Afridigest Week in Review: Dollars for digitization
+New Afridigest sections +Digitizing funerals +Still day 1 for payments in Africa +The strategic approach to building a board +Partech and Microtraction's 2nd funds +Zambia's first accredited VC fund
The Afridigest Week in Review is a must-read weekly recap for Africa-focused founders, executives, and investors.
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Week 33 2022: August 14-20
📰 Deal of the Week🇳🇬 Omnibiz, a Nigerian B2B e-commerce platform, raised a $15M ($5M equity/$10M debt) pre-Series A led by Timon Capital, with participation from Ventures Platform, Lofty Inc, Chapel Hill Denham, Chandaria Capital, Musha Ventures and others.
About Omnibiz: The company, which is among the various players digitizing various aspects of retail across Africa, is focused on digitizing the retail supply chain and helping retailers restock inventory.
Omnibiz connects retailers, logistics providers, FMCG distributors, & manufacturers using an asset-light model; it also offers digital bookkeeping, ERP software, and credit solutions.
Operational in Ghana and across 12 cities in Nigeria, Omnibiz currently generates ~$130M in GMV on an annualized basis from ~3,000 daily active merchants, according to media reports. Over 200 FMCG brands are currently available on the Omnibiz platform which works with a network of 70+ logistics partners to deliver goods to merchants within 24 hours.
Key personalities:
Deepanker Rustagi, Founder & CEO, Omnibiz
Nikos Katsaounis, Partner, Timon Capital
In the CEO’s words: “We are concerned about having the right volumes to make us grow into a stable, long-term, and profitable business. This has pushed us to focus more on retailers with the capacity and capability to grow but [who] cannot do so because of challenges in their ecosystem. So we pick our retailers rather than working with every retailer in the industry… The retention of [our] retailers, even with growing competition, has been phenomenal.”
In the Investor’s words: “The FMCG supply chain is fragmented, inefficient, and opaque. Omnibiz tackles all of these problems and addresses them with an efficient software layer that provides much-needed data on this otherwise obscure market and supply chain. Deepankar Rustagi is an excellent operating CEO.”
Contextualize it: B2B e-commerce—alongside fintech & trucking—is one of the sectors that has received the most investor attention across Africa in recent months and years. Traditional or informal retail dominates commerce on the continent with “African consumers [buying] more than 70% of their food, beverages, and personal care products from the continent’s more than 2.5 million small, independent shops,” according to BCG. Accordingly, founders and funders see an outsized opportunity to offer this market new digital solutions for procurement, payments, delivery, analytics, and more. VC-funded players in the space, broadly speaking, include Omnibiz, Sokowatch, TradeDepot, Cartona, Marketforce, Sabi, Alerzo, Suplias, and others.
Recommended Reading: Omnibiz — A network of networks for African retail by the Timon Capital team
Other reads:
Will B2B e-commerce capture Africa’s informal markets? by Abraham Augustine
Hear more directly from the Omnibiz CEO in this Nov 2021 CNBC Africa interview (just after the company’s previous $3M seed round):
HERE’S YOUR WEEK 33 EQUITY FUNDRAISING TRACKER
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🔦 Other dealsOTHER FUNDRAISES ACROSS THE CONTINENT
🇰🇪 iProcure, a Kenyan B2B agtech supply chain platform, raised a $10.2M ($9M equity, $1.2M debt) Series B led by Investisseurs & Partenaires (I&P), with participation from Novastar Ventures, Ceniarth, and British International Investment (BII)
🇳🇬 Pastel, a Nigerian SME-focused digital bookkeeping platform, raised a $5.5M seed round led by TLcom, with participation from Global Founders Capital (GFC), Golden Palm Investments, DFS Labs, Ulu Ventures, Plug and Play, and Soma Cap
🇳🇬 Koolboks, a Nigerian/French tech-enabled provider of solar-powered cold storage & smart refrigeration solutions, raised a $2.5M seed round led by Aruwa Capital Management with participation from Acumen, Blue Earth Capital, All On, GSMA, and others
🇳🇬 In addition to the YC S22 startups mentioned in previous weeks, Bridgecard, a Nigerian issuer of Mastercard & Visa cards, announced its acceptance into Y Combinator’s Summer 22 batch
🇿🇦 PixelBlue, the parent company of South African indoor farming agtech platform Homefarm, announced that it raised a ~$104K (R1.7M) seed round from CapaciTech and others
🇰🇪 Lori Systems, a Kenyan on-demand logistics & trucking company, raised an undisclosed pre-Series B from Google's Africa Investment Fund and other investors — “At this stage in our journey, and in this current market, we made the strategic decision to extend our Series A rather than raise a Series B on unfavorable terms” - Lori CEO Uche Ogboi
DEBT
Africa Data Centres, Africa’s largest network of interconnected data facilities, received the first $83M disbursement of an up to $300M loan from the US International Development Finance Corporation (DFC)
Watu Credit Uganda, the Ugandan entity of Kenyan mobility-focused asset financing platform Watu Credit, secured a $7M subordinated debt investment from the Verdant Capital Hybrid Fund
M&A
South Africa’s Naspers, Africa's largest public company, announced that its subsidiary, Prosus, will pay between $1.5-1.8B to buy the 33% stake in Brazilian food delivery company iFood that it doesn't already own
African technology infrastructure and services provider Liquid Intelligent Technologies, a business of Cassava, today announced that it finalized the 100% acquisition and delisting of Israel’s Telrad (TASE: ILA)
VC FUNDS
KfW, the German development bank, is committing ~$45M to Partech Africa Fund II as the fund’s anchor investor — Partech Africa’s portfolio includes Wave Mobile Money, TradeDepot, Yoco, Reliance Health, and Nomba (formerly Kudi) and other potential Fund II LPs include FMO, the IFC, and the EIB
Nigerian/pan-African early-stage venture capital firm Microtraction announced a $15M first close of its second fund — Individual LPs include founders of venture-backed African companies such as Paystack’s Shola Akinlade, Paga’s Jay Alabraba, and Float’s Jesse Ghansah, as well as GPs of global funds such as a16z’s David Haber, Y Combinator’s Michael Seibel, and Precursor Ventures’ Charles Hudson; the firm’s portfolio includes 54gene, Helicarrier, and Cowrywise.
🔎 Spotlight on Amano Capital: Zambia's first regulated VC fundIn Week 31’s Community Corner we congratulated Kas Shirley whose firm Amano Capital now manages Zambia’s first ever accredited and regulated VC fund. This week we asked Kas a few questions about the news.
What is Amano Capital?
Amano Capital is a Zambian firm with three divisions: Amano Advisory, Amano Brokerage, and Amano Ventures.
The venture arm was recently founded following the success of the Advisory and Brokerage divisions. After various advisory engagements where we collected significant data on our portfolio companies, we gained conviction in building a Ventures arm that would make direct investments into our portfolio companies, rather than just brokering capital raises. Thus, Amano Ventures focuses on companies that have already been nurtured through Amano Advisory, and our investment team has a deep understanding of their market and growth potential.
The initial Amano Ventures fund is a $3 million vehicle whose ticket sizes range from $250k-$500k. We specifically target post-revenue companies who have raised pre-seed and seed investments that Amano Brokerage has facilitated and one of our primary goals is to prove that the Amano advisory to venture pipeline works. The fund is sector agnostic, but all companies are tech-enabled.
Why does this news matter? What's the significance of being a regulated and accredited VC fund in Zambia?
This venture represents a fundamental step towards Zambia becoming a key hub for technology in the SADC region. Zambia borders eight other countries. It has a new political regime that is promoting several new policies that are enticing founders in SADC to domicile in Zambia. Becoming the first accredited and regulated VC gives Amano Capital a first-mover advantage in investment participation. Moreover, the Securities Exchange Commission of Zambia is using Amano Capital as a reference point to develop well-regulated funds in this space.What’s your thesis on the Zambian market? Where are the untapped opportunities and what are the challenges?
Zambia holds a great opportunity to be the testing ground for continental solutions. The country has an expanding middle class with increasing disposable income; smartphone adoption rate per capita is one of the highest on the continent; and Zambia has a relatively stable political environment. … However, due to a lack of necessary skills and education, Zambian founders have traditionally struggled to scale their businesses. It is within this context that we have found it necessary to provide advisory services to founders with brilliant ideas.
This pre-preparedness and resilience are important in entering bigger regional economies such as South Africa and Kenya, where founders typically have minimal time to find an MVP. This makes them less vulnerable when entering competitive markets, as they are better prepared to scale and adapt. Furthermore, Zambia suffers from a lack of investment opportunities, making capital expensive for early-stage companies.
In fact, several early-stage companies have burnt out from their pre-seed investment due to the lack of access to subsequent rounds of funding, which has had a negative effect on Zambia’s international investment reputation. Through Amano Ventures, we are creating an investment vehicle that makes sure companies don’t burn out at seed-series A, and will be a strong catalyst for more deal flow in the market.
📚 Quick hitsFOR YOUR READING PLEASURE
Status traps: Learning from web2 social networks — a16z’s Sriram Krishnan builds on Eugene Wei’s Status as a Service and applies concepts from economics to aid understanding of social network mechanics
The pyramid of the flexible mind — Loup Funds’ Doug Clinton on the four mindsets that drive decision-making and leadership in everything from politics to entrepreneurship to financial markets
Five lessons from history — Morgan Housel: “The most important lessons from history are the takeaways that are so broad they can apply to other fields, other eras, and other people…. [they] are so fundamental to the behaviors of so many people that they’re likely to apply to you and situations you’ll face in your own lifetime.”
Bonus
Africa’s cold rush and the promise of refrigeration — Long-read from The New Yorker on cold storage & cold chain logistics: “The primary difficulty…is that operating a cold chain costs the same, if not more, in Nairobi as it does in New York City: five to fifteen cents per kilo of produce. In other words, refrigeration adds about one percent to the cost of a tomato in the developed world, but about thirty percent to its cost in the developing world. Nobody is going to pay that.”
My brother made it in Lagos — and taught me lessons about my life in London — “I was in boarding school in England and he had returned to Lagos to become a full-time ‘hustler,’ the name tag given to eager young entrepreneurs in Lagos. In Lagos, it's natural to have more than one job. I have friends who are lawyers by day and make-up artists, wig sellers, and DJs in the evenings. Chinaza was no different. In addition to his 9 to 5 private equity job, he and a few friends started a film production company that would go on to produce films for the Nigerian cinema, Netflix and Amazon Prime.”
Public bookmarking
The strategic approach to building a board — From a16z: “The best founders and startups build their boards forward from product-market fit and approach it like building a presidential cabinet.”
🙈 Visual of the week
There's a wave of digitization going on across Africa with everything from payments to local retail to logistics & beyond being affected. One interesting vertical to watch here is the funeral sector.
Speaking quite generally, the African continent is characterized in many places by high death rates and low savings levels. At the same time, “levels of religious salience are particularly high in sub-Saharan Africa,” according to the Pew Research Center.
Consequently, funerals can be frequent, lavish affairs — involving the acquisition of “fabulous” coffins, coordination with religious, governmental, and local institutions, management of a wide variety of vendors: caterers, gravesite service providers, printers, transporters (e.g., providers of hearses and repatriation services), etc., and more.
Funeral planning is a largely offline, low NPS experience that’s starting to be digitized, with players like Egypt’s Sokna and South Africa’s Sendoff among those leading the charge.
There’s an interesting opportunity to deploy the digitization & platform playbooks used in other sectors, there are a number of financial services & insurance angles as well, and it’s a large industry — after all, everyone dies. Watch this space.
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🕵️♀️ In case you missed itNEWS & ANNOUNCEMENTS
Egypt’s central bank governor resigns amid economic woes
Togo and the United Nations Economic Commission for Africa (ECA) have signed an MOU to establish the “African Centre for Coordination and Research in Cybersecurity” in the country
The United Nations Development Program (UNDP) launched its $1 billion Timbuktoo initiative that will set up venture hubs in eight cities: Casablanca, Cairo, Accra, Nairobi, Cape Town, Lagos, Dakar, and Kigali
Meet the core cohort of 15 startups selected for Village Capital’s Future of Work Africa accelerator
ESSAYS & REPORTS
Paula Mokwena, CEO and Head of Direct Investments at Fireball Capital, writes ‘Tech investment key to creating sustainable change in SA’
Ibikun Taiwo, Communications Manager at Sustainable and Inclusive DFS writes ‘Financial inclusion: Separating facts from fad and fiction’
Johan Steyn, Research Fellow at Stellenbosch University writes ‘Conversational AI: Africans disproportionally disadvantaged’
Anthony Muisyo, a Kenyan Web3 enthusiast, writes ‘A tale of 2 coins : KES to USDC’
Nathaniel Witbooi, media and ecosystem lead at AfricArena, writes ‘What investors look for before funding tech start-ups’
Obi Ebuka David, Co-Founder and CTO at IdentityPass, writes ‘There is a huge need for growth in the Nigeria tech industry, here is why’
DFS Lab’s Jake Kendall and Chernay Johnson write ‘Announcing: The DFS Lab Retail Digitization Tracker’
Efosa Ojomo, Senior Research Fellow at the Christensen Institute, writes “The key to success in Mastercard Foundation’s Young Africa Works initiative”
Smile Identity published its State of KYC report H1 2022 (PDF)
OTHER ARTICLES
Egyptian startups pull trigger on layoffs amid growing uncertainty and funding crunch (Wamda)
Microsoft is leading Big Tech’s push to relocate African developers to North America (Quartz)
MTN's fintech ecosystem grows as spinoff plans continue (Connecting Africa)
Meet the Paystack Mafia: a group of emerging Nigerian founders (TechCabal)
Your favorite startup may be slashing salaries (Notadeepdive)
DStv’s dance with a French pay-TV giant (MyBroadband)
Why John Deere invested in Africa’s Hello Tractor (AgFunder)
Since 2015, Techstars has backed 50+ African startups (Benjamin Dada)
INTERVIEWS/PROFILES
Meet the Investor: Eloho Omame, FirstCheck Africa Co-Founder & TLcom Capital Partner
Meet the Investor: Maya Horgan Famodu, Ingressive Capital Founder
Meet the Investor: Thabiso Foto, CFO at Founders Factory Africa
Meet the Investor: Maëlle Gavet, CEO of Techstars [On the launch of the Techstars/ARM Labs Lagos program]
🐤 Tweets of the WeekIt’s still the earliest days for fintech in Africa, according to a Tanzanian founder:
And it’s day one for cross-border, intra-Africa payments:
Last but not least, here’s a reminder to always shoot your shot — cold pitches (done right) can work
Bonus: four reasons to listen to Afrobeats — one, two, three, four
LA FIN
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— Emeka
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