An inside look at how interest rates are pressuring VCs and stifling innovation
This article was contributed to TechCabal by Yacob Berhane, Co-Founder & CEO of Pariti. Founders…we’re not the only ones struggling. In the past 18–24 months, we’ve heard the term “dry powder” over, and over again. Basically, the perception is that after record-setting fundraising years, VC funds are sitting on massive piles of capital that they haven’t deployed. The perception in many of my conversations with founders is that investors are sitting on cash and watching us flounder. The reality is far from that. I wanted to write this for my fellow founders who may not have the time to research or may not have had the exposure to capital markets as I did during an investment banking stint. Hopefully, this is helpful and informative in tying some of the different threads on this topic together. Sorry for the jargon; I’ve done my best to link back to useful resources to help you along the way. This isn’t a pity party for investors; it’s a reality check for us. There’s no one coming to save us. We have to build resilient businesses solving big problems, with great distribution/moats, adapt to the new AI world, and still grow at exceptional rates. If that sounds ridiculous, it is. But so is believing we can build a unicorn and change the world—right? Mario Gabriele, writing in The Generalist, once said, “If the 2020s have one ultimate message, however, it is that we live in the most chaotic timeline. This is the age of superbugs and superbubbles, lockdowns and collapses. Welcome to the roaring twenties: a decade of pandemonium.” The quote above captures the essence of what it means to be a founder, especially a millennial one. We’ve come of age in rapid boom and bust cycles and now need to get comfortable with the reality that until interest rates come back down, there’s no reason to believe the VC dollars will start flowing at a high clip. It would be awesome to look at the Fed Funds Future contracts and be able to predict rates, but I’d rather spend time and effort figuring out how to build a phenomenal business that solves massive problems. This allows us to endure the hard times so that we’re able to appreciate the good ones to come. Topics to unpack New normal for founders and investors. The definition of a good deal has drastically changed. Yes, as founders, it feels like the goalposts have now moved—they did! But not just for us. VCs are struggling to raise. If you check the data, you will see that it’s hard out here for everyone. If you’re a VC that doesn’t have a good track record of DPIxTVPI or some solid name-brand exits, raising the next fund is an uphill battle. Focus on protecting portfolio value. General partners (GPs) have needed to and will likely continue to focus on the bird in hand rather than over-indexing on the birds in the bush, thinking (and/or hoping) their portfolio founders will just figure it out. Funds have ring-fenced capital to their portfolio to ensure survival for their winners and potential winners (as best as they can) to be able to ride out the storm (hopefully). It’s also a new world for a lot of VCs. Many GPs are new to this game and have never been through a bust cycle just as us founders, so we’re all learning in real time. We also must remember our investors have other investments and only approximately 30 days in a month. So, a good exercise for us founders is to look at the size of the fund compared to how much they invested and consider what they mark you at and the likelihood you’re a fund returner or not. It’s not easy, but that level of sobriety is critical, especially in these times. Opportunity cost for calling capital. Depending on the limited partner (LP) base (institutional, endowment, pension fund, HNWI), they can have different capital needs. In an environment where you can earn 500+ basic points (bps) risk-free and be able to get out of money markets in days, it begs the question: Why allocate into illiquid asset classes like early-stage equities, especially when your public market equities are down over-indexing the portfolio in equities in general? So now what? Ask yourself: Is this my life’s work? If it is, you’re playing an infinite game. There’s no shame in losses that come with that, as long as you operate with integrity and genuinely are obsessed with solving a problem that can improve the lives of others. This whole thing is a series of experiments. Something else that’s important to align with your leadership team and major investors is: Are we going for default alive, investable, or acquirable? Be clear and decisive here. Remember: build something that matters to people. We obviously all want to be fund returners, unicorns etc. Sometimes that’s not in the cards. Sometimes it is. What is in your control is being customer-focused and obsessed with solving problems using data and feedback. At Pariti, we’ve realised that by co-creating with our community building around data x AI models, we can change capital and talent markets and empower people to earn. Supercharging their efforts with AI does not replace them. Some of our community referrers are earning more monthly than the average GDP/per capita in Africa. Are we satisfied? No! But every day I get reminded that there are people in the world grateful for what we’ve built, and that reigns supreme above all else. For those of us who make it through this cycle, I believe the businesses we are building will be some of, if not the most, transformational businesses the world has ever seen. If you want to learn more about this and other related topics sign up here. I’ll be interviewing founders/investors over the coming weeks to unpack more of these current events and get different perspectives from early-stage to growth-stage founders & investors.
Read MoreM-KOPA expands to South Africa with pay-as-you-go solar panels
This article was contributed to TechCabal by Seth Onyango via bird story agency. M-KOPA is finally rolling out its pilot operations in South Africa five months after it secured over $250 million of debt and equity to fund its expansion across Africa. The company, which pioneered a pay-as-you-go model for solar panels and smartphones in East Africa, will partner with local retailers and distributors to offer its suite of smart products to low-income households in the vibrant township. Recently, the firm sought a sales executive through postings on Glassdoor and Beebee, as it looks to bolster its drive in Soweto. Last year, Jesse Moore, M-KOPA CEO and Co-founder said the firm would expand to more markets across Africa and scale to over 10 million customers in the next few years. South Africa thus represents M-KOPA’s fourth-largest market, following Kenya, Nigeria and Ghana, where the company has enjoyed relative success with a diverse range of consumers. In Soweto, M-KOPA aims to replicate its Kenyan success in a market often disrupted by power outages due to load-shedding. Despite these challenges, South Africa’s dynamic and varied economy offers a new frontier for M-KOPA. Choosing to start in Soweto is seen as a strategic move, given the township’s similarity to the markets where M-KOPA has previously thrived. The area’s demographics, mainly low to middle-income households, align well with M-KOPA’s product range. According to tech analyst, Martin Macharia, the entry into the South African market is a natural pivot. “The country, despite its economic strides, grapples with challenges such as frequent power outages and a significant portion of the population still living without regular access to important amenities,” he noted. “M-KOPA’s innovative solutions, therefore, which have seen great success in Kenya and to some extent Nigeria, are poised to offer much-needed relief in these areas. By partnering with local retailers and distributors, M-KOPA is not only contributing to the economy but also embedding itself within the community, ensuring that its solutions are tailored to meet the specific needs of the South African consumer.” M-KOPA’s products include smartphones, electric motorcycles and solar power systems, which customers can pay for in small instalments over time, using their mobile phones. The products are embedded with credit through a smart digital connection, giving customers instant ownership and access to essential services. As of March 2022, it had reached 2 million customers across four African markets, with the latest funding haul setting it on course to become the dominant player in that space, possibly a unicorn.
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👨🏿🚀TechCabal Daily – ChatGPT now has a free voice chat option
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning If you ever need someone to talk to, here’s a notice that ChatGPT is here for you. Yesterday, the company rolled out a voice chat feature for all ChatGPT users, and it’s completely free to use for everyone who downloads the app! You can choose from one of five voices and ask it anything, the same way you’d ask with the text feature. There’s a boatload of functionality for this from having discussions about work, talking through your ideas, or even asking how to make $20 million like we did—investments and high-risk ventures, btw. Hopefully, OpenAI will employ its own service to mediate its in-house CEO scuffles. In today’s edition GetEquity questioned over unpaid funds Alerzo lays off 100 employees Aduna Capital raises $20 million for Northern Nigerian startups Stream Spotify for free in Mali, Madagascar, and DRC Telkom needs more time to buy 5G in South Africa The World Wide Web3 Opportunities Startups GetEquity questioned over unpaid funds GIF source: Tenor Yesterday, a TechCabal investigation revealed that capital marketplace GetEquity was at the centre of a police complaint on unpaid funds. According to the report, another startup, Peppa, filed the complaint after GetEquity stalled in remitting about $14,000 which Peppa had raised on GetEquity’s platform. The report led to the detention of GetEquity co-founder Temitope Ekundayo who was invited for questioning by the police force and subsequently detained for two days. Backstory: GetEquity operates as a private marketplace where other startups can raise money from private individuals. In July, Peppa had raised $43,000 on GetEquity’s platform. When it requested a payout, GetEquity instead proposed a four-week payment plan which Peppa founders say GetEquity did not stick to. According to Jude Dike, co-founder at GetEquity, fluctuations in dollar rates affected the startup’s ability to remit funds. Investments on GetEquity are made in several currencies, but the platform remits its funds in US dollars. At the time of the complaint, GetEquity had remitted $29,000 to Peppa and had $14,000 to balance. With the report and detainment of its co-founder, the startup now says it has paid the outstanding amount. While Peppa says it only filed a police complaint as a last resort, GetEquity says it’s now considering legal action over the detention of its co-founder. 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. Layoffs Alerzo lays off 100 employees eight months after last layoff round Adewale Opaleye, CEO Alerzo. Image Source: TechEconomy. Alerzo, an e-commerce startup, has laid off at least 100 employees eight months after it laid off 400 employees. The e-commerce startup, which secured $10.5 million in a Series A round in 2021, cited the implementation of an “end-to-end warehouse management system” and improved process automation as the reasons for the layoffs. Insiders familiar with Alerzo’s operations revealed that the majority of the affected workforce worked in the company’s 40 warehouses. The company implemented new software that eliminated the need for several lines of approval, leading to redundant roles, and at least two staff members were let go from each warehouse. Support measures: Alerzo is taking steps to support the impacted employees. Laid-off employees will receive a one-month severance package and continued Health Maintenance Organization (HMO) coverage until the end of the year. Funding Aduna Capital launches $20 million fund for Northern Nigerian startups Surayyah Ahmad Sani and Sanusi Ismaila Aduna Capital has launched its first $20 million fund dedicated to discovering and nurturing early-stage startups across Africa, especially those in Northern Nigeria. The investment firm, founded by TTLabs founding partner Surayyah Ahmad Sani and CoLab Founder Sanusi Ismaila, is focused on empowering female founders and startups in underserved regions like Northern Nigeria. Northern Nigeria? Yes. With a population of over 100 million people, Northern Nigeria offers a vast untapped market, positioning itself as a pivotal region for growth. Additionally, research has shown that female-led startups generate 78 cents in revenue for every $1 invested, while male-led startups generate only 31 cents. The firm aims to focus on this by giving 50% of its investments to female-led startups. A pan-African approach: Aduna Capital’s investment focus also has a pan-African approach beyond northern Nigeria. The fund will put 25% of its investments towards startups in the rest of Nigeria, and another 25% across the African continent. Per Ahmad, the fund will be investing between $50,000 to $200,000, in startups, but will occasionally write angel checks to help fill gaps in funding from other investors in the region. The firm also plans to sell its stakes in companies when they reach the Series A stage. However, Ahmad mentions that the firm intends to keep about 20% of the companies they invest in and continue to invest more money in these chosen companies as they grow. Zoom out: Aduna joins a growing number of venture capital firms that are recognizing the entrepreneurial potential of Northern Nigeria. THESCATHGROUP (TSC), for example, has already provided early-stage funding and advisory support to ten tech startups in the region, including The AgroTrader and OffKay. These investments are helping to fuel innovation and economic growth in Northern Nigeria. Introducing: IP Whitelisting on Paystack Tighten security for your business by declaring the specific IP addresses from which Paystack should process API requests. Here’s how to set it up. Media You can stream Spotify for free in Mali, Madagascar, and DRC GIF source: Tenor Spotify users across three countries in sub-Saharan Africa no longer have to worry about data to stream music on the platform. Telecom Orange has partnered with Spotify to allow smartphone users in the Democratic Republic of the Congo, Madagascar, and Mali to listen to music on Spotify without buying data. How does it work? The French telco will be providing free data bonuses for Spotify users who sign up for an Orange mobile offer in these countries. The
Read MoreLagos startup filed Police complaint against GetEquity founders over unpaid funds
Peppa, a startup that offers escrow services to people online shoppers, has filed a police complaint against Jude Dike and Temitope Ekundayo, the co-founders of GetEquity, a self-described “marketplace for private capital” that helps startup founders raise venture funding from retail investors. The police complaint is related to $43,000 that Peppa had raised using GetEquity, three people with direct knowledge of the matter told TechCabal. Those sources confirmed that Ekundayo, GetEquity’s COO, was invited by the police and detained for two days in connection with the complaint. He has now been released and GetEquity said it plans to institute legal action over his detention. The Alagbon division of the Nigerian Police Force did not respond to a request for information. GetEquity told TechCabal that the police complaint and the subsequent detention of its co-founder was an “intimidation tactic,” claiming the startup had already paid $29,000 out of the $43,000 raised by Peppa. GetEquity says it has now paid the outstanding amount owed. “We approached GetEquity to help us collect money from angel investors as part of a small family and friends round,” said a source at Peppa who requested anonymity to allow them to speak freely. According to the terms of that deal, GetEquity would collect these funds on behalf of Peppa and a commission for its service. “As our company had completed a Know Your Customer (KYC) process, our agreement stated that we could collect the money that had been raised whenever we were ready, and it would be wired to us,” said the person at Peppa. Two people at GetEquity confirmed that Peppa completed the funding round in July. Yet, when the company tried to collect the money it had raised, GetEquity could not pay upfront and proposed a four-week payment plan instead. GetEquity later reneged on that payment plan. GetEquity says FX volatility impacted ability to pay “As a business, we’ve had to deal with high volatility in the Nigerian exchange rates,” said Dike, CEO at GetEquity. He explained that his startup receives funds from investors looking to back startups listed on the GetEquity app. Retail investments are deposited in several currencies, while the platform pays the funds to the associated startups in US Dollars. He claimed that while the company makes provision for exchange rate volatility in the process, the “volatility of the Naira increased exponentially between 2022 and 2023.” “You had situations where if the investor makes a payment today, it takes two days for the transaction to settle, and the price of the US Dollar may have changed by as much as N200 in those two days.” Dike admitted that this extreme volatility “led us into a hole we needed to sort out with our liquidity partners.” He said the company’s outstanding payouts were worth tens of thousands of dollars without a timeline for when it suffered the financial crisis. However, Dike claims that the company eventually rectified the situation and said it entered into an agreement with Peppa to stagger those payments. At the time of the police complaint, GetEquity still owed $14,000. One person at Peppa said the company filed a police complaint only as a last resort after months of dialogue with GetEquity.
Read MoreExclusive: Retail startup Alerzo fires 100 employees in fresh layoffs
Alerzo, the e-commerce startup that raised $10.5 million in a Series A round in 2021, has laid off at least 100 people eight months after it laid off 400 employees. A company spokesperson confirmed that at least 100 roles were affected but did not share an exact figure. “As a company, we’ve invested and built an end-to-end warehouse management system that has improved process automation,” the company said in the statement. “These technological investments have enhanced warehouse performance, including our turnover and sales metrics. Unfortunately, this has meant streamlining and consolidating certain warehouse roles.” Two sources with knowledge of Alerzo’s business confirmed that most of the affected employees worked at the company’s 40 warehouses. They said implementing new software eliminated the need for several lines of approval in those warehouses, leading to several redundant roles. At least two members of staff were fired in each of the warehouses, they said. The laid-off employees will be paid one month’s salary as part of their severance package. Alerzo also said that HMO packages for affected employees would remain active until the end of the year.
Read MoreTelegram is offline in Kenya as internet authorities remain silent
All internet-related agencies and telcos are silent on the Telegram disruption that has lasted for two weeks. Telegram, a chat app with over 700 million monthly active users, has been unavailable to users in Kenya during the day, disrupting the service that has now lasted over two weeks, coinciding with the country’s ongoing college entrance examinations. While Kenya’s Communications Authority (CA) has not confirmed the disruption, there are speculations that the timing of Telegram’s outage may be linked to an attempt to curb examination malpractice. Telegram is popular in Kenya because of features like cloud backups, and large groups that can accommodate thousands of members. Telegram channels are popular in the country among media companies and other businesses, which use them to share updates with their subscribers. Telegram’s disruption has caught the attention of AccessNow, a non-profit digital rights group, which has written to three Kenyan telcos (Safaricom, Telkom, and Airtel), the ICT cabinet secretary Eliud Owalo, and Kenya’s Communications Authority (CA), seeking an explanation for the shutdown. “Blocking access to essential platforms that facilitate the exercise of rights and freedoms including freedom of expression and access to information is a violation of Article 35 of the Constitution of Kenya,” AccessNow argued in the letter. As of the time of this report, the CA, which is responsible for overseeing ICT matters in the country, remained silent on the matter. Telcos like Telkom Kenya, Safaricom, and Airtel Kenya have also kept details private from their customers about the interruption. Customers accessing Telegram via Jamii Telecoms have not reported any disruptions. TechCabal’s efforts to reach the mentioned telcos and agency via calls and text were unsuccessful. But why the partial disruption? The partial shutdown coincided with the start of the Kenya Certificate of Secondary Education (KCSE) examinations. The exams are a prerequisite to joining college or other institutions of higher education. However, rogue agents use Telegram to share examination materials for profit. Six individuals have been arrested for engaging in this vice, which has tainted the credibility of KCSE for years. The disruption may be an attempt to address cheating cases as the exams near their end later this week. It should be noted that Telegram is only offline during the day. At night, when exams are not being conducted, it runs just fine. It can also be circumvented using a virtual private network (VPN) application.
Read MoreJetstream, Ghana’s leading e-logistics startup is betting on its export loan business for growth
In addition to freight forwarding, the 4-year-old company wants to be a one-stop shop that offers hard-to-get export loans to small exporters who receive international orders they cannot finance. By owning more of the export process for small customers and enterprises alike, Jetstream Africa hopes to grow faster and become more attractive to investors ahead of its series A. Miishe Addy, Jetstream Africa co-founder and chief executive, simply wanted to help small exporters and importers in Ghana send cargo abroad. But after her company commenced operations in 2019, Addy and her co-founder, Solomon Torgbor, who had led a team in the customs unit of the global shipping liner, Maersk, quickly realized that growing a logistics business in Africa meant becoming the financial partner for her customers. For Jetstream Africa, it meant supporting small businesses with a cash advance of between $17,000 to $100,000 in asset-backed loans. The credit facility helps small exporters complete orders as international demand for quality African products grows. When Jetstream started operations in 2019, the hypothesis was that by grouping cargo together, they could reduce the rates each cargo owner had to pay. Miishe’s team thought that doing this would make it easier for SMEs in Ghana to ship anywhere they wanted to around the world. “We were retaining customers [but] their topline wasn’t growing and ours wasn’t either,” Addy told TechCabal. Despite Jetstream’s aggregation, it was still too expensive to sell or buy goods internationally. So the company’s early assumption that simply bundling cargo into container-sized units would reduce costs and spur export growth had to be modified after months of experimentation. “What we discovered is that it doesn’t matter how much you discount freight. If customers do not have enough liquidity to buy and sell goods, the discount is irrelevant,” Addy said in a call with TechCabal. Unlike other regions, African exporters are forced to take more risks when they sell goods to international buyers. “Folks who are producing goods on the continent probably have the worst payment terms of any trading parties in the world. If they’re selling cargo they don’t get paid until it gets to the buyer. If they’re buying cargo they have to pay a front,” Addy said. Since the cargo moves across great distances and are been imported or exported to people who do not know each other in person. Both parties need to trust that the goods are been shipped, contain what was ordered, and that the payment will arrive when due. African banks hesitate to offer loans to SMEs because the typical SME customer in Africa has far fewer assets than what banks are willing to accept as collateral. Trade finance—an umbrella term for the different financial arrangements that are used to source for and pay short-term trade loans—is one of the oldest banking functions. According to the World Trade Organisation, as much as 90% of global trade depends on trade financing. But in Africa, the gap between the demand for and supply of trade financing continues to widen. A 2019 estimate by the African Development Bank (AfDB) put the gap at $81.8 billion, analysts say it may have now reached $120 billion a year. A joint study released in 2022 by the WTO and the International Finance Corporation (IFC) on trade finance gaps in the four largest economies of the Economic Community of West African States (ECOWAS) — Côte d’Ivoire, Ghana, Nigeria, and Senegal — claimed that raising the share of trade supported by trade finance in the four countries to the average African level of 40% would result in an extra 8% in trade flows annually. In ten years, the gains would reach $140 billion in additional trade. Export/import logistics runs on several parallel layers. There are the practical realities of moving a shipment from its point of origin to the port, dealing with customs rules, and warehousing. There is the vagaries of dealing with shipping lines. And the exporter needs the financial muscle to pull all of this off. Said Addy: “There is no type of supply chain that is as complex as a cross-border supply chain where those three things need to not only go well, but they have to be precisely synchronized in order for a shipment to get to B.” What is new about Jetstream’s model is that the company wants to bring as many layers in the export/import process as possible under one umbrella. It first started to do this in Ghana when it acquired the licence to handle customs formalities and coordinate with shipping carriers. The industry term is clearing and forwarding. Sales from clearing and forwarding is a small chunk of Jetstream’s revenue, but gross margins from the segment can be as high as 90%, Miishe confided. For customers, taking Jetstream’s money means they do not have to wait for long to get paid, and can consequently take more orders from international customers. Due to wild fluctuations in the naira’s value relative to the dollar, Jetstream does not offer its financing product in Nigeria. Adding credit to the core business of moving goods across borders for small businesses and a growing cohort of big enterprise customers means taking on more risk. But since the company is the freight forwarder and customs agent in both countries (it recently acquired a clearing and forwarding licence in Nigeria) it also gives Jetstream Africa the opportunity to hedge its risks. Something that standalone trade financiers and merchant banks struggle with. Whenever Miishe’s company lends (typically only up to 30% of the amount required), they also get to hold 100% of the inventory in leased warehouses in addition to full control over export documents. In the case of exports, buyers make payment to Jetstream Africa which is then disbursed to the seller less loan amount, interest, and fees. The original goal of the business remained the same. By helping small businesses buy or sell internationally, Miishe and Torgbor hoped to build a venture-scale business. But to do that they needed to take
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👨🏿🚀TechCabal Daily – Bolt’s €2,000 seed
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning Bard has some updates. Google’s AI service can now solve mathematical problems, and create charts and graphs so you can be one of those people who helps people “visualise data”. And unlike OpenAI’s $20 GPT-4, it’s free to use. Speaking of OpenAI, we’ve got updates on Silicon Valley’s latest power tussle in today’s edition. In today’s edition OpenAI appoints ex-Twitch executive as interim CEO Caroline Wanjihi is Bolt’s new regional director Bolt to announce winners of €2,000 seed funding today Okada Books is shutting down Vodacom to save whales using AI The World Wide Web3 Opportunities Big tech Open AI appoints ex-Twitch executive as interim CEO Emmett Shear. Image source: The Hollywood Reporter Hours after negotiating to return Sam Altman to his position, the board of directors at OpenAI yesterday appointed Emmett Shear, former CEO of streaming platform Twitch, as the interim CEO of the GPT-4 parent company. That’s three CEOs in one weekend. ICYMI: On Friday, Sam Altman was suddenly removed as CEO by the board who accused him of being shady with his communications. President and co-founder of OpenAI Greg Brockman also resigned along with other senior researchers on the team. By Sunday, investors like Microsoft and Thrive Capital who were blindsided by the removal pushed the board to consider reinstating both Altman and Brockman to their positions. A quick play: The negotiations broke down when the board rejected Altman’s condition for his comeback, which was that they step down. The board quickly appointed Shear as the new CEO after chief technology officer Mira Murati who was initially appointed acting CEO publicly aligned herself with Altman. Murati reportedly had plans to rehire Altman and Brockman in new capacities if the negotiations fell through. Microsoft, which has invested over $13 billion in Open AI, also made a quick play for Altman with CEO Satya Nadella hiring Altman and Brockman to head a newly-established AI research team at Microsoft—with Altman as “CEO” of the team. Employees want the board gone: Since the announcement of Shear as the new CEO, several employees have taken to Twitter to express their displeasure. About 505 of the company’s 700 employees have signed a letter asking the board to resign for lacking “competence and care”. The staffers, who are also threatening to resign unless Altman and Brockman are reinstated, include Murati and chief scientist Ilya Sutskever who now says he “deeply regrets” ousting Altman. Sutskever, who is also on the board, reportedly led Altman’s dismissal after the two disagreed on the potential risks of commercialising AI too quickly. Microsoft’s big picture: And if you’re wondering where 505 employees will go if they resign, Microsoft has reportedly offered all the employees slots on the new AI team Altman and Brockman are leading. Considering this, Microsoft CEO Satya Nadella’s tweet about Microsoft’s commitment to supporting OpenAI takes on a new significance. Either way, Microsoft gets what it paid for. 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. Mobility Caroline Wanjihia is Bolt’s new regional director for Africa Caroline Wanjihia Bolt has appointed a new regional director, Caroline Wanjihia, to lead its ride-hailing operations in Africa, the Middle East and LATAM markets. This move comes weeks after Bolt paused its food delivery service—Bolt Food—in Nigeria and South Africa, citing its decision to exit as “necessary to streamline resources and maximise overall efficiency as a company”. The new regional director: With a background as a Kenyan lawyer and seasoned business strategist, Wanjihia brings more than 15 years of expertise in strategy, business development, and operations, having advised global leaders such as Coca-Cola and Barclays. She is set to lead Bolt’s expansion efforts across the region, taking charge of current operations and introducing new initiatives. Wanjihia’s appointment comes at a time when Bolt is facing regulatory scrutiny in countries such as Kenya. Drivers in the country have accused the platform of operating without being registered in Kenya after the NTSA, earlier in October, delayed its licence renewal. While the NTSA renewed Bolt’s licence, the drivers have demanded that Bolt register as a corporate company in Kenya. Wanjihia’s new role will bring her to the forefront of issues like this. Mobility Bolt to give 10 Nigerian drivers €2,000 seed funding Image source: YungNollywood Buckle up, folks! Bolt will be selecting the top 10 finalists for its accelerator programme Den today. The finalists will each get €2,000 ($2,190) in seed funding. The Den accelerator programme, in partnership with the Nest Innovation Park, was originally announced in September as an incentive for its Nigerian drivers. To compete, drivers had to submit business proposals that aligned with sustainable mobility solutions. Last week, 20 drivers were shortlisted from five Nigerian cities—Abuja, Lagos, Kaduna, Kwara and Rivers The finalists will participate in a two-week boot camp, but only the top 10 will receive the €2,000 ($2,190) seed funding and access to a six-week business mentorship programme. All shortlisted candidates will present their innovative ideas to a panel at the grand finale which is set for later today. Bolt’s new vision: This initiative spotlights Bolt’s commitment to fostering innovation in sustainable transport. By empowering drivers to develop business plans aligned with Bolt’s Africa City Vision, the company aims to enhance mobility solutions in African cities. The company should also be launching the Bolt Academy this month. The company says it partnered with Coursera to create an online training programme for Nigerian drivers where they can learn and develop business development skills. Zoom out: This year, Bolt has deepened its commitment to its African drivers, hiring an African regional director as we’ve written above. It’s also opened driver engagement hubs in Kenya and Lagos to address driver concerns. Introducing: M-Pesa payments in Kenya Paystack enabled M-PESA payments for merchants in Kenya. See what Paystack has been up to in 2023 →
Read MoreDigital publishing pioneer Okada Books is shutting down after ten years
Okada Books, Nigeria’s pioneer digital publishing and bookselling platform, will shut down on November 30, 2023, citing rough macroeconomic conditions. “We explored various avenues to keep our virtual bookshelves alive but, unfortunately, the challenges we face are insurmountable,” said Okechukwu Ofili, the company’s CEO, in a statement shared on social media platform X. Okada Books was launched by Nigerian writer Okechukwu Ofili in 2013 “to simplify distributing and selling books in Nigeria.” For Nigerian writers, getting publishing contracts has always been tough and self-publishing is also expensive. Okada Books was built on making self-publishing easy while connecting writers to people who would pay for their work. With its Android application and online platform, authors could share their books directly with readers and profit from their work. According to its website, Okada Books took a 30% commission on every sale. The average book on the platform cost between N250 – N500, but pricing could be higher depending on the author’s choice. “Okada Books created a market where none existed, so it’s quite sad to see them shut down. But I am looking forward to what fills this gap,” Ruth Zakari, editor-in-chief at Zikoko, told TechCabal. Okada Books was among 12 startups selected for Google’s Launchpad Accelerator Africa in 2017. The digital publisher claimed to house a library of over 40,000 original books and 400,000 registered readers. Now that it is pulling the plug on its operations, writers who rely on the platform to monetise their works would be forced to find alternatives. The shutdown comes amid a shaky macroeconomic market for African startups. Last week, TechCabal reported that Zazuu, the fintech marketplace for cross-border payment networks in Africa that raised over $2 million from investors, shut down after failing to raise funding.
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Next Wave: The obsession over unicorns or camels is weird
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner Join us for TechCabal Battlefield, Moonshot’s startup competition where you can showcase your startup idea to a global audience and an esteemed panel of judges and stand a chance to win up to 2.5 million naira in funding for your business! Click to register for TC Battlefield First published 19 November 2023 Africa investors need to learn to make VC math work instead of debating whether the continent needs unicorns or camels. VCs who focus on the math will be fine regardless. Within days of each other last week, Financial Times and Business Insider published interesting articles about investors who are buying up startups that were counted as dead in venture capital portfolios. Startups that fall into this category include the ones struggling to raise additional capital (and are facing certain extinction) because of too-high valuations from their last round. But the list also overwhelmingly includes companies that are simply not growing fast enough for VC tastes. The thesis is simple. Imagine that a solid business is at risk of shutting down because it had the misfortune to fall on the wrong side of the power law—the theory that only two out of 10 investments generate most of the profits VCs make—and is running out of capital. Almost no one will want to put in capital at the elevated valuations of 2021. But what if these companies, many of which have been silently written down by their investors, have the option to continue life as slow-growing but stable companies? According to Business Insider and the FT, some investors are offering a path to this. UK-based Resurge Growth Partners and Tikto Capital, San Francisco-based Arising Ventures and even the American private equity giant KKR are some of the firms choosing this strategy. Given the steep decline in venture capital funding made into African startups and the rise of a “VC may become PE” narrative, which I wrote about earlier this year, I want to know if this is a viable strategy for some savvy investors out there, and why not, if not. Here’s a thought experiment. If venture capital investors (and non-investor-observers) in Africa are calling for profitability from startups (some of them barely out of their seed-stage), would it not make sense to add dividend payouts to the requests? If the desire to correct the last two years of investment excesses is turning venture capitalists in Africa into equity analysts who want dividends on cash flow, why not abandon the VC game entirely? Partner Content: All eyes on the Africa’s Business Heroes fifth anniversary and grand finale: Why you should attend Much of the recent stories about African startup-land have been dour, as you well know. The unfortunate result is that former growth-at-all-costs investors are now more conservative than KKR. To my mind, there are only two forks at this junction. It is either the venture capital story is not working, or the venture capital story is working just as designed and investors misread the book all along. If the venture capital story is not working then maybe investors in Africa need to create something new. If however the philosophies that underpin venture capital are intrinsically undamaged, then we ought to look elsewhere to find the mismatch in expectations. Article continues after this ad How many startups received funding last quarter? What sector received the most funding and how many acquisitions were disclosed in the last quarter (hint not more than 7). Get the full State of Tech in Africa Report for Q3 2023 here. Downloand now I took the liberty of looking for the mismatch and it seems to me that (at least) part of the mismatch stems from seeing venture capital from at least three distorted perspectives. The first is as a social and economic restructuring vehicle, where VC funds are expected to turn the economies startups are building in around. Unfortunately, while venture-funded startups can take advantage of adverse or tail economic winds, they rarely create economic breakthroughs or pitfalls by themselves. In other words, good VC-backed startups can be created in times of economic plenty or during economic adversity, but VC-backing rarely creates prosperity or adversity. The second distorted perspective is seeing startups as a channel to build SMEs. And the third (and most egregious) perspective is treating venture capital as a means of personal enrichment without recourse to the owners of the invested capital. As a result of the distorted perspectives around VC money and the 2021 deluge of capital, VC (globally not just in Africa) has been rightly criticised. Some of that criticism has called for the entire VC model to be reorganised (especially in Africa) to create gazelles, camels or some other NatGeo-type wild animal. For the uninitiated, “camels” are startups that supposedly prioritise survivability and profitability and are valued at less than a billion (i.e are not unicorns). But the caveat to preaching and creating a new (and convenient model) of venture capital is that the more than $10 billion of VC money that has so far been invested into African companies (2020 to 2023) was attracted to the continent by a narrative of VC-style returns. Thus if anyone proposes something different (in the guise of advocating for more “reasonable” expectations. Then they have to justify why investors should prefer SME-style returns from backing African companies where there are VC-style returns to generate in other markets. Good luck to anyone having this conversation with LPs. Partner Content: Tap into the modern-nostalgia of the Tecno PhantomV flip 5G Phone Meanwhile, the investors who still retain belief in the VC-philosophy seem to have been stunned into inaction. Or they try to role-play the hardball tactics better associated with private equity investments. Both approaches are a mistake because they mix up consequences and results. Africa’s venture ecosystem does not necessarily need “camels”. It just needs an acknowledgment that most African companies in existence today public and private alike, are simply not
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