Afridigest Week in Review: Strive-ing for cyber security
+Doing early stage tech M&A deals in Africa +More on Flutterwave's Kenya situation +Thinking about Africa's population +Tiger Global's mistakes +Ask Me Anything +Deals in Ivory Coast, Sudan, Egypt
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! The most clicked link last week was 'Operating efficiently at scale' from Coinbase CEO/Co-Founder Brian Armstrong.
This week’s newsletter includes some firsts. For the first time, there’s an Ask Me Anything section near the end for public responses to reader questions. Please continue to send questions in. Thanks to those that have already done so and thanks also to Bloc Founder Edmund Olotu — we had a very interesting conversation last week which should be published on Saturday. Relatedly, in another first, this newsletter contains audio — make sure to press play to hear Edmund’s take, in his own voice, on getting deals done.
If you’re new, welcome 🙌🏽 — you’ll receive a weekly digest like this on Mondays usually and, sometimes (but not always), an original essay/article on Saturdays. For past essays and digests, visit the archive.
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Week 29 2022: July 17 - 23
📰 Deal of the WeekBILLIONAIRE MOVES
Strive Masiyiwa’s Cassava Technologies raised $50M from C5 Capital, a British VC firm that specializes in cyber security, space, and energy security investing — the investment is part of a “broader funding round.”
About Cassava Technologies: Cassava is a vertically integrated Zimbabwean/pan-African tech platform that serves customers in over 20 African countries.
Its two main verticals are Digital Infrastructure (fiber networks & data centers) and Digital Services (cyber security, fintech, and B2C digital services) under which it houses the brands/businesses Liquid Intelligent Technologies, Africa Data Centres, Distributed Power Technologies, Liquid Cloud, Liquid Cybersecurity, Vaya Technologies, and Sasai.
The firm, an Econet spinout, was founded by billionaire businessman Strive Masiyiwa, founder of Zimbabwean telecommunications conglomerate Econet Wireless. Today, Cassava claims to be the largest independent, pan-African terrestrial fiber network operator; it’s also a leading carrier-neutral data center provider on the continent.
About C5: C5 Capital focuses on investing in cybersecurity and closely aligned sectors such as data analytics, cloud-computing infrastructure, and space. It has two main units: Cyber Partners, which invests in mid to late-stage companies, and Impact Partners, which invests in earlier-stage companies with substantial growth potential.
Going forward: In partnership with C5 portfolio company Haven Cyber Technologies, Cassava will launch a network of six Cyber Security Operations Centres (CSOCs) across Africa that will enable the rapid delivery of cyber security services and operations on the continent. More generally, with the deal, Cassava becomes the go-to-market partner in Africa for all of C5’s portfolio companies.
Personalities:
Strive Masiyiwa, Founder & Executive Chairman, Econet Group (Cassava Technologies & Econet Wireless)
André Pienaar, Founder C5 Capital
In the Founder’s words: “This investment from C5 is part of our plan to raise additional growth capital whilst diversifying our investor base. We are delighted that C5 has joined us to help realize our vision of a digitally connected future that leaves no African behind.” — Strive Masiyiwa
Words from the investor: “Following the launch of Cassava Technologies’ cutting-edge Cyber Security Operations Centre (CSOC) planned for Johannesburg later this year, we see tremendous growth potential for Cassava Technologies’ cyber security business to help protect African enterprises and communities.” — André Pienaar
🔦 Other dealsOTHER FUNDRAISES ACROSS THE CONTINENT
🇨🇮 Bizao, an Ivorian payments platform, raised an ~$8.2M (€8M) Series A led by AfricInvest, with participation from Adelie and Seedstars Africa Ventures
🇸🇩 Bloom, a Sudanese savings-focused digital bank, raised a $6.5M seed round from Visa, Global Founders Capital, Goodwater Capital, VentureSouq, Y Combinator, and others
🇪🇬 Stllr Network, an Egyptian digital marketing platform, raised a six-figure venture round from 500 Global, Women Spark, Falak Angels, and others
🇳🇬 Afriguild, a Nigerian play-to-earn blockchain gaming guild turned DAO (decentralized autonomous organization), raised an undisclosed amount from Adaverse in a seed round
🇳🇬 Chowdeck, a Nigerian on-demand food delivery platform, announced its acceptance into Y Combinator Summer 22 batch — this is in addition to the four other Africa-focused startups that made YC S22 announcements in Week 27
M&A
Gumtree, one of South Africa’s largest online classifieds marketplaces, was acquired for an undisclosed amount by Impresa Capital, a South African firm led by brothers Sean and Donovan Bergsma who are the majority shareholders of the Ignition Group
DEBT
d.light, a provider of clean energy solutions across Africa, announced a $50M balance sheet debt facility from a consortium of lenders including Mirova SunFunder, TDB (Trade and Development Bank) and FMO, the Dutch entrepreneurial development bank
VC FUNDRAISING
Cathay AfricInvest Innovation Fund (CAIF), a Pan-African fund launched via a partnership between Tunisia’s AfricInvest and Europe’s Cathay Innovation, announced a final close of ~$113M (€110M) — Cathay and AfricInvest began working on the fund together in 2019; the CAIF portfolio includes 54gene, PalmPay, and OZÉ
Egyptian VC firm Algebra Ventures announced a $10M commitment from Dutch entrepreneurial development bank FMO into Algebra Fund II — This follows the IFC’s $15M pledge announced in Week 15; the fund has a $90M target
FrontEnd Ventures, a new fund focused on early-stage Kenyan startups up to Series A, announced the first $1M close of a targeted $5-10M — so far the fund is largely backed by Kenyan HNWIs in the banking, real estate, and manufacturing sectors
📰 News of the weekA DISCUSSION ON DOING EARLY-STAGE TECH M&A DEALS IN AFRICA
Good news! I was able to connect with Edmund Olotu, Founder of Nigerian fintech infrastructure provider Bloc. (Many thanks, Edmund 🙏🏽 and thanks to readers that sent in questions 🙏🏽)
As you may recall, Bloc’s acquisition of Nigerian payment orchestration platform Orchestrate was last week’s deal of the week.
Edmund and I discussed the strategic rationale for the Orchestrate acquisition, things to consider in getting early-stage deals done in Africa in this environment, how #AfricaTech founders should think about pivots, the market downturn, and more.
Here’s a quick teaser clip to whet your appetite:
“A lot of people have to tuck in their egos…[You have to] identify what’s real and what’s not real. Valuations are unreal. What’s real is really what exists on ground. And sometimes some people allow themselves to be led by valuation and not be led by what truly exists, you know, foundationally within a company… Understanding that and coming to that realization with a sense of humility is also important in…putting these types of deals together.” — Edmund Olotu
Why listen to Edmund? First of all, Harvard-educated Edmund Olotu is what some might call a mensch. But beyond that, he’s a seasoned, award-winning, serial entrepreneur. He previously co-founded Novira Therapeutics, a venture-backed American biotech company that raised north of $20 million and was ultimately acquired for $600 million by Johnson & Johnson.
Why Bloc’s acquisition of Orchestrate matters: While there’s (unsurprisingly) been an uptick in M&A across the African startup ecosystem this year, many of those deals (particularly those with Nigerian acquirers) have had a geographic expansion rationale. Bloc’s tie-up with Orchestrate is different — it accelerates both companies’ product roadmaps, and, as Edmund puts it, “it’s a model that a lot of fintechs should be willing to adopt.” And if one believes that the market downturn makes consolidation in fintech (and other sectors) across the African tech ecosystem more likely, the deal is certainly worth studying.
We agree with Greg’s tweet above — and the full video should be published this Saturday
📚 Quick hitsFOR YOUR READING PLEASURE
In some weeks, there are relatively few interesting pieces published; in others, we’re blessed with a plethora of good content. This week was one of the latter. Enjoy.
Little ways the world works — I’m like a moth to a flame when it comes to many of Morgan Housel’s essays. This article, dear reader, is another instant MH classic: “It might sound crazy, but once you understand the basic principles of your profession, you might gain more expertise by reading around your field than within your field. Connecting dots between fields helps you uncover the most powerful forces that guide how the world works, which can be so much more important than a little new detail that’s specific to your profession. And if you look hard enough, there are so many dots to connect.”
What I learned at Clubhouse — Former Clubhouse Head of Community Anu Atluru shares lessons on how to build and scale startups: “If talking to your users is important, being a user of your own product is just as critical. There are lots of reasons to do this: it builds empathy for your users, it builds empathy for your team, it helps clarify user feedback and context-poor data, it can reveal new product ideas and, hence, it improves your product judgment.”
What I miss about working at Stripe — Former Stripe operator Brie Wolfson penned a piece largely on the excitement of working hard: “It’s not so much that I miss working at Stripe. It’s more about missing that universal agreement that it’s really, really cool to devote yourself fully to your work. And to expect that from your colleagues in a way that makes you feel that ‘we’re all really, really, really in this together’ kind of way.”
Finding power: How to do market analysis — Nathan Baschez outlines the process he uses to uncover power dynamics when analyzing industries: “The question is, what kinds of strategies generate market power? To answer it, I developed a process that fuses together the ideas of the three most important theorists in business strategy: Clayton Christensen, Michael Porter, and Hamilton Helmer.”
When to expand your marketplace business, according to 14 operators — “We talked to over a dozen marketplace operators from companies like Uber, Instacart, and Airbnb and synthesized their learnings on when, where, and how to expand into new geographies and verticals.” [Pair with this Twitter thread from one of the authors.]
Bonus:
The company of the future is default global — a16z puts forth that the successful companies of tomorrow will be multi-country from Day One, creating significant opportunities for entrepreneurs to build the internal software systems these Default Global companies will need to grow.
The problems with picks and shovels business models — An interesting take on the consensus wisdom of being an arms dealer. “Many founders believe it’s better to be a toolmaker than a miner. But is it? […] Building tools for a class of ‘jobs to be done’ is a riskier endeavor than it may seem.”
The reckoning of “pandemic tech darlings”: Lessons on growth function shocks — “Many investors rewarded pandemic winners, assuming a new growth baseline had been set. But Covid's impact was not one-dimensional, and three nuanced growth archetypes emerged after the system shock.”
VCs are scared when they should be greedy — “There’s never been more cash available for startups, but the people holding that cash (investors) are telling founders there’s no money available for investing. Founders need to understand the logic behind this contradiction and how to operate within it, because rapidly growing companies still (usually) need to raise capital to build their businesses.”
Pair with: The discussion on Hacker News
He dropped out to become a poet. Now he’s won a Fields medal — A bit of a random read relative to our usual focus, but I really enjoyed this profile of mathematician June Huh.
Public bookmarking:
Frameworks — An interesting collection of useful frameworks from Chris Paik
100 unicorns: 12 different GTM motions — Ali Abouelatta, PM at Duolingo, shares learnings from his study of 120+ unicorns & public companies to understand the nuances of go-to-market strategies
📢 Share this with a colleague 📩
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🦋 More on Flutterwave's Kenya situationNigerian fintech unicorn Flutterwave is in the thick of it.
Earlier this year, the company made headlines due to allegations of sexual harassment, mismanagement, and more, and in Week 27, the news came out that “a court in Kenya has frozen more than $40m in accounts belonging to [the company] under the country’s anti-money laundering laws.”
Some pundits opined in response (and without evidence) that the action by Kenyan regulators was primarily due to some sort of anti-Nigerian sentiment, perhaps in an attempt to boost Kenya’s own fintechs or extract financial concessions.
Alternatively, as mentioned in this pseudonymous article, “a number of players in the fintech space, as well as some Flutterwave investors, … chalked up the money laundering suit initiated against Flutterwave … as a case of ignorance on how fintechs work.”
But sometimes when there’s smoke, there may well be fire?
Yesterday, Abubakar Idris at Rest of World published a piece well worth reading: Rocked by workplace scandals, Flutterwave now faces multi-million-dollar fraud allegations in Kenya. Some excerpts below:
“The Kenyan high court froze 52 bank accounts owned by Flutterwave with a total balance of $45 million, and another 10 bank accounts linked to the company but operated by other entities.”
“The aggregate amount of funds alleged by [Kenya’s Assets Recovery Agency] to have been laundered or labeled as suspicious via Flutterwave or associated companies is over $200 million.”
“Reporting by Rest of World uncovered a complex web of relationships between Flutterwave, members of its management, and some of the indicted entities.”
For example, “between September 2021 and April 2022, Flutterwave received over $47 million from AdGuru, a digital marketing company [having] Okonkwo Adaeze Chinenye and Caroline Wanjiku Muchina as directors. The ARA said Muchina is the spouse of Flutterwave’s East Africa business head, Mouko David Elizapha Omaanya. [And] Rest of World’s reporting revealed that Chinenye is the only other shareholder in Berrywood Integrated Concept, a Nigerian company co-owned by Flutterwave’s CEO.”
“No supporting documents were provided to justify the transactions [between the entities and Flutterwave], the ARA wrote, creating suspicions that the bank accounts were used as conduits for money laundering.”
“The scandal has piled pressure on Flutterwave CEO, Olugbenga ‘GB’' Agboola, who has been publicly silent on the problems at the company…There are increased murmurings for Agboola to reconsider his leadership role at the company he co-founded in 2016.”
Flutterwave was/is “moving towards an initial public offering in 12 to 18 months time, though that timeline is now less certain with the current global economic downturn.”
👀 Visual of the WeekThese two areas of Africa have roughly equal populations.
Source: Amazing Maps
🕵️♀️ In case you missed itNEWS & ANNOUNCEMENTS
ESSAYS, REPORTS, ETC.
Matias Gonzalez Orozco & the Catalyst Fund team published ‘Why we invested: TopUp Mama’
The Kippa team analyzed 23,000 MSMEs who use the Kippa App across Nigeria’s thirty-six states and published ‘The Nigerian MSME Report’ (PDF)
The African Scalecraft team published AfricanScalecraft.com, a website dedicated to examining how ventures scale in sub-Saharan Africa
OTHER ARTICLES
African startups are raising unprecedented amounts. What next? (The Economist)
What will it take to digitise B2B payments in Africa? (TechCabal)
The global downturn is real, but the allure of Africa’s digital markets hasn’t changed (Rest of World)
Lenders are thwarting digital currency’s adoption in Nigeria (Bloomberg)
Rising inflation and fuel price threaten the growth of the Nigerian tech ecosystem (TechCabal)
Zimbabweans abroad switch to food delivery apps to help family at home (The Guardian)
Funding gap excludes Black-owned startups from South Africa’s booming digital economy (TechCrunch)
Pair with: Investors steer clear of African startups with only local faces (The East African)
How Wave rose to become Francophone Africa’s first unicorn (Quartz)
Techstars CEO Maëlle Gavet outlines the accelerator’s newest program in Africa (TechCrunch)
What makes South Africa attractive to streaming giants? (Communiqué)
Inside Safaricom’s top executive shake-up (Business Daily Africa)
Global rights groups want Meta to stop gagging South African whistleblower (Quartz)
Africans look to crypto as charity funding dwindles (Reuters)
PODCASTS
Andreata Muforo, partner at Nairobi-based venture capital firm TLCom Capital; Ido Sum, partner at TLCom Capital; Zach George, managing partner at Launch Africa Ventures; and others discussed fundraising on the Grit & Growth podcast
Mareme Dieng, Africa Innovation & Strategy Lead at 500 Global; Rajiv Daya, Head of Investments at Founders Factory Africa; CommerzVentures’ Hangwi Muambadzi; Launch Africa’s Mohamed Karar and Zach George; and Tidjane Dème, General Partner at Partech and co-lead of the Partech Africa Fund discussed the Senegalese tech ecosystem on the AfricArena podcast
Mark Mwangi, Amitruck Co-Founder & CEO, discussed tech in the African logistics landscape on the Chini ya Maji podcast
PROFILES/INTERVIEWS
Meet the Investor: Toffene Kama, Investment Principal, Mercy Corps Ventures
Meet the Executive: Nile Younis, Chief Commercial Officer, Klasha
🐤 Tweets of the WeekOui Capital’s Peter Oriaifo hints at an interesting development in Africa Tech — if anyone has details, my inbox is open…
China Tech expert Rui Ma shares a slide from a Tiger Global presentation about investing mistakes:
And here’s a thread I found interesting on crypto for the unbanked:
“The basic premise that crypto can bank the unbanked is that it solves KYC / AML issues. This assumes that most people are unbanked because they lack documentation, and crypto doesn’t care about documentation. Therefore problem solved. But the problem is more nuanced. I’m not sure crypto has an answer for the unbanked yet.”
💬 AMAASK ME ANYTHING
Joe from Austin, Texas asks: Thanks for a consistently comprehensive newsletter … How do you do it?
Great chatting on WhatsApp, Joe. And thanks for the kind words 🙏🏽 I know the thrust of your question is on the Week in Reviews so I’ll focus there.
How do I do it? The abstract answer is: genuine curiosity, optimizing for interesting, and having some semblance of a system.
And the more technical answer is that the Week in Review posts are a heavy dose of curation with a dash of creation & opinion.
For curation, I rely on reader messages, Google Alerts, curation tools (e.g., Tweetshelf), skimming through trusted newsletters (shoutout to Katelyn Donnelly’s Declarative Statements, for example), and serendipity/social media algorithms.
For creation, I think about the audience — readers like you. Why you’re here, what you’d find meaningful, and what you’d need to know to be current on #AfricaTech in a given week. Then I focus on that and try to keep things fluff-free.
All in all, things are very much still a work in progress however. (See for example the delay with today’s newsletter.) Thanks for the question, Joe. 🙌🏽
Have a question for this AMA? Email me here.
🗣️ Community Corner, Opportunities, & Suggestions⭐ Afridigest is a media partner of the 2022 Nigeria Fintech Forum being held on August 3rd in Lagos — Register here & hear from a number of Afridigest readers who’ll be speaking
Applications are now open for the second cycle of DMZ Cairo’s incubator program — apply by September 29
Meta (Facebook) is actively seeking to collaborate on a marketing project with a business school on the continent — Contact Jane Egerton-Idehen
The GSMA Innovation team is hiring a Nairobi-based Senior Manager for the Innovation Fund
LA FIN
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— Emeka
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