re looking forward to hearing about what comes next
Congrats to Ahmed Elmurtada and the 249 Startups team on a successful launch event in Khartoum
Congrats to Charles Nichols on the ongoing public introduction of Nuzo — Exciting times ahead
Congrats to Zekarias Amsalu Dubale, Leland Rice, and the AFS team for what I hear was a great Africa Fintech Summit DC 2022
Finally, join us in welcoming Albert Wenger and Union Square Ventures to the African continent — in Week 14’s Week in Review, we noted that Egypt’s Shift EV “appears to be USV’s first investment in Africa” and it’s now officially confirmed:
Albert Wenger 🌎🔥⌛ @albertwenger
Our first ever investment in Africa: Shift EV is retrofitting vehicles to electric, starting in Cairo, Egypt
USV @usv
Announcing @usv investment in Shift EV https://t.co/x9mZEcHs9N
April 20th 2022
31 Retweets239 Likes

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Thanks for reading 🙌🏽 Send me your news, comments, questions, etc. via Whatsapp, Twitter DM, or email, and feel free to reach out if you just want to chat. 🙏🏽

— Emeka

Afridigest