👨🏿🚀TechCabal Daily – Showmax to discontinue services outside Africa
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Chowdeck, the Y Combinator-backed Nigerian food delivery startup, says it has crossed ₦1 billion ($1.2 million) in monthly gross merchandise value (GMV). This marks a 10x growth spurt for a company that reportedly crossed ₦100 million monthly GMV just ten months ago. Want to know how they did it? Chowdeck founder Femi Aluko breaks it down in this TechCabal exclusive. In today’s edition Norrsken22 closes $205 million fund Showmax to exit non-African countries Twitter continues to ignore ex-Africa team Funding tracker The World Wide Web3 Opportunities Funding Norrsken22 closes $205 million fund GIF source: Zikoko Memes Africa-focused venture capital firm Norrsken22 has closed its debut Africa Tech Growth Fund at $205 million, $5 million more than its $200 million goal. The VC firm launched its Africa Tech Growth Fund in January 2022 with $110 million, but support for the fund slowed as Africa’s funding scene tightened between 2022 and 2023. Side bar: While African startups raised about $5 billion in 2022, funding in 2023, as of October 2023, stood at $2.7 billion. The $205 million completes the firm’s debut fund. The round was supported by a group of 30 unicorn founders globally including Flutterwave CEO Olugbenga Agboola, Skype Skype co-founder Niklas Zennström, iZettle co-founder Jacob de Geer, and Delivery Hero co-founder Niklas Östberg. What’s the money for? Norrsken22 is looking to invest in growth-stage startups across the continent. The fund is looking to invest in 20 startups, with its ticket size averaging $10 million. According to managing partner Natalie Kolbe who spoke to TechCrunch, 50% of the fund will be used to build its portfolio with Series A and B companies, and the rest for investment in Series B and C companies. Its portfolio of companies presently includes B2B retail startup Sabi, auto-financing startup Autochek, identity verification platform SmileID, fintech Shara, and digital bank Tymebank. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Streaming Showmax to discontinue services outside Africa Showmax is maxing out its efforts in Africa…and Africa alone. The MultiChoice streaming service announced, last week, that it would discontinue its streaming services outside Africa by December 1, 2023. This means Showmax users outside the continent will no longer be able to access the service by then. Why? In a statement shared with customers, the company said, “For the moment, we will be focused specifically on the African market and on meeting the needs of our growing customer communities across the dynamic continent.” This move comes weeks after the company also announced the shutdown of its paid tier Showmax Pro which offered users access to live sports and news from SuperSport. Showmax 2.0 is coming to screens: It’s also a part of Showmax’s total revamp to Showmax 2.0. Image source: Showmax The full details of Showmax 2.0 are unknown for now, but it does include a partnership with NBC Universal’s Peacock which will bring new content to Showmax. The partnership saw MultiChoice sell 30% of its stake in Showmax to NBC Universal for $30 million. While Showmax 2.0 is set for launch in March 2024, prices for the service have already been increased since July 2023 with its Premium Plus subscription tier getting a $2 increase. Zoom out: Meanwhile, MultiChoice is also increasing the prices of its DStv and GOtv services across the continent. Its Nigerian viewers, last Friday, received news of a 19% increase across subscription packages—the country’s second increment of 2023 since May when an 18% increment was implemented. So far, MultiChoice is scrambling to compete with an incursion from international streaming services like Netflix, Hulu and DisneyPlus. As of 2021, Netflix had the highest number of subscribers at 2.6 million, beating Showmax’s 800,000 subscribers. Join the Paystack private beta Paystack has launched a private beta to offer payment tools to businesses in Côte d’Ivoire, Egypt, and Rwanda. Learn more about Paystack’s entry into 3 new markets → Big Tech Twitter continues to ignore ex-Africa team Image source: Twitter A year after abruptly laying them off, Twitter—now X—is yet to give its Africa team their severance packages. The team of 20, headquartered in Ghana, had announced the launch of a new office a week prior to their layoffs. While teams across other continents received—in emails informing them of their layoffs—emails to the Twitter Africa team included no details on severance packages. All requests to the Twitter headquarters were also not responded to. BBC reported that the team then engaged a team of lawyers from Agrncy Seven Seven who were in contact with the Elon Musk-led company, but Twitter stopped responding to the lawyers in May 2023, right when discussions were almost at a close. Now, the team is once again considering legal action against Twitter/X for violating Ghanaian labour laws. Last week, BBC once again reported that the team has yet to get its severance package from Twitter/X. While the ex-Twitter Africa team had reestablished contact, and both parties had agreed that all settlements would conclude by October 5, the BBC reports that Twitter/X once again ignored the deadline, the latest in a string of missed deadlines. “Every time we get close, they go silent for weeks on end with no explanation. It has been one year since they were all laid off, defeating the entire purpose of a redundancy package, which is meant to cushion employees against the adverse effects of being laid off,” said Carla Olympio from Agency Seven Seven. The big picture: The ex-Twitter Africa team is just one of several ex-Twitter employees who are being taunted by billionaire Musk’s indifference. There are reportedly over 2,200 arbitration cases against Twitter/X by ex-employees who, after Musk’s bungled Twitter takeover, were left without severance packages. The company globally owes at least $500 million in severance packages, an amount Musk doesn’t seem to be interested in paying—just as he’s not
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How Victor Ekwueme is helping the blind see through tech
In Nigeria, access to opportunities for people with disabilities is an uphill climb. Amidst the challenges, Victor Ekwueme is shining a light through tech, especially for visually impaired persons. If you sit beside software developer Victor Ekwueme while he’s writing or coding, you may think he’s a snob who only wants to be in his world; he would have his earphones on, and his stare at his screen wouldn’t waver. What you may not realise immediately is that he cannot see you. His earphones are for him to listen to his screen reader telling him what key he’s hitting. Ekwueme, 44, is among the nearly seven million people who are blind in Nigeria. He was born to renowned professor of music, composer, and actor Lazarus “Laz” Ekwueme and Lucy Ekwueme, a professor of music education. Before he became visually impaired, he earned a degree in computer science from the University of Lagos in 2002. In 2004, after getting his first master’s degree in information technology from the University of Nottingham, Ekwueme noticed that his sight was failing. Whenever he looked down, he could only partially see objects in his upper vision field, and if he looked up, he could only partially see things below. A medical diagnosis later revealed that he had retinitis pigmentosa, a rare genetic eye defect affecting 1 in 4,000 people. It is incurable; this bug he could not fix. Rather than take the blow sitting down, Ekwueme decided to take matters into his own hands. “I felt that as I was losing my vision, there was little time left for me. So I started consuming as much knowledge as I could find,” he told TechCabal. “I read various books because I felt they would help me if I lost my vision. I read developmental books as well, but that’s when I came across an MIT course on EdX, Introduction to Python Programming.” In 2011, after he won the Apps4Africa hackathon for his app called HospitalManager, his eyesight deteriorated to the point where he couldn’t continue working on creating the app. He decided then to get a job. As his eyesight declined, Ekwueme had to get an assistant to navigate daily life. His assistant, Tobi, a computer science student, introduced him to the screen reader on his personal computer, which allowed him to do certain tasks independently. Initially, Victor listed his disability on his CV, and, perhaps unsurprisingly, he hardly ever got called for interviews. He decided to remove that detail, and the interviews started coming. Despite his obvious skills, no one offered him a role. “I remember once I went for an interview, and they gave me an assessment. My assistant was with me, and I mentioned that he’d read the assessment without giving anything away. The recruiter in charge said I should read it myself. I told him I was blind, and I couldn’t, and they just cut the interview short,” Ekwueme revealed. Victor Ekwueme at Moonshot Many people with visual impairments can relate to Ekwueme’s story. In 1994, Opeoluwa Akinola, CEO and co-founder of AccessTech, had the same experience. Akinola also has retinitis pigmentosa. As a young graduate of the University of Lagos, Akinola interviewed at an audit firm. Due to the confidential nature of the job, he wasn’t allowed to have an assistant read documents for him. He didn’t have access to assistive technology to work independently. This was the moment Akinola decided that he’d make sure that people with visual impairments did not get axed out of opportunities because of their disability. Twenty-six years later, Akinola created AccessTech, an organisation dedicated to providing assistive technology tools and training blind people on digital skills. AccessTech wants inclusion through assistive technology Though officially incorporated in 2020, AccessTech dates way back to when Akinola vowed that blind people would stop missing out on jobs on a large scale. Between 1999 and 2007, he trained as a computer technician, taught himself how to use the computer and then developed the curriculum at the Nigerwives Computer Training and Braille Production Centre, an NGO that taught blind people digital literacy. While working as a consultant, he also got certified as a professional in accessibility core competencies. He’s one of the three people who are certified in Nigeria. Now, AccessTech partners with organisations in the US, Europe, and Asia to provide assistive technology in the form of devices and training on how to use and maintain such devices. One such partnership is the Assistive Technology Experience Centre in Lagos, in partnership with Microsoft AI4 Accessibility which was launched in April 2023. It’s within this programme that they have collaborated with Ekwueme to teach rudimentary data analytics to young people with visual impairments. “The objective of this training is to open up opportunities for blind persons as data analysts. Most blind children are relegated to the humanities while growing up; they’re not allowed to explore their talents. Most blind people typically end up as lawyers, teachers or in the civil service. We believe that opening up a tech career will help them diversify their opportunities,” Emmanuela Akinola, co-founder and COO of AccessTech, told TechCabal. As an expert in data analytics, and with his disability, Ekwueme is the perfect tutor in the training’s pilot edition. The participants are advanced users of computers with screen readers and have a good understanding of statistics. According to the World Health Organisation (WHO), approximately 26.3 million people in the African Region have a form of visual impairment. Of these, 20.4 million have low vision and 5.9 million are estimated to be completely blind. It is estimated that 15.3% of the world’s blind population resides in Africa. AccessTech has considered this and is not limiting its scope to Lagos. They’re hoping they can partner with the Nigerian government to include visually impaired persons in the three million technical training programme instituted by Bosun Tijani, Nigeria’s minister of communications and information technology, and eventually expand their footprint to other African countries. “The goal is to have
Read MoreAt Black Ops Operators Happy Hour, experts explore the role of operators in the Nigerian tech ecosystem
Speaking at Black Ops’ Operators Happy Hour event in Lagos, experts highlighted the importance of operators in the Nigerian tech ecosystem. When you think of what drives Nigerian startups, what naturally comes to mind are the engineering and product teams. But tech isn’t everything. Enter operators who are responsible for the overall functionality of startups. Think of sales and marketing, human resources (HR), finance, customer service, customer experience, operations, etc. Since they work behind the scenes, the spotlight is barely on them. The role of these operators in the Nigerian tech ecosystem was a major talking point at the Operators Happy Hour event organised by Black Ops, a community for African operators, on October 19th, 2023, in Lagos. [ad] Speaking during a panel discussion moderated by Gerald Black, partner Black Ops, Uwem Uwemakpan, head of investments at Launch Africa Ventures said founders must bring operators into the business from the get-go. “It is the foundation of the business. As you are thinking about driving the vision, you must also think about who else can help you in this journey. You need people on your team who can pick up these things in your absence and run the business,” he said. The operator’s job lies at the intersection of strategy, operations, and technical depth. If anything, a clear understanding of how businesses work and expertise are critical to the role. Hence, for early-stage founders, hiring the right and seasoned operators may come at a high cost. But, another panelist, Babajide Duroshola, General Manager, M-Kopa, opined that founders should hire based on their financial strength. He said, “I’d use a simple example. When you have a child and want to hire a nanny, you get the one you can afford. And as you start to grow, you then hire experienced ones. That is the way businesses should run.” For Ololade Odunsi, Portfolio Talent Lead at Founders Factory Africa, operators are the engine of every startup. However, they are often left behind in innovation. “In most startups, the technology is there for customers to use, but as HR, you are doing payroll and building reports on Excel sheets. It is a problem. Still, it is important operators can build efficiency in that semi-manual environment,” she noted. One consensus from the panel is the need to support operators considering their essential place in the ecosystem. More than ever, there is a greater need for operators who can keep costs under control, manage risks, and achieve profitability. While the founders hold the vision for the business, it is ultimately up to them to allow operators freely and do whatever is needed to ensure business growth, Launch Africa’s Uwem said.
Read MoreZambia startup Save&Remit wins pitch competition at Africa Fintech Summit
Zambian startup Save&Remit has won the Alpha Expo pitch competition at the Africa Fintech Summit. Trade Lenda from Nigeria and aXion Zorn from Uganda came second and third respectively. Zambian fintech startup Save&Remit won the Alpha Expo pitch competition at the Africa Fintech Summit in Lusaka, Zambia. The company won a $2,500 cash prize, beating out 14 other startups. Second place went to Trade Lenda from Nigeria for their small business digital bank product. Third place went to aXiom Zorn from Uganda for their data analytics platform which enables credit scoring for smallhold farmers. Founded in 2020, Save&Remit’s flagship product is a digital saving platform that lets cooperatives and SMEs save from their mobile phones. Its features include digital ledger book, digital identity, digital and financial literacy, disbursements and security. Key takeaways Zambian startup Save&Remit has won the Alpha Expo pitch competition Trade Lenda from Nigeria and aXion Zorn from Uganda came second and third respectively. “It’s great to win the pitch competition among such great other startups. In terms of our platform, we look forward to expanding beyond Zambia as research shows there is significant demand for the kind of service we offer,” founder Putty Muuka told TechCabal. “The winners and other pitching startups are building products that are solving problems across multiple sectors,” said Amara Muoneke, one of the judges for the pitch competition.” You see the scalability in what they are building, and they also understand their customers and users very well.” The pitch competition was sponsored by USAID.
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Inflation is rising across Africa, can DeFi help?
Image source: CNBC Africa Whichever way we look at it, it is evident that the current economic reality is challenging with inflation soaring in emerging markets, especially Africa. In Nigeria, inflation is at 26.72%, and in Ghana, it’s at a whopping 40.1%, and even up to 63.30% in Sudan. The average annual inflation in Sub-Saharan Africa (SSA) in 2023 sits at 12.5%, making it the second highest in any other region of the world after the Middle East and North Africa region. The escalating cost of living, caused by various factors, has left many grappling with eroded purchasing power. This has made saving for financial objectives more daunting than ever. The challenge has grown more pressing, necessitating innovative solutions to fortify the financial resilience of individuals and economies. In recent years, innovators have leveraged financial technology with its innovative tools, to help individuals to budget, save, and invest wisely, thereby mitigating the impact of inflation on their livelihood. The proliferation of DeFi powered by blockchain technology offers an array of solutions to reshape the economic future of Africans. Innovations like blockchain technology offer transparency and security in financial transactions, reducing corruption and fraudulent practices that can exacerbate inflation. This not only reduces corruption and fraud but also instills confidence in financial processes, which is essential in combating inflation. Additionally, the importance of inflation-resistant investments cannot be overstated when dealing with inflation. DeFi solutions often feature stablecoins, which are digital currencies pegged to real-world assets or fiat currencies. These stablecoins can provide a reliable store of value through high fixed yields and are immune to inflation’s erosive effects. According to Seçkin Çağlın, co-founder of Cenoa, at a recent edition of TechCabal Live on October 27, “To fight inflation, you need to make sure your money grows faster than inflation so you don’t lose money,” The growth of peer-to-peer lending and transfer platforms enabled by DeFi also creates alternative sources of financing, and facilitates cross-border transactions with ease, reducing the risks associated with currency devaluation and fluctuations in exchange rates. This way, Africans can source for financing and also protect their wealth from the damaging effects of inflation by diversifying into other assets that can thrive even in inflationary environments. On lending and credit solutions provided by fintechs, Yasmine Mohamed Henna, co-founder of Sympl said, “When it comes to inflation, it is important for fintech not to overburden the people with credit that they cannot pay. The solutions must align with the reality of the country that is adversely affected by inflation.” DeFi platforms offer the opportunity to explore a wide array of investment options, from yield farming to liquidity provision. These investments can be chosen strategically to counteract inflation’s impact. However, despite the various solutions offered by fintech including decentralised finance and blockchain technology, there is still a knowledge and trust gap which presents a problem, leading to mistrust and resistance to change among potential and existing DeFi users. This also includes the regulatory bottlenecks that already exist. While there is still a lot of work to be done with regulation and education, the mistrust isn’t unfounded as the rise of cyberattacks on fintechs and the concerns about data protections are problems that need to be addressed to build reliability on fintechs. On building trust, Emre Ertan, co-founder at Cenoa advised, “Fintechs need to be highly transparent to build trust among users. You need to give control back to the users so they are assured that they are using the right platform.” Peter Onu, manager, remittance architecture and strategy at MTN Group Fintech, also mentioned that a good way to build trust is to provide people with what they need. ******* This article is part of the TechCabal Live series brought to you by TechCabal in partnership with Cenoa. Cenoa is a borderless super wallet that improves access to dollar-based products
Read MoreKenya’s dx5 set to pick East Africa’s most influential CIOs in its 15th awards conference
dx5 will also pick a number of companies that have used technology to drive their operations, including county governments. Kenyan publisher dx5, formerly CIO East Africa, will hold its 15th annual technology awards, the CIO100 awards this month. The organisation, which also publishes hardcopy technology magazines, selects influential technology players such as chief information officers (CIOs) in the East African region. It also handpicks 100 companies that have played a key role in driving innovation in their products and services. In the 2023 installment, British American Tobacco (BAT) Nigeria, Kenya Tea Development Agency (KTDA), and Sarova Hotels & Resorts will take part in the fair. “We received applications from over 600 organisations across the continent, which reflects Africa’s growing embrace of technology and its positive impact. Technology is the ultimate winner here, and it’s inspiring to witness our continent’s technological evolution,” dx5’s chairman and co-founder, Harry Hare said. Besides picking the CIO of the year winner – who has led the most compelling project that not only successfully incorporated technology but has also merged business strategy with the organisations vision – the show will run 14 other categories. Other award categories include Education, Health, Manufacturing, SACCO, Insurance, and Banking. Notable accolades include the dxNova Woman of the Year, Company of the Year, and CXO Influencer of the Year Awards. Moses Onkundi of ABSA bank won in 2022 and will be defending his title alongside James Nyakomitta, Group CIO, APA Insurance, Martin Mwarangu, Group General Manager – ICT/SAP Project Manager, KTDA, Peter Kanda, CIO, Gertrude’s Children Hospital, Gilbert Mutai, Head of IT, Car and General Group, Sachin Samat, Director – Group IT, NCBA Bank Kenya, and Charles Washika, Director ICT & Innovation, Co-operative Bank of Kenya, among many others. County governments, including Kitui, Nyandarua, and Makueni, are contenders for the local government award. Government entities such as the Ministry of Water & Environment Uganda, Nairobi City Water and Sewerage Company, and Uganda Electricity Generation Company Limited (UEGCL) will also take part in the competition. Winners will be revealed on the evening of November 24, 2023
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Meet the startups that say your salary shouldn’t wait till payday
The 30-day salary presents a liquidity gap between paydays. To bridge this gap, employees often turn to costly options like high-interest payday loans. Startups like Pade offer on-demand access to their accrued pay as a better alternative. If your salary is paid monthly, you’re familiar with all the jokes about money vanishing as soon as it hits your account or even the reality of counting the days till the next payday minutes after your salary is paid. During the 30-day wait for the next salary, many workers take out expensive payday loans to cover unexpected or costly expenses. Yet, in a survey of 101, the majority (70.6%) of employees said they would rather receive their salaries at the end of the month than request a portion of the salaries they had worked for on a weekly or daily basis. That preference contrasts with the growing market for loans and alternate financing products like buy-now-pay-later products across the continent. Pade, a Nigerian HR-tech company, told TechCabal that although people frown at the idea of chipping at their salaries before payday, their financial behaviour shows that it is what they need, as real-time access to their pay is a cheaper alternative to salary advances, loans, buy-now-pay-later, and other credit services they resort to. The 30-day salary creates a liquidity gap from one paycheck to the next, breeding a crop of startups offering employees real-time access to the money they have earned instead of waiting for the lump sum on payday. These products are called earned wage access (EWA). Respondents to our survey said they would rather stick to the status quo instead of earned wage access because it supports their financial management style, and withdrawing their pay mid-month may encourage reckless spending. The others said they may use EWA as the flexibility will enable them to meet emergencies ahead of payday. “The devaluation of the currency against the dollar is drilling a hole into the pockets of Nigerians who are taking up multiple jobs, requesting salary advances, and taking loans [at high-interest rates] to meet their daily needs,” Ore Badmus, marketing lead at Pade, told TechCabal. Charles Njoku, Ore Badmus, and Seye Bandele. Pade recently added earned wage access to its payroll and staff management features, toeing the line of a competing startup, SeamlessHR. It eponymously named the new feature EWA, the acronym for “earned wage access.” “We are marketing it towards people who earn ₦200,000 and less because of the inflation rates,” Badmus said. The startup says that the service, which will give salary earners access to up to 50% of their income, comes at no new cost to employers. Although Pade currently operates in Africa, EWA is only available to employees and businesses in Nigeria. “We’re also partnering with Money Africa to educate people on how to properly manage the money they now have free access to,” Badmus told TechCabal. Like several HR tech startups that have added this feature to their platforms, Pade is advertising the service as a way for employers to increase employee retention and productivity. HR professionals whom TechCabal spoke to agreed that the service could cater to the pain points of employees. However, the professionals also emphasized that, from the employers’ perspective, it is considered a desirable but non-critical offering. “We had a zero-interest salary advance policy that only about two people used per year at the startup I formerly worked at,“ an HR manager who declined to be named told TechCabal, but she thinks organizations can benefit from it if an internal poll shows that it is something the employees want. However, there is a shared concern that employees may abuse the flexibility. ”It is thoughtful, but there is a chance that some employees may abuse it and resign after withdrawing their pay without turning in a notice, an HR manager at fintech startup Herconomy told TechCabal. On the flip side, 31% of respondents to our survey say the option will increase their likelihood of staying with an employer. “[Such an option] indicates some level of (perhaps contrived) agency that the employer is willing to bestow upon me. It builds up trust and admiration to a degree,” one respondent said. While HR startups like Pade only offer these services to clients whose payroll they handle, some providers offer earned wage access as a standalone product directly to consumers through their employers (as a B2B2C service). Both models are in close competition with one another. Still, time has seen upstarts that start out providing solely earned wage access and add on other services so that they can continue to offer EWA services at the lowest possible charge, increase distribution, and thereby compete favourably. For example, Earnipay recently expanded its earned wage access solution to provide more tools for payroll management, bulk bill payments, purchase order financing, and even loans. In South Africa, EWA platform Smartwage rebranded into an HR platform now named Jem. Egyptian EWA provider Khazna also evolved from an EWA provider to a financial super app. Providers of the service typically monetise it in two ways: they either charge a one-time, flat fee to withdraw their earned wage, or they charge a withdrawal fee for each withdrawal that the user makes, depending on the size of the withdrawal. Some allow employers to pay for the charges or charge the employee directly upon withdrawal. For example, a Nigerian earned wage access provider, Earnipay, has a one-time flat fee starting at about ₦250. On the other hand, Pade offers this service at no cost to the employers themselves. “But we charge a withdrawal fee to the employee,” Badmus told TechCabal. However, regardless of the models, EWA providers need access to significant lending capacity to profitably offer this service. Even when fulfilling the traditional 30-day pay, employers often have shortfalls, as they also struggle with long wait times between when they’re paid by their customers. To give employees on-demand access to their salaries at any time, EWA providers need access to liquidity. Pade, for
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How YC-backed Chowdeck hit ₦1 billion in monthly order value
Chowdeck, the Y Combinator-backed Nigerian food delivery startup, says it has crossed ₦1 billion ($1.2 million) in monthly gross merchandise value (GMV). It marks a 10x growth spurt for a company that reportedly crossed ₦100 million monthly GMV ten months ago. ChowDeck’s CEO, Femi Aluko, told TechCabal that the startup had over 60,000 active users in October, up from 7,000 in January. The company also says it makes a profit from each delivery with more than a “25% take rate per order.” “Our strength is building products; we execute and grow fast,” Aluko explained. “Even though we’re not the cheapest food delivery service in the country, we are the most efficient.” Key Takeaways Chowdeck has crossed ₦1 billion ($1.2 million) in monthly gross merchandise value (GMV) with over 25% take rate on each order. The startup has 1,300 riders across four Nigerian cities who earn an average of $70 weekly. It has 300,000 users and an average of 60,000 active users monthly. He claims that Chowdeck’s growth in October was organic and that the company did not run any marketing campaigns in October to boost its numbers. Instead, it focused on adding new features and applying learnings from Y Combinator, the San Francisco-based accelerator program that has backed dozens of successful startups. ChowDeck has also expanded to three cities, namely Port Harcourt, Ibadan, and Abuja, since January. The startup claims it has over 1,300 riders, making an average of 10,000 daily deliveries across the four cities. Spurred by the effects of COVID-19, Africa’s food delivery industry has taken off as more vendors and consumers embrace the convenience of digital takeouts to serve customers in major cities like Lagos. The industry is expected to grow 18% annually over the next few years and will cross $7.45 billion in revenue this year, according to Statista. In Nigeria, Africa’s most populous country, eating at restaurants and other food vendors is a big part of the local culture, with Nigerian households spending 20% of their income on food cooked outside their homes. Noticing this trend, Y Combinator recently backed at least eight food delivery startups in Africa since 2021. Navigating the fuel subsidy removal Chowdeck’s feat comes as Nigeria’s economy continues to struggle after the removal of fuel subsidy in May significantly impacted transportation costs, including for mobility businesses across the country. Inflation has also grown unabatedly monthly, with food inflation rising to 30.6% last month as the biggest driver. Despite the rising operating costs, Nigeria’s online food delivery market is highly contested, with several international companies, such as Glovo, Jumia, and Bolt, competing to own a larger chunk of the market against startups like EdenLife, FoodCourt, and Chowdeck. ChowDeck’s Aluko described the month of May as one of the company’s toughest periods. As costs jumped, the startup had to increase delivery prices by 50%, becoming the first food delivery company to do so following the subsidy removal. “No matter how good or bad the economy is, we won’t build our company or product on bad unit economics or subsidise prices based on VC funding,” Aluko said, referring to the popular venture-building model of the last decade that helped create multiple billion-dollar companies that have since struggled to break even as sustainable businesses. Image Source: Faith Omoniyi/ TC Insights He added that Chowdeck decided not to compete on pricing. Instead, the company is focused on improving its product and increasing the weekly earnings for riders based on the number of food orders they complete. “Chowdeck riders are the best-paid in the delivery space today; we know we can’t afford to have riders that are disgruntled or don’t earn a lot of money.” Hiring agents to validate orders One strategy that Chowdeck has used is to hire agents who validate orders for riders at the busiest restaurants. For these busy restaurants, the agents manually verify if a customer’s order is in stock and ensure that an order is canceled if the restaurant does not have the order. Aluko told TechCabal that the startup only hires agents for the top 20 restaurants out of the thousand on its platform and only when “the demand has grown more than the supply at these restaurants.” “At that point, they’re doing enough orders for us to cover the cost of hiring agents and still make us profitable,” Aluko said. Getting riders to be effective When Chowdeck entered the food delivery scene, it faced stiff competition from incumbents. However, the company discovered that the average delivery time for its competitors was longer than 30 minutes. Chowdeck set out to differentiate itself in the market with a shorter turnaround time for delivery. Aluko explained that he devised a model for faster deliveries after a trip to Dubai. At the time, the model relied heavily on more compliant and reliable delivery riders, two attributes the average Nigerian dispatch rider tends to lack. Chowdeck’s management team piloted the model by fulfilling food delivery orders themselves. This helped them understand the challenges, they said. They developed rider incentives like providing housing support and offering promotion opportunities to high-performing riders to join Chowdeck’s operations team. Aluko added that Chowdeck discouraged cash on delivery for newly recruited dispatch riders because this caused accountability problems. Rewarding good behaviour has helped onboard more drivers as Chowdeck scaled across Nigeria, the company shared. Editor’s note: The exchange rate used in this article is $1 = ₦788.33
Read MoreBacked by 30+ unicorn founders and institutions, Norrsken22 raises $205 million to back high-growth companies in Africa
Norrsken22, an Africa-focused venture capital firm, has reached final close at $205 million—$5 million more than its goal—to back African startups that are ready to scale, otherwise called growth-stage startups. First launched in January 2022 and reaching the first close at $110 million, the Norrsken22 African Tech Growth Fund counts wealthy Swedish founders including Skype co-founder Niklas Zennström, iZettle co-founder Jacob de Geer, and Delivery Hero co-founder Niklas Östberg as limited partners; Flutterwave co-founder and CEO, Olugbenga Agboola also invested in the tech growth fund. According to TechCrunch, approximately 59% of the funding came from a consortium of 30 unicorn founders globally. Institutional investors in the fund include Standard Bank Group Ltd., Norfund, British International Investment, the International Finance Corporation, and the US International Development Finance Corporation. In October African-focused venture capital firms announced deals worth $144.3 million (excluding grants) per data from funding tracker Africa: The Big Deal. Since January deals worth $1.3 billion have been announced compared to $2.9 billion in 2022 and $3.3 billion in 2021, according to the same report. At the same time, the pace of growth-stage investments in African startups has declined; in 2023 there have been only 26 Series A and onwards deals disclosed according to analysis of data from Africa: The Big Deal. This compares unfavourably with 69 deals in the same category in 2022, and 76 in 2021. Large deals from the continent’s Series A and onwards firms used to make up the bulk of venture capital investments as investments and valuations raced upward globally. “We used to markup valuations almost every quarter,” one seed-stage venture capital investor told TechCabal. Seed-stage venture capital firms have raised millions from local and international limited partners to find and back early-stage companies, but the continent’s pool of dedicated growth-stage capital has remained limited. Norrsken22 is one of the few growth-stage funds dedicated to backing African startups. Its sister asset manager, Africa Seed Fund is currently in talks to raise additional capital to support early-stage companies building out another end of the pipeline.
Read MoreNairobi will host the 2024 Africa Fintech Summit
The 11th edition of the Africa Fintech Summit will be held in Nairobi, Kenya in 2024, said Zekarias Amsalu, the co-founder of Africa Fintech Summit at the ongoing 10th edition of the summit in Lusaka, Zambia. “We are excited to be in Nairobi next year,” said Andrew Barsden, the summit’s lead organiser. “Additionally, the relaxed visa requirements for Africans announced by President William Ruto will help in making the event much more open and inclusive to more people,” Barsden added. Key Takeaways 2024 Africa Fintech Summit to be held in Nairobi, Kenya. Organisers said the country relaxed visa requirements as one of the motivations. It will be the 11th edition of the summit. Some possible format changes in Nairobi The Africa Fintech Summit is often a two-day event, with the main panels and activities happening on day one, while day two consists of pitch events and other auxiliary activities. Barsden shared that in 2024, the event might be spread over three days to facilitate more networking opportunities for delegates. “We are also looking at including numerous excursions in the country for delegates, ”said Barsden. Over the course of next year, the summit will hold roundtable discussions with regulators, including ministers and governors, in major cities like Lusaka, Cape Town, Nairobi and Washington DC to facilitate discussions on fintech regulatory frameworks. The Africa Fintech Summit held its first event in Washington D.C in April 2018.
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