Afridigest Week in Review: Digitizing traditional trade
+Digitizing traditional B2B e-commerce +African fintech unicorns in Kenya +The major opportunity for African VCs +News, Tweets of the Week, Events, and 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, friends! Happy new week and happy new month. 🎈 The most clicked link last week was Nathan Baschez’s 'Finding power: How to do market analysis'
Apologies for overpromising: I wasn’t able to finalize the discussion with Edmund Olotu over the weekend, and pardon me in advance if it’s published at a random time this week. In any case, it’s a high priority on my end.
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.
(And for my writing, podcasting, video hosting, event planning, and other creator friends who are very regularly starting to seek links to their work in this newsletter — I’m more than happy to share quality content, of course, but at the same time, I’m actively starting to seek reciprocity. No man is an island after all.)
💥 Thanks in advance for sharing this newsletter with your Twitter followers, LinkedIn colleagues, Slack groups, email friends, etc. 🙏🏽
Week 30 2022: July 24 - 30
📰 Deal of the Week
DIGITIZING THE TRADITIONAL
Cartona, an Egyptian B2B e-commerce marketplace, raised a $12M Series A led by Silicon Badia, with participation from the SANAD Fund for MSMEs, Arab Bank Accelerator, Sunny Side Ventures. Global Ventures, Kepple Africa, and others.
Cartona primarily connects retailers to manufacturers and wholesalers in Egypt; it’s firmly in the realm of digitizing the traditional offline market which we’ve referenced repeatedly relative to sub-Saharan Africa here. (See also: Corner stores are the new darlings of the global tech industry and Week 36 2021’s Week in Review)
About Cartona: Cartona says it’s one of the fastest growing B2B e-commerce marketplaces in Egypt. Here’s a direct quote: “Streamlining the distribution process, we directly connect retailers with suppliers, wholesalers, and producing companies. Through Cartona, retailers can browse, compare, and order their merchandise, saving time, money, and effort in their daily operations.”
In the Founder’s words: “We are delighted to complete our Series A fundraise. The market context for Cartona is hugely attractive, and we are just getting started. Egypt has hundreds of thousands of mom-and-pop stores that are core to our business model. We will continue empowering them via efficient and seamless solutions in their trade and financial cycle with FMCG companies and wholesalers, aligning with our mission to help people better manage and control their businesses.” — Mahmoud Talaat
In the Investor’s words: “We are thrilled to partner with the Cartona team to help them continue to disrupt the $120B Egyptian retail market through its B2B technology platform and embedded financial service offerings. The market is hungry for these types of solutions and we believe Cartona's asset-light approach will allow them to serve as many marketplace participants as possible in a highly efficient manner.” — Namek T. Zu’bi
🔦 Other deals
OTHER FUNDRAISES ACROSS THE CONTINENT
TFK (The Fashion Kingdom), an Egyptian fashion, beauty, and home accessories e-commerce marketplace raised a $2.6M seed round co-led by CVentures and A15, with participation from existing investors and new investors Lotus Capital, Raba Capital, Sunny Side Venture Partners, Foundation Ventures, Cairo Angels, and others
Qwili, a South African hybrid hardware-software smartphone and a digital sales ecosystem for MSMEs, raised a $1.2M in seed round led by E4E Africa, with participation from Strat-Tech, Next Chymia, Untapped Global, Codec Ventures, and others
Hashgreed, a Nigerian NFT marketplace, multipurpose NFT, and super dApp (Krosscoin) platform, announced that it raised $1M in an unspecified round from unnamed investors
Evolutics, a Nigerian insurtech software solutions provider, raised $250K in an unspecified venture round led by Mercurial Advisory and Dubai’s Dinku Transnational of Dubai
Climate Crop Ltd., a Moroccan agtech platform that that specializes in genetic editing to unlock the potential of plants and enhance their capability to harness more energy and produce higher yields, announced an undisclosed venture round from UM6P Ventures
Akorn Technology, a Moroccan agtech platform specializing in non-GMO edible coating corn byproducts, announced an undisclosed venture round from UM6P Ventures
Gamp, a Nigerian device protection insurtech platform for consumer electronics, implicitly announced an undisclosed venture round from Ingressive Capital, First Circle Capital, Future Africa, and others
Aku, a Nigerian full suite fintech payments and banking service platform, implicitly announced an undisclosed pre-seed from The Fintech Fund and others
Ubenwa, a Canadian ‘audio biometrics’ company specializing in identifying neurological disorders in infants, raised a $2.5M ($3.2M CAD) pre-seed led by Radical Ventures with participation from AIX Ventures and others — the AI-powered company founded by Nigerian CEO Charles Onu identifies early signs of birth asphyxia and can potentially use cry triggers to associate learning milestones; while the CEO is Nigerian, the company is firmly Canadian and has operations in Brazil and Nigeria
Umba, an emerging markets digital bank with current operations mostly in Nigeria & Kenya and founded by Irish entrepreneurs, bought a majority stake in Kenyan deposit-taking microfinance bank Daraja for an undisclosed amount — Umba whose base is in Nigeria announced a $15M pre-series A earlier this year and is among the 2022 African neobanks to watch, according to Afridigest
German corporate venture builder Creative Dock Group (CDG) was acquired by FoundersLane — the combined entity, FoundersLane Egypt is co-led by Egyptian entrepreneurs Mohamed Aboulnaga (co-founder of MNT-Halan) and Anas Rabah (co-founder of fintech-focused VC Klivvr)
MAX (Metro Africa Xpress), a Nigerian mobility platform, announced a partnership with Yamaha’s Nigerian subsidiary, Moto Business Service Nigeria (MBSN), to finance and maintain over 50,000 vehicles over the next 2 years
Moove, a Nigerian ‘mobility fintech platform’ that’s a significant Uber Africa partner announced a vehicle financing partnership with Uber India to launch 5,000 CNG and electric vehicles within a year and 30,000 CNG/electric vehicles in India within five years
VCS & FUNDS
Seedstars announced a $20M first close of a $30M target for its SIV II (Seedstars International Ventures II) fund — LPs include the IFC, Visa Foundation, The Rockefeller Foundation, and Symbiotics. The fund will invest in pre-seed and seed-stage startups in Asia, the Middle East, Latin America, and Africa over the next three years, with follow-on investments up to Series A. The existing portfolio includes Nigeria’s Omnibiz. SIV II seems to have a blended finance structure backed by an IFC first loss guarantee that seems to mean that if investments in low-income countries fail, the Seedstars will be covered by the IFC.
Zedcrest Capital, a Nigerian investment fund whose portfolio includes Nigeria’s TalentQL and Indicina, Ivory Coast’s Julaya, and Egypt’s Thndr, announced the launch of Knight Fund, a $10M equity bridge fund for early-stage companies looking for follow-on capital — “We’re still investing in seed from our first fund but we are also going to slow down because the biggest opportunity right now [is] in pre-Series A. So now, we’re dedicating $10 million to this category of slightly more mature businesses going through a rough patch because the market is very tight.” — Adedayo Amzat, founder and CEO of Zedcrest Capital
📰 News of the week
AFRICAN FINTECH UNICORNS GET WINGS CLIPPED IN KENYA (AND YES I KNOW UNICORNS DON’T HAVE WINGS :)
Perhaps the biggest news across the ecosystem this week involved African fintech unicorns Flutterwave and Chipper Cash; in a memo dated July 29th, the Central Bank of Kenya directed financial institutions in the country to “immediately cease and desist” from dealing with both companies.
In response to a question from Bloomberg Africa journalist Bella Gbenga a day earlier, CBK Governor Patrick Njoroge said bluntly, “Flutterwave is not licensed to operate [as a] remittance provider or… as a PSP payments service provider in Kenya… They are not licensed to operate and therefore they shouldn’t be operating. And I think Chipper Cash, we could also say the same.”
Given Flutterwave’s current situation in Kenya (see last week’s Week in Review for example), the crackdown on the firm wasn’t altogether surprising, but the action towards Chipper Cash was largely unexpected.
Abubakar @IAtalkspaceCentral Bank of Kenya (CBK) to financial institutions: "immediately cease and desist from dealing with Flutterwave and Chipper Cash. You are thereafter required, within seven days of the date of the letter to confirm to CBK your compliance with the directive."
Flutterwave says it applied for a PSP license in 2019, and, presumably, Chipper Cash has also engaged regulators, so there are questions of why now and why these firms in particular.
And the questions raised by this action are all the more salient given that there’ve historically been large timing gaps between the grant of a license and the launch dates of fintechs in the country in many cases:
This is a developing story that broke a business day or two ago on July 28th/29th. See below for additional coverage:
Nation Africa: Avoid Flutterwave, Chipper — CBK orders banks amid money laundering claims
Business Daily: CBK orders banks to close Flutterwave, Chipper Cash accounts
TechCrunch: Kenya directs all banks to stop dealing with Chipper Cash, Flutterwave, saying they are unlicensed
BenjaminDada: How did Flutterwave and Chipper Cash expand to Kenya without licenses?
Bloomberg: Flutterwave says it’s awaiting Kenya license after bank snub
TechCabal: Flutterwave responds to statement by Central Bank of Kenya’s Governor
📚 Quick hits
FOR YOUR READING PLEASURE
Time-to-utility and jobs to be done — Solid overview of JTBD and time-to-utility/value/fun from former Facebook & Instagram product manager Tanay Jaipuria, with useful, specific examples on how to reduce time-to-utility
Spell. It. Out. — Great tips from Susa Ventures’ Leo Polovets specifically on making pitch decks clearer, but more abstractly about telling stories with data and removing ambiguity from communications
The seven deadly sins of consumer technology — Interesting read (as always) from Index Ventures’ Rex Woodbury, this time marrying the 7 deadly sins to consumer tech. He mentions a few companies enabling frictionless living under Sloth, but I can't help but think that the sector that best embodies it in 2022 is quick commerce
Tails, you win — Venture capital is a long-tail-/home-run-/power-law-driven business. But, as Morgan Housel argues here, it’s not unique to VC: “Long tails drive everything. They dominate business, investing, sports, politics, products, careers, everything… Extreme winners and losers emerge faster in VC…but extremes are the norm, everywhere. Great ideas and great execution are rare. Most competitive fields have strong feedback loops: Losers keep losing because no one wants to be associated with losers, and winners keep winning because winning opens doors, and open doors beget more open doors.”
The storytelling of investing — According to Third Point’s Dan Loeb, “To be an investor is to live constantly at the intersection of story and uncertainty.” And here, Contrary’s Kyle Harrison digs, thoughtfully, into storytelling and investing
The state of NLP — Very solid overview of the natural language processing landscape today and opportunities ahead
📢 Share this with a colleague 📩
The Afridigest Week in Review is designed to inform Africa-interested founders, executives, investors, and observers and is often referred to as the most comprehensive weekly newsletter covering the African tech ecosystem. Share it aggressively (rawr!) — your colleagues will thank you. 🙏🏽
👀 Visual of the Week
Did you know? The vast majority of funding in Africa currently takes place at early-stage rounds where under $5M is raised. So, the consensus expectation in the coming years is that there’ll likely be significant demand for larger rounds as these startups come of age.
But, notably, there’s an outsized drop in deal activity from Seed to Series A rounds which presents, at the same time, a challenge for startups and an opportunity for investors.
(And, indeed, where’s Iyin by the way?)
🕵️♀️ In case you missed it
NEWS & ANNOUNCEMENTS
ESSAYS & REPORTS
Nicole Dunn, formerly of Founders Factory Africa and now COO of Revio, writes ‘Is the venture capital model working for Africa?’
Adia Sowho, former Interim CEO of Thrive Agric and current CMO of MTN Nigeria, writes ‘The anatomy of a turnaround’
Adrienne Lees and Phil Mader, researchers at the University of Sussex write ‘To tax or not to tax mobile money: The impact on Digital Financial Services in Africa and beyond’
The UNCDF’s Marup Hossain, Muhammad Ali Akram, and Eugenia Perez Pons write ‘Access and usage of digital remittances: A case study of Ping Money in The Gambia’
Egypt’s booming startup scene is becoming the gateway to MENA (The Next Web)
Techstars CEO Maëlle Gavet on the accelerator’s renewed interest in Africa (TechCabal)
Gabon’s startup scene looks for Anglophone investment (African Business)
Abidjan is a hidden gem—but for how long? (TechCabal)
As Africa’s digital economy grows, expensive internet hinders investor activity in some countries (TechCrunch)
What will it take for monthly rent payment to work in Nigeria? (African Arguments)
Facebook risks ban in Kenya for failing to stop hate speech (TechCrunch)
FEC considers NITDA bill that seeks to tax and fine Nigerian tech companies (TechCabal)
Crypto trades drive Naira to new low in unauthorized market (Bloomberg)
Adia Sowho, CMO of MTN Nigeria, appeared on Peace Itimi’s Founders’ Connect [Video]
Maxime Bayen, co-founder of Africa: The Big Deal, discussed why Africa seems immune to the capital markets downturn on Eunice Ajim’s new Live the African Dream podcast — congrats, Eunice 🙌🏽
Tayo Akinyemi, Africa Tech enthusiast, discussed tech entrepreneurship in Africa on the African pre-seed podcast
🐤 Tweets of the Week
Ikpeme Neto, Founder of Nigerian healthtech Wella Health, shared some thoughts in a tweet that resonated, especially in this environment:
And your humble author, Emeka Ajene, finally turned the piece that you and other Afridigest readers saw first weeks ago into a Twitter thread — better late than never:
And one of my favorite Africa Tech writers Abubakar Idris shared some relevant thoughts about African expansion choices (⭐ and by the way, if you’re a Nigerian/Anglophone Africa founder that would like more context on Francophone Africa, it’s perfect timing to reach out — I’m kicking tires on something that could be helpful 👀)
Also, Y Combinator’s Gustaf Alströmer shared a thread on equity that every founder with a team outside of the US should read (but his LinkedIn post is probably more direct tbh, and he mentions Africa there)
Speaking of YC and being direct, here’s a 2-tweet thread from Paul Graham — we’re all guilty
And last but certainly not least, a thread from Harlem Capital’s Henri Pierre-Jacques for investors and aspiring investors (it’s another case where the LinkedIn post is a bit more direct)
🗣️ Community Corner, Opportunities, & Suggestions
⭐ Afridigest is a media partner of the 2022 Nigeria Fintech Forum being held this Wednesday, August 3rd in Lagos — Register here & hear from a number of Afridigest readers who’ll be speaking
Congrats to Peter Kisadha as he now focuses on making African education institutions financially resilient — Future Africa will miss you but we’re assuredly all excited about Steward 🙌🏽
Wiza Jalaski and the This Week in Fintech team are holding the Lagos fintech happy hour on August 25th (co-organized with Visa, TeamApt, Accion Venture Lab, Turaco, and Fincra) — get your tickets here (& yes, I have mine)
Congrats to Kyane Kassiri for a successful RaliCap meetup in Lagos 🧢✨ — great to meet Kyane, Sacha, Yemi, Kennedy, Duke, and several other Afridigest readers in person for the first time (& congrats also to Hayden 👶🙌🏽)
And congrats to Nicole Dunn, formerly of Founders Factory Africa and now of Revio — almost certain she’s not a reader, but I’m a fan of her writing — consider this my ask to readers in her circle to clue her in to Afridigest 🙏🏽
The DFS Lab team and the Mojaloop Foundation are offering a three-day payments bootcamp — if your company ‘connects and transacts with financial institutions on behalf of users’, take a look and apply by August 19th
The Djamo team is hiring a Country Launcher in Senegal 👀
The Glovo team is hiring a Lagos-based Nigeria General Manager
Thanks for reading Afridigest 🙌🏽
Please ask your friends, colleagues, and Kenyan fintech regulators in your network to subscribe.