Afridigest Week in Review: Major M&A moves
+Market downturn in the African context +GIFs galore +Music streaming across Africa +Catching up with Kenya's Kune +The everything economy +Optimizing for feelings +Endeavor Nigeria's new report +More
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 Sequoia Capital’s Doug Leone on building an enduring company. And in case you missed it, I published 'The top smartphones in Africa' less than 24 hours ago.
This week, we’re having some fun at Afridigest. I heard you like GIFs so we packed several in today’s newsletter—GIFs galore!—& otherwise tinkered with the usual format. If you enjoy this version, let me know by sharing it wherever you typically share this sort of thing — Twitter, LinkedIn, Slack groups, etc. And if you hate it, that’s cool too — but let me know what you think: Whatsapp, email.
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 (if the universe permits). For past essays and digests, visit the archive.
Week 23 2022: June 5-11
📰 Deal of the Week
MFS Africa is acquiring Global Technology Partners (GTP) for $34M (in an undisclosed mix of cash and stock).
About MFS Africa: Headquartered in Johannesburg, South Africa, MFS is a pan-African digital payments gateway that connects over 320 million mobile money wallets across 35+ African countries. The company last raised $100M ($70M equity/$30M debt) in a November 2021 Series C.
About GTP: Based in Tulsa, Oklahoma, USA, GTP is the leading prepaid card processor across Africa. It serves clients across 30+ countries and works with ~80 banks across the continent. It's also fully connected to the Visa, Mastercard, GIM, GIMAC, and Verve networks.
Dare Okoudjou, MFS Africa Founder & CEO
Bob Merrick, GTP Founder
Rich Bialek, GTP CEO
Filip Nilsson; MFS Africa Head of Corporate Development
Why it matters: Mobile money plays an increasingly significant role across sub-Saharan Africa. (Remember last week’s visual of the week?) And many international service providers fail to prioritize African markets, resulting often in broken payment experiences to & from the continent. (Remember this tweet featured in last week’s digest?) An MFS-GTP tie-up helps solve this.
Be smart: With the deal, MFS Africa gains the capability to issue prepaid cards that African users can attach to their mobile money accounts in order to perform international transactions that are difficult or impossible to do today. To put it simply, users across Africa will soon be able to recharge internationally accepted prepaid cards using their existing mobile money wallets.
Amplifying African fintech: MFS Africa also plans to leverage GTP's platform to accelerate the card initiatives of telcos and fintechs across the continent.
Africa to the world: The deal also signifies the 'coming to America' of MFS. Beyond using GTP’s platform to facilitate card & mobile money interoperability, MFS Africa intends to leverage GTP's US presence to expand its commercial activities across North America.
Zoom out: This is the fourth significant acquisition in recent times by MFS. The company acquired international airtime top-up provider Sochitel in 2016, Ugandan SME-focused digital payments platform Beyonic in 2020, and Nigerian agent network Capricorn Digital/Baxi in 2021.
Nota bene: An early version of this first appeared on the Afridigest Linkedin page — today's a good day to follow us if you don’t already.
🔦 Other deals
OTHER FUNDRAISES ACROSS THE CONTINENT
GOMYCODE, a Tunisian tech training & upskilling platform, raised an $8M Series A co-led by AfricInvest’s Cathay AfricInvest Innovation Fund and Proparco, with participation from Wamda Capital and others — GOMYCODE currently operates in Tunisia, Morocco, Egypt, Algeria, Ivory Coast, Senegal, Nigeria, and Bahrain; it has 20 physical centers and over 500 teachers across its current footprint
Indicina, a Nigerian provider of API-driven credit infrastructure that facilitates lending decisions, raised a $3M seed round led by Target Global, with participation from Greycroft and RV Ventures — Indicina has over 120 customers who it has helped process over $5M worth of loans
Klasha, a Nigerian provider of fintech solutions for the cross-border e-commerce space, raised $2.1M co-led by American Express Ventures and Global Ventures, with participation from Greycroft, Seedcamp, Plug and Play, Berrywood Capital, and Breega — Klasha announced a $2.4M seed round in Week 40 2021 and says that this fundraise completes the round; notably, this was American Express Ventures' first investment in an African startup. Since its May 2021 relaunch, Klasha has onboarded over 1,700 merchants & processed over 210,000 transactions.
Nice Deer, an Egyptian digital insurance & healthcare platform connecting healthcare providers, health insurance companies, and beneficiaries, raised a $1M pre-seed led by DisrupTech Ventures
ShopEx, a Nigerian direct-to-consumer live shopping multi-channel retail platform offering ‘As Seen on TV’ brands, raised a $635K pre-seed led by HAVAÍC which provided $400K; other ShopEx investors include EchoVC and Expert Media Partners — The company says it’s done nearly $2.5M in sales since launch
Franc, a South African investment platform, raised a ~$522K (ZAR8M) seed extension round from 4DX Ventures and others — The company announced a B2B offering that enables companies to offer investment products using Franc’s technology and license
WafR, a Moroccan fintech and rewards platform that helps FMCGs execute promotional campaigns in local grocery stores while allowing users to earn phone recharges when they use the app to pay, raised $455K at a valuation of $9M from Launch Africa Ventures, First Circle Capital, WeLoveBuzz, and others — WafR previously raised ~$650 over two rounds earlier this year; most recently in Week 14, it raised ~$278K at a $7.5M valuation
ADVA, an Egyptian consumer lending BNPL installment payment platform, raised an undisclosed ‘six-digit’ seed round from Sawari Ventures — the company estimates that it’s 2021 “business volume” was over $5M
VantagePay (formerly ZappGroup), a South African B2B white-label payment & technology solutions provider co-founded by former MTN Group CEO Paul Edwards, raised an undisclosed Series A from Crossfin Holdings, a Blue Garnet Ventures subsidiary
SparePap, A Kenyan B2B2C after-sales spare parts, accessories, and car servicing platform, raised an undisclosed amount from Mobility54
The following startups are receiving a $125K investment each from the Norrsken Impact Accelerator:
Nigerian primary healthcare platform Clafiya
Nigerian clean energy financing platform SunFi
South African health network HealthDart
Kenyan savings and investment platform Power Financial Wellness
Ghanaian BNPL platform Motito
Ugandan lending platform Emata
Tanzanian payment solution Umoja Labs
Rwandan artisan recruitment platform Fixa
Mozambican digital transport platform Appload
Backbase, a Dutch engagement banking platform that helps banks improve customer-facing channels, raised a ~$126M growth equity round at a valuation of ~$2.6B from Motive Partners — the startup already has “numerous banking clients in Africa” and plans to grow its teams in the Middle East, Africa and Latin America with this funding
Go1, an Australian enterprise learning platform aggregating educational and training content, raised $100M at a $2B+ valuation in a round co-led by AirTree Ventures and Five Sigma, with participation from SoftBank Vision Fund 2, Salesforce Ventures, Blue Cloud Ventures, Larsen Ventures, TEN13, Y Combinator, and others — The corporate e-learning platform launched with South African Rhodes Scholar Melvyn Lubega as a founding executive; My South African friends often refer to the (clearly) Australian company as South Africa’s first unicorn
Bankingly, an Uruguayan platform that helps emerging markets banks provide world-class digital channels to customers, raised an $11M Series A led by Dalus Capital, with participation from new investors IDB Lab, IDC Ventures, Athos Group, Kube Ventures, Grupo Finacess, iThink VC, Sonen Capital, and Oikocredit; existing investors Elevar Equity and Endeavor Catalyst; and others — Today, Bankingly has nearly 100 financial institutions in LatAm and Africa using its SaaS platform and it plans to use a part of the proceeds to further development its presence across African markets
In addition to the MFS Africa acquisition of GTP discussed above, Moroccan B2B e-commerce marketplace & digital financial service distributor Chari acquired Ivory Coast’s Diago, a platform connecting local retailers to FMCGs and importers, in an all-stock transaction for an undisclosed amount
MENASSA. From MENA to SSA: Diago founders Amidou Diarra and Ali Ouattara, former executives at Glovo and PepsiCo, will manage further growth in Ivory Coast before leading expansion to other countries in Sub-Saharan Africa
CEO commentary Ismael Belkhayat, Chari Co-Founder & CEO adds that his team continues “to surround [itself] with young and ambitious entrepreneurs from Francophone Africa to build together a pan-African giant of FMCG and financial services distribution.”
M&A streaks: Like MFS, Chari is a repeat acquirer; it has now announced 3 acquisitions within the last twelve months including the $22M acquisition of deal for Axa Credit, the credit arm of Axa Assurance Maroc, and the acquisition of bookkeeping app Karny
Partech Africa’s Venture Fund II is under consideration from the IFC to receive up to $26M from the IFC and under consideration from the European Investment Bank (EIB) to receive an undisclosed amount
Egypt’s Disruptech announced an undisclosed investment from Axian Group in Disruptech Egypt Fund I
🇰🇪 Catching up with Kenya's Kune
Seems like there's a bit of schadenfreude in the Kenyan ecosystem this week.
I won’t hide the ball — here’s the quote that matters: “Kenyans said it, and I will say it again, Kune is just another white-founded startup that aims to fix a problem that doesn’t exist.” It’s from an article published last Wednesday titled ‘Kune’s journey of a thousand lies.’
So what’s going on?
Kune, the, er, ‘white-founded’ Kenyan foodtech startup, announced a $1M pre-seed — one of the largest in East Africa at the time — in June 2021. Founder/CEO Robin Reecht then told TechCrunch: “After three days of coming into Kenya, I asked where I can get great food at a cheap price, and everybody [told[ me it’s impossible. It’s impossible because either you go to the street and you eat street food, which is really cheap but with not-so-good quality, or you order on Uber Eats, Glovo, or Jumia, where you get quality but you have to pay at least $10.”
Many Kenyans, apparently seeing little merit in Kune’s vision, took it personally and the entire matter caused quite a stir on Twitter & beyond.
So why the schadenfreude now?
Well, Kune’s initial goal was to provide affordable meals to Kenyans by owning “the entire supply chain, from cooking to packaging to delivery,” while “build[ing] its own fleet of 100 electric motorcycles by early 2022.”
But that dream seems to now be deferred.
The company, which appeared to aspire to disrupt Jumia Food, Uber Eats, Glovo, and other aggregators in the country, has apparently laid off staff and now embodies the old adage, “if you can’t beat them, join them.” According to folks on the ground, the only way to order Kune currently is via these same platforms.
Mwango Capital @MwangoCapitalKune Food [@KuneFood] update: - Remember them? They raised USD 1M pre-seed last year and #KOT warriors were up in arms. - Well, they have grown Monthly Recurring Revenues from USD 3k to USD 37k in 3 months since launch. - And are looking to raise seed round of USD 3.5M soon. https://t.co/udFr3x9XV5
Essentially, the company now operates as a cloud kitchen that distributes food via the major aggregators/platforms.
But a pivot isn’t a failure, and Kune’s Reecht told a Kenyan media platform during the week that “Kune’s core business has always been about producing great food. Not delivering it… Now that we reached enough scale, we received interesting terms from the delivery platforms…It wouldn’t have made sense for Kune to keep owning the delivery. We always choose what is best and cheapest for our customers and that is why we moved our on-demand sales to those aggregators.”
At the end of the day, Kune is currently in the process of raising an additional $3.5M and time will tell who has the last laugh.
See also: Week 30 2020’s Week in Review spotlight on ‘the color of capital’ in the Kenyan ecosystem.
📚 Quick Hits
FOR YOUR READING PLEASURE
The ____ Economy — A16Z’s D'Arcy Coolican writes “In the last 10 years we’ve seen The Attention Economy, The Sharing Economy, The On-Demand Economy, The Crypto Economy, The Creator Economy, and The Ownership Economy all become real categories… Andreessen Horowitz’s Jeff Jordan says ‘the secret to everything I’ve done, and it’s not a secret, is economic empowerment. It is building things that help people make money.’ Nearly every big platform hits escape velocity by helping people make more money.”
Pair with: The hierarchy of venture opportunities in emerging markets — “The opportunity for entrepreneurs and investors [in Africa] is to create & support ventures that enable SMEs to thrive, that economically empower partners and that facilitate micro-entrepreneurship & financial freedom.”
Optimizing for feelings — Josh Miller & The Browser Company team on why metrics-driven craftsmanship feels broken: “We’re pretty fed up with a certain philosophical framework in Silicon Valley. It has many names: the growth mindset. OKRs. KPIs. Even Minimalism…At its core, it all comes down to one thing: the relentless optimization of everything in our world… The most profound craftsmanship in our world across art, design, and media has long revolved around feelings… Feeling is what’s missing from today’s software.”
Solving retention with loops — “By the end of this article, you will know how to build retention loops which are a lever and prerequisite to scaling your business. We’ll share examples throughout to get you thinking about how you can make retention loops for your business.”
The market correction has come for Series A and seed startups — Pitchbook with some data on the current market correction in developed markets: “Over the last two or three months, seed and Series A deal valuations have dropped significantly, and early-stage investors have gotten more selective, focusing on startups that can meet more substantial revenue targets than were required in the past.”
Where to find truths — I’m a long-time fan of Eric Jorgenson since his Zaarly days (trivia: I once applied to an MBA internship there) & this piece spoke to me. Basically, truth is what matters & it can come from anywhere. “We have to be open-minded…Get dirty. Get weird.” Reminded me of Talor Pearson’s optimize for interesting essay for some reason.
So much for cutting out the middleman. Instead of getting rid of intermediaries, the internet created entirely new ones — A Columbia Law professor writes in the Atlantic about “how the internet has contributed to new types of middlemen [who disrupt] direct connections rather than facilitating them”
How the Amish use technology — Interesting excerpt from Wired of an upcoming book on a unique segment of American society: “The manner in which the Amish put technologies to use reveals a great deal about the relationship that they want to have to the larger society… It seemed to me as an outside observer that new ways of using digital technologies and accessing information do not seem to indicate that the demise of Amish bonds and culture are on the horizon.”
Public bookmarking — I haven’t read or skimmed these in detail, but I plan to
Observations on Web3 in Africa — From a writer whose work has been previously featured in a Week in Review; I’ll read later this week
Knowledge Is not understanding — From another writer whose work has been featured here; If I’m honest, I’ll probably never read this in its entirety though
Is it a Ponzi? A framework for evaluating crypto projects — I feel like this could be an interesting read from another trusted author, but I’ve already surpassed the time I have for crypto reads this week
Metrics to focus on before and after product/market fit. How to better understand your product at different stages? — Seems like an interesting interview of relevant experts on an interesting subject
🙈 Visual of the week
MUSIC STREAMING ACROSS THE CONTINENT
Did you know: Despite the global popularity of Nigerian Afrobeats, the music streaming market in Africa is largely driven by South Africa. The country that gave birth to Amapiano contributes roughly 40% of the continent’s music streaming revenues and ~11% of monthly active users (MAUs).
Be smart: Africa’s music streaming revenues are projected to triple by 2026, and five countries (South Africa, Egypt, Nigeria, Morocco, and Algeria) generate 86% of today’s total.
Key players: Anghami, Mdundo, UduX, Boomplay, Audiomack, Apple Music, YouTube Music, Deezer, Spotify
Big picture: While music streaming continues to explode worldwide, its growth across the continent is dampened by internet access considerations (e.g, smartphone adoption, data affordability, internet penetration). These infrastructural issues place an upper limit on the current music streaming market — and the same can be said of certain digital B2C consumer markets across the continent.
Source: Africa: a breeding ground for music streaming platforms’ expansion, Dataxis
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🌍 The market downturn in the motherland
In Week 20’s Week in Review, I shared a variety of international perspectives on the market downturn. And this week it seems that a number of voices around the African startup ecosystem have opinions to share:
The future Africa team writes ‘What does the market downturn mean for the future of Africa?’ — “There is capital sitting on the sidelines to be deployed but startups will be in a tough competition for it and only the best companies will get funded…Due diligence will be carried out with more intensity, [and a] deal slowdown will ultimately affect valuations on the continent.”
African Business published ‘Companies will go under’: Global tech rout to set back fundraising in Africa — “The biggest slowdown will be in late-stage funding… Investors are no longer keen to pump large amounts of late-stage capital into startups when there is no clear exit plan… However, early-stage funding will not see the same pullback.”
Quartz published Why Africa is defying global trends in VC funding— “There’s every possibility that the growth witnessed in early 2022 could carry on into the second half of the year, but it’s still too early to say for sure…What is almost certain is that African startups’ share of global venture funding will continue to rise.”
Oui Capital’s Peter Oriafo, DFS’ Stephen Deng, and others discuss teh subject on Twitter — “To me, logically its a bit of a stretch to say Africa is holding up while western markets are down, yet the vast majority of VC funding comes from the west... and the opportunity cost for investing in general just went up a notch.”
TLCom’s Ido Sum penned a Twitter thread — “Large investors…who expanded to Africa as an ‘exploration’ may stop doing so for some time, and valuations [may take] a hit… With that [said], there are also some big opportunities. M&A should become much more prevalent across Africa, and…talent, globally, may have less options… .Not all markets are the same, and while a lot of fluff will go away, solving massive real-world problems profitably, will always win long term.
MarketForce CEO Tesh Mbaabu writes ‘Raising our $40M Series A, thoughts on the economic situation and how to come out stronger’ — “There is likely to be market instability for some time, and a funding environment that’s quite different from what we’ve seen in Africa over the past few years…It’s important that you’re prepared…Hope for the best, but it’s also important to plan for the worst.”
🕵️♀️ In case you missed it
NEWS & ANNOUNCEMENTS
MFS Africa Founder/CEO Dare Okoudjou writes ‘MFS Africa’s coming to America’
Fincra CEO Ayowole Ayodele writes ‘Fintech in Africa: Overcrowded, just enough, or not enough?’
Co-Founder and CPO of Vendease Africa Gatumi Aliyu writes ‘Winning the talent war’
KfW DEG Impact’s Tobias Kauer and Rena Hufmann write ‘The world’s fastest-growing venture landscape’
Ighosime Oyofo, Executive Director at Lion's Head Global Partners, writes ‘How to make a business investable in Nigeria’
Disrupt Africa published the South African Startup Ecosystem Report 2022
⭐ Endeavor Nigeria published the report ‘The Inflection Point: Africa’s Digital Economy is Poised to Take Off’ (PDF) [Highly recommended, see tweets for operators and investors]
Media sachetization is real, and product pricing in emerging markets shows it (Communiqué)
Big tech is winning the battle for Kenya’s talent (Quartz)
How two Africans overcame bias to build a startup worth billions (Forbes)
Africa’s startup funding gap—and investor opportunity—is right after the seed stage (Quartz)
Angel investors plug early-stage funding gap in Africa (Ventureburn)
The fourth industrial revolution: a seductive idea requiring critical engagement (The Conversation)
Virtual influencers to 'unlock infinite job opportunities in SA (IT Web)
Ride-hailing super app Gozem signs $10M deal with IFC (Ventureburn)
Lars Veul, Co-Founder of South African logistics tech firm Pargo, discusses last-mile logistics challenges on the Business Day Spotlight podcast
Timothy Nuy, Co-Founder & CEO of South African credit-focused fintech turned credit-led neobank Finclusion, discusses the complexities of lending in Africa on the Chini ya Maji podcast
🐤 Tweets of the Week
A thread from a Nigerian fintech founder on all roads leading to loans
Last week, I highlighted the Morgan Housel article ‘Different kinds of BS’ — here’s a thread on BS in pitch decks from African founders
Also, as it’s officially election campaign season here in Nigeria, here’s a very interesting tweet & thread reminding you that the more you look the less you see…
🗣️ Community Corner & Opportunities
Congrats to Mwiya Musoktwane on joining the Akili Ventures board as Chairperson
The US Chamber of Commerce invites applications to the 2022 Africa digital innovation competition from fintech, supply chain, and social services startups and SMEs. Deadline June 30th. Details here.
Y Combinator’s Startup School is coming to Lagos this summer hosted by Paystack
Join the VC4A team. They’re hiring a CEO to lead the organization’s next phase of growth — MBA holders are invited to apply for the location-agnostic role
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