- January 3 2024
Ecobank-backed Cameroonian fintech, Koree, closes $200k pre-seed round
Cameroonian fintech Koree has closed a pre-seed round of $200,000 which it plans to use to grow its merchant base. Koree, a Cameroonian fintech that allows customers to save spare cash (change) on their cards, has raised a $200,000 pre-seed round. The fund will be used to grow its network of merchants, scale its user base, and ultimately achieve product-market fit, according to Magalie Gauze-Sanga, founder of Koree. The round was backed by Tunde Akinnuwa, co-founder at Duplo, Cameroon Angels Network, Catalytic Africa, Digital Africa, and other private investors. Koree aims to solve the problem of spare change in cash-based economies by using a card and digital wallet that allows merchants to return their customers’ spare change. With Koree’s product, these merchants can also create loyalty programmes where customers can earn cashback rewards. To achieve its objective of raising the pre-seed fund, Koree is set to launch a new marketplace that will enable users to get rewards on their everyday purchases. “Consumers will now earn cash when they shop on the Koree app, across 14 categories ranging from bakery, supermarket, fast food, movies, pharmacy etc,” Gauze-Sanga told TechCabal. “They shop as usual and earn a certain percentage of the amount they have spent. The money Koree users earn in their wallet is hard cash, which they can redeem directly into their mobile money account.” Koree will work with customers’ referenced payment service providers for them to be able to redeem their cashback. Since its launch in 2022, Koree has registered more than 11,000 users and processed over 40,000 cash-based transactions worth $285,000. In that time, the fintech has also generated 22,000 private wallets. Its revenue source stems from charging merchants a subscription fee in addition to a commission on each transaction for its customers. In 2023, Koree won the Orange Fab Cameroon challenge. With the fintech’s aim to expand across the continent, especially within francophone Africa, the Orange Fab acceleration programme will provide resources targeted at expansion. Orange’s network of industry experts will provide mentorship for Koree’s strategic development plans. In October, Koree won the Ecobank Fintech Challenge, taking home $50,000 in non-dilutive funding. This funding is already being used to hire in business development and engineering roles. With Koree’s team spread across Cameroon, Côte d’Ivoire, Togo, Nigeria, and Senegal, Gauze-Sanga believes that having a physical office—which will be in Douala, Cameroon—would help the team bond and create a strong work culture.
Read More- January 3 2024
How grants affect the African economy
Article contributed by Uzochukwu Mbamalu, Founder and CEO Palremit Grants play a crucial role in shaping economies and supporting academic pursuits worldwide. In the context of Africa, the impact of grants goes beyond individual aspirations, influencing the broader economic landscape and growth opportunities. This article explores the multifaceted influence of grants in Africa, highlighting their significance in both economic development and academic growth. Grants have a profound impact on Africa’s economic landscape by stimulating innovation, entrepreneurship, and job creation. They serve as catalysts for positive change. They provide essential financial injections into various sectors, fostering innovation, infrastructure development, and sustainable projects. In Africa, grants often target initiatives aimed at poverty alleviation, healthcare improvement, and fostering entrepreneurship. These funds contribute to the overall economic stability of nations, enabling them to address pressing societal challenges. Specifically, grants empower local businesses by fostering innovation and supporting small enterprises. Grants become instrumental in creating a robust economic foundation. The ripple effect of such financial backing is felt throughout communities and multi-sectors. In academia Grants contribute to the creation of a vibrant academic community. They enable the establishment of research centers, support faculty development, and facilitate international collaborations. The infusion of funds into academic institutions not only raises the standard of education but also positions African universities on the global stage. In Africa, where access to quality education can be a challenge, grants play a key role in expanding academic horizons. In local business In businesses, these financial injections provide crucial support for entrepreneurs and enterprises, enabling them to expand operations, invest in technology, and foster innovation. In a region where access to traditional financing can be challenging, grants are instrumental in unlocking the potential of businesses. Moreover, grants often come with a focus on sustainable and socially responsible business practices, contributing not only to economic prosperity but also to the overall well-being of communities. Grants play a pivotal role in shaping a vibrant and resilient business landscape across the diverse sectors of Africa. In fintech In fintech, grants provide financial backing for fostering African financial inclusion, ensuring that fintech solutions reach underserved populations; although; most African fintechs typically seek out funding from VC firms—like Ajim Capital, which has one of the largest portfolios of African fintech startups; equities, and angel investments. Ironically, grants don’t require founders to commit any business equities required by these VCs. However, there is a bigger gap in the funding which drives fintechs to VCs instead. Still, there are examples of grants and accelerators in Africa providing mentorship platforms to fintechs in Africa to run with their ideas and contribute to the evolution of fintech. These funds enable fintech startups to experiment with novel ideas, refine existing technologies, and navigate regulatory challenges. Top grants in the world for Africans Several prestigious grants open doors for Africans to access global opportunities. Some top grants programs available to Africans today include: Mastercard Foundation Scholars Program (Academics) The African Women in Agricultural Research and Development (AWARD) Fellowship (Agriculture Research and Academics) African Development Foundation Grant (Businesses) Tony Elumelu Foundation Grant (Businesses) I-Dice (Businesses) Shell LiveWire (Businesses) Anzisha Prize for African Teen Entrepreneurs (Businesses) Ugwumba Leadership Centre (Businesses) Google Hustle Academy SMB Fund (Businesses) Google for Startups Black Founders Fund (Businesses) MEST Seed Funding & Accelerators (Businesses) Catalyst Fund Inclusive Fintech Accelerator (Fintech) These grants and numerous others provide avenues for skill development, research initiatives, and entrepreneurship support. By tapping into these opportunities, individuals and organizations in Africa can contribute significantly to the continent’s growth and development. Tips for applying for a grant Applying to grants has a high barrier to entry. This is because it is typically highly competitive. Importantly, you should possess sharp grant-writing skills to get one leg up in any competition. Even after you’ve acquired this skill, there are still certain actions that aspiring founders must carry out to increase their chances of winning a grant for their businesses with no equity. Consider these strategies: Understand the specific requirements and objectives of the grant you are applying for. Craft a compelling and concise proposal outlining your objectives, methodology, and anticipated outcomes. Steal this tip when you write your grants. Judges are more impressed with businesses that have well-thought-out feasibility studies and plans for growth, backed by numbers. Clearly articulate how the grant will contribute to positive change in your community or field. Most grants give high priority to ESG factors. So think about ways your business plays in this ecosystem and sell it. Foster collaborations and partnerships to strengthen your application. Adhere to the application guidelines meticulously to avoid disqualification. Grants play a pivotal role in shaping the African economy and academic landscape. As catalysts for positive change, they empower individuals, businesses, and institutions to contribute meaningfully to societal progress. While the application process may pose challenges, the potential benefits far outweigh the cons. As Africa continues its journey towards economic prosperity and academic excellence, grants stand as beacons of hope, providing the necessary support for businesses in Africa.
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- January 3 2024
Funding reaches two-year decline as African startups raise $3.2 billion in 2023
In 2023, African startups secured $3.191 million in funding. This marks a sharp decline compared to the previous years. Per our friends at Africa: The Big Deal, a curated funding database, African startups raised $3.4 billion in 2023. At TechCabal, our number is at $3.2 billion because we define funding a bit differently. What’s important to note is that we’ve left out undisclosed funding and estimates in this. The ecosystem experienced a quarter-on-quarter decline from Q1 2023 when $1.2 billion was raised, to Q2 with $877.8 million and Q3 with $492.7 million. There was a slight uptick in Q4 which saw $551.2 million in raises. At $3.2 billion—or even $3.4 billion, what’s clear is that 2023 marks the lowest funding for African startups since 2020’s $2.1 billion. It’s a 36% decline from 2022’s ~$5 billion total. Image source: TechCabal/Timi Odueso The good news is, much like the plight of abandoned New Year resolutions, the decline in venture funding isn’t just an African affair—it’s a worldwide trend. Per Crunchbase, the once-mighty flow of VC funding has been on a steady downhill slide since January 2022, which was the last time global tech funding exceeded $60 billion per month. January 2023 marked a descent to just under $40 billion, which, compared to the modest $19.2 million raised in November 2023, almost feels like a glorious beacon of hope. The bad news—or as seers want us to believe—it’s only going to get steeper in 2024 with several forecasts finding investors being more cautious on whose mouth they put their monies. At least 10 of the 23 tech leaders we spoke to for our 2023 Wrapped article said as much, noting that 2024 will see more frugal investors, leaner startups and tougher economies…at least in the first half. Investors at global funds like Thomvest Ventures and QED who spoke to Business Insider also gave similar predictions. It might not always be sunny in tech, but there’s a silicon lining to this gloomy news. To quote Healthcap founder Ola Brown, “Some of the largest tech companies in the world, such as Apple, WhatsApp, Slack, Microsoft, Amazon, and Uber, were born during “venture capital winters”. Funding winters push companies towards sustainable growth and innovation. Regions: How did the Big 4 perform? Region-wise, North African startups led the way in 2023 with $1.074 billion in raises. This, of course, was pushed by Instadeep’s $680 million acquisition led by BioNTech. Image source: TechCabal/Timi Odueso Meanwhile, across Africa’s top quartet, funding streams shrunk as harsh economies surfaced. The Big 4—Nigeria, Egypt, Kenya and South Africa—used to refer to the four countries that receive the most attention from investors, raised $2.37 billion—about 74.9%— in total. Surprisingly, Nigeria sits at the bottom of the ladder this year with just $398.2 million while Kenya sits atop with $756.2 million. Image source: TechCabal/Timi Odueso This is a major decline (66% ) for the West African giant which has raised over $1 billion per year since 2021. Sectors: Big Energy While Nigeria’s tech ecosystem might have not been fully charged in 2023, the continent’s energy—or cleantech—sector certainly was. Don’t get it wrong, fintech is still king, accounting for about 45% of the total funding. But energy-led startups brought power to the industry, and new meaning to the phrase, more passion, more passion, more energy, more energy, more footwork… Between June 2023 and October 2023, the energy sector continuously dominated funding, with a significant 43.7% of the total capital raised during that period. Image source: TechCabal/Timi Odueso In April and May, energy startups were the second-highest performing sectors after fintech. That’s seven out of twelve months with energy in the leaderboard for the African tech ecosystem. The biggest deals from this sector are led by Kenyan cleantechs with SunKing’s $130 million securisation deal and Wetility’s $48 million mezzanine round, and Nuru’s—a DRC startup—$40 million Series B round. Funding: VC investment in 2023 In 2023, there was a lot of talk about how much funding startups raised or didn’t raise, but so little about the moneybags behind them. But hey, investors are people too, right? If you were wondering which new VC firms popped up last year and which old ones raised new funds? Here’s what you need to know. Exciting closes: Partech Africa took the crown with the close of its $263 million Africa Fund II, doubling their investment caps. Knife Capital also announced the close of its $50 million growth fund in the same month—August. And the party kept going with P1 Ventures, Verod-Kepple Africa Ventures, and others raising 8 figures in first closes, gearing to raise even more this year. The VC scene went green: Specialised climate funds blossomed across the continent. Novastar led the charge with its $200 million Africa People + Planet Fund, while E3 Capital and Lion’s Head joined forces with their $100 million Low Carbon Economy Fund. AfricaGoGreen added another $47 million to the mix, and local players like Echo VC chipped in with green-focused funds. Grovest, Sasol’s Venture, Gaia Energy, and others also announced climate-focused funds. New kids on the block: A number of fresh faces made big splashes. Accelerator Norrsken22 stormed into the year with a $250 million debut fund, while Black Ostrich Ventures and Seedstars Capital joined the continent’s party with their maiden Africa-focused funds. Even established players like Emkan Capital debuted a new $31 million fund for early-stage startups. Equator’s $40 million maiden fund also came in followed months later by Aduna Capital’s $20 million fund which focuses on under-funded regions like Northern Nigeria. Not so new kids: Established VCs doubled down in Q2: Ajim Capital, Oui Capital, Goodwell Investments and Alitheia Capital closed new funds, while Saviu Ventures neared its €32.8 million ($35 million) goal. Flat6Labs announced a $95 million seed fund to expand its investments to Nigeria, Ghana, Kenya, Morocco, and Senegal, and TLcom set sights on a $150–$180 million fund for the continent. We also saw angels: Right at the start of 2023, Kazana Fund launched Angel Syndicate with over
Read More- January 3 2024
Tingo Founder Dozy Mmobuosi charged with securities fraud in the U.S
U.S. prosecutors have shared details of criminal charges brought against Odogwu Dozy Mmobuosi, the founder and CEO of Tingo Group, a Nasdaq-listed “agri-fintech” startup. Mmobuosi is accused of reporting hundreds of millions of dollars in fictitious revenues and assets for three companies he controls. He is charged with conspiracy, securities fraud and making false filings with the Securities and Exchange Commission. The three charges carry a maximum sentence of 45 years; prosecutors say Mmobuosi is at large. According to the indictment, Mmobuosi “orchestrated a scheme to enrich himself by falsely representing that Nigerian companies he founded, Tingo Mobile and Tingo Foods, were operational, profitable businesses generating hundreds of millions of dollars in revenue, respectively.” In 2022, Tingo Group reported that it had cash and cash equivalent of $461.7 million for the fiscal year. Investigations showed that its bank accounts held less than $50 in total. Mmobuosi propped up his businesses in interviews over the years and, in 2021, told one publication that Tingo had 12 million users and a valuation of $6.3 billion. He told several publications about plans to list on the New York Stock Exchange by 2021. In reality, Tingo was listed on the Nasdaq after a series of reverse mergers allegedly based on fake financials. Getting listed on the Nasdaq gave Mmobuosi and his companies access to US investors and capital. The U.S. prosecutors say he was able to siphon an estimated $16 million from Tingo Group. The house of cards, propped up by grand claims, was short-lived. A report by Hinderburg Research, the infamous American short seller, soon called Tingo’s financials and operations into question, branding it a fraud of massive proportions. On December 18, the SEC announced an investigation into the company, suspending trading in Tingo’s shares. Two days later, Dozy Mmobuosi temporarily stepped down.
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- January 2 2024
Five trends to watch out for in African tech in 2024
With 2023 now behind us, we look back on a year marked by strong economic headwinds and market upheavals. A cursory look at funding numbers shows that 2023 was a mixed bag. Venture capital (VC) funding fell by 41.7%, quarter-on-quarter, going from $916m in Q2 to $499m in Q3. In 2022, funding raised by African startups peaked at $5bn. As of November 30, 2023, this figure stood at $3.246bn, which, so far, shows a stark 36% dropoff from last year, highlighting the difficulty investors faced in raising funds in 2023. The number of $1m+ equity deals also waned significantly from a high of 125 in Q1 2021 to 42 in Q3 2023. Despite the low numbers, 2023 had some positives. Notably, a new African unicorn emerged in the shape of MNT-Halan, the Egyptian fintech startup. Firms like Partech—via its Africa II fund—and M-Kopa raised money above their expectations, exceeding $250m each. Flutterwave made strides towards its goal of an initial public offering (IPO) after being cleared of financial misconduct in Kenya, and Nigeria’s central bank shifted its posture on crypto to adopt a crypto-friendly policy stance. So, what trends should we look out for heading into 2024? Funding downturn and cost-cutting measures likely to remain In 2023, fintech, logistics, and e-commerce platforms, which traditionally attracted heavy funding, witnessed a slowdown marked by downsizing and, in some instances, shutdowns. In Q1 2024, startups will likely continue cost-cutting measures and refocus on unit economics in an uncertain funding environment. This could be anything from localizing costs and scaling back operations, raising funds in local currency, revising medium to long-term goals by prioritizing survival, and reducing exposure to markets susceptible to foreign exchange volatility. Recent trends point to this, as we have seen companies like Paystack scaling back its activities outside Africa and Jumia shutting down its food delivery business. Resilience will be the watchword. Consolidation via mergers and acquisitions Seven mergers and acquisitions deals (M&A) led the way in African tech at the beginning of 2023, valued at ~$710m, with Biontech the pacesetter by acquiring AI firm Instadeep for $680m. More recently, there have been merger talks by B2B platforms Kenya’s Wasoko and Egypt’s MaxAB, which, if finalized, would make it the largest merger within the e-commerce subsector. So far, there have been at least 29 such deals, although most have been for undisclosed amounts. Market dynamics, capital availability, and startup agility drive M&A in Africa, often initiated by larger companies looking to acquire earlier-stage companies on the path toward going public. The presence of numerous small and medium-sized companies operating across diverse regions and sectors creates a fragmented market. By coming together, they can be better equipped to compete in the global market and attract investments. Expect such collaborations in 2024. Artificial Intelligence to gain wider application Beyond its widespread use in large language models (LLMs), there will be more integration of artificial intelligence (AI) across diverse sectors ranging from payments to health infrastructure. However, digital commerce platforms are likely to adopt AI tools using surgical precision rather than implementing them on a sweeping scale. Africa’s AI market is projected to reach $6.9bn in 2024. Most of it will be powered by machine learning, natural language processing, and autonomous and sensor technology. African investors to maintain cautious optimism A survey by the AVCA on the expectations of 88 African investors, including Limited Partners (LPs) and General Partners (GPs), noted that 85% of LPs plan to increase their allocation to private capital in Africa over the next two years, with impact (77%) and investment mandate (68%) identified as their primary reasons. Data from our Founders’ Outlook Survey revealed that 65% of investors maintain an optimistic outlook for the African startup ecosystem in 2024. The optimism does not appear misplaced, as the Financial Derivatives Company projects that inflationary pressures will ease across Africa, falling from 18.6% in 2023 to 16.1% in 2024. The Economist Intelligence Unit (EIU) predicts that “Africa will be the second-fastest-growing major region in 2024, with most countries increasing economic growth compared with 2023. East Africa is expected to champion African growth.” However, the EIU also says many African countries will feel the weight of excessive debt and a heavy repayment burden in 2024. Possible shifts in regional preferences In 2024, investors could reevaluate their regional strategies in response to changing macroeconomic and political conditions. Per the EIU, fifteen African countries have elections next year, and investors will observe their outcomes keenly. Elections are fraught with risk, especially in regions where armed conflict is rampant. The EIU notes that elections in Algeria, Egypt, Ghana, and South Africa will add to political risk, which could have long-term implications on where investors put their money. The AVCA survey revealed that LPs favored investing in West Africa while GPs leaned towards East Africa. The data aligns with this: between 2019 and 2023, per The Big Deal, there were over 700 recorded deals worth $1m or more. West Africa led the pack with 246, East Africa with 175, Northern Africa with 160, Southern Africa with 147, and Central Africa with 14. Depending on the degree of confidence, the numbers could realign with investors becoming more risk-averse. It’s all “wait and see” going into 2024.
Read More- December 29 2023
The hits and misses of Southern Africa tech in 2023
A wrap-up of TechCabal’s coverage of the southern Africa tech ecosystem. As a pan-African technology publication, TechCabal prides itself on offering coverage of the continent’s tech ecosystem beyond its headquarters in Lagos, Nigeria. In this end-of-year wrap, our Southern Africa correspondent, Ephraim Modise, looks back at the stories that made 2023 in the regions and how we covered them. This year, the region saw some hits as numerous funds were launched to support innovators, startups built products which addressed some of the region’s most pertinent socio-economic challenges, and regulators introduced frameworks which drove innovations. However, there were also several misses as cybercrime and online scams ran wild, layoffs and closures rocked the region, and C-Suite executives made some questionable business decisions. Read on to get a broader view of our coverage of the southern Africa region and how we stayed on top of all these stories and much more! Launch of funds Throughout 2023, several funds were launched to drive tech innovation in the region. These included the Convergence Partners Digital Infrastructure Fund, the Sasol greentech startups fund, the SA SME Fund, and Knife Capital’s $50 million Series A fund. Several startups in the region also raised a significant amount of funds amid a global fundraising crunch. These included Planet42’s mega $100 million Series A round, Naked Insurance’s $17 million Series B, TymeBank’s $77 million pre-Series C, and Stitch’s $25 million Series A. Startups solving pressing issues This year, TechCabal also covered startups and tech companies in the region which are solving pertinent problems in their respective markets. These included healthcare startups in South Africa, Whatsapp chatbot startups in the region, how startups are tackling South Africa’s cybercrime epidemic, as well as agritech, edtech, and mobility startups building solutions to address the region’s power supply issues. Ecosystem explorations Staying true to its mission to provide complete coverage of the pan-African tech ecosystem, TechCabal also explored other ecosystems in the southern African region outside South Africa. From Zambia’s emergence as a force in the list of pre-emerging ecosystems to Madagascar’s bid to make its name known in the African tech ecosystem, to Namibia’s mission to address the issues plaguing its ecosystem, our coverage provided readers with insights into what is happening in tech on the continent beyond the “Big Four.” Beyond ecosystem explorations, our coverage also delved deep into ecosystem activities that are positioning technology as the driver of socio-economic progress. This coverage included how South Africa continues to lead the continent in the race for data centre dominance, how short-term loans by telcos are driving financial inclusion in Botswana, how Zambia’s national debt restructuring will help grow its tech ecosystem, how WomHub is building an accelerator for women founders, and how the University of Cape Town produces the most startup CEOs on the continent. We also spoke to several investors who are betting on the region’s investors. These included Keet van Zyl of Knife Capital, Andile Ngcaba of Convergence Partners, Brenton Naicker of CV-VC, Francois Malan of Savant, Amina Patterson of Solve4X as well as Palesa Tabai of I’M IN Accelerator. Other hits TechCabal also covered numerous other areas of tech in southern Africa including the launch of PayShap in South Africa, Amazon’s launch in South Africa, how the region’s startups continue to lead exits on the continent, how private equity firms are coming to the rescue during the VC crunch, Innovation Collective’s mission to foster inclusion for Cape Town’s underprivileged founders, how Union54 made a comeback from an almost crippling chargeback fraud debacle, and how associations are trying to spearhead fintech growth in Botswana and South Africa. Layoffs and closures As with the rest of the world, southern Africa’s region was hit with macroeconomic challenges which forced several startups, tech companies, and other ecosystem players to scale down or completely cease operations. Crypto exchange Luno cut 35% of its staff, WhereIsMyTransport shut down while Naspers had to let go of 30% of its headcount. Still on Naspers, the company also shut down its Naspers Foundry fund which had invested in 12 startups. Cybersecurity and online scams had a field day ‘Twas the year that hackers and online scammers claimed victims almost with impunity in the region. In South Africa, hackers hit some of the country’s most well-known brands including Showmax, Shoprite, DisChem, Liberty Insurance, TransUnion, and even government departments. In Botswana, online scams had a field day, costing victims tens of millions of pulas while in Lesotho, the country’s central bank was hit with a security breach. Zimbabwe’s promising AI startup also saw a security breach which threatened its existence. Shoddy corporate governance Beyond startup challenges, TechCabal’s coverage of the region also touched on bigger tech companies whose lacklustre governance continues to erode shareholder value. We covered MultiChoice’s seemingly never-ending struggles including plummeting share price, written-off losses on Kingmakers, inglorious exit from Malawi as well as Canal+’s seemingly looming takeover of the broadcaster. We also covered the drama of the love triangle between MTN, Telkom and Rain, MTN passing load shedding costs to clients, the dramatic exit of Naspers’ CEO Bob van Djik, the greylisting of South Africa by the Financial Action Task Force (FATF), Botswana’s microfinancier Letshego’s declining profits, as well as Starlink’s struggles with regulators in Zimbabwe and South Africa. Other misses Other no-so-good ecosystem happenings that we covered included how a so-called Facebook rapist escaped from prison in South Africa, the trend of failing incubators and accelerators in the region, startups exiting too early as they fail to raise follow-on capital, the region’s shortage of technical talent, internet disruptions in Zimbabwe during elections, complaints against InDrive operators in Botswana, why CEOs in the region struggle to raise capital, as well as South Africa’s mission to introduce stringent tax requirements for remote workers. What to expect in 2024 in southern Africa tech With 2023 in the rearview mirror, we brought you coverage which kept you abreast of everything tech in the Southern Africa region and, in 2024, we will do even more. Stay tuned as we
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- December 29 2023
How you read TechCabal this quarter
2023: Ending well, launching forward Coming into 2023, we had ambitious goals about the breadth of our coverage across news, products and events. Twelve months later, we’re sitting with the results of our lofty dreams, and we couldn’t be more grateful for how far we’ve come. One of our goals was to pay closer attention to the geography of our readership and ask critical questions to guide our coverage. It’s been particularly gratifying to see our readership in South Africa, Kenya, Ghana, and the US grow collectively by 307.94%, from 249,808% in 2022. Our story on Chowdeck hitting ₦1 billion in order value was picked up by Y Combinator. Our tech-career newsletter, Entering Tech, started this year with 23K readers and it’s closing with over 60K readers. Our analytical forecast newsletter Next Wave has grown to over 50K readers, up from where we were at 31K in January. We maintained a two million-strong readership for tow quarters running. In our top-10 most-read stories for the quarter were the Dash, Zazuu, and Pivo shutdowns; and Fidelity Bank blocking transfers to some neobanks. It’s interesting to note how these stories are all about happenings in the payments space. In 2024, we will be doubling down on our reporting in the financial services sector: we will be asking the revealing questions about business models in the sector, regulations, retail and SME lending, remittances, and wallets. Edutech This quarter, we were interested in the intersection between tech and education. We told the story of the evolution of edtech startup uLesson from an extra-lesson service for pre-university students to an online tertiary institution, Miva University. We also brought you the inspiring story of visually impaired software developer Victor Ekwueme, whose work is fostering tech inclusion for disabled persons. The people behind your favourite startups Startups are run by human beings who put their heart, love and ambition into building strong businesses. This quarter, we asked: who are the minds calling the shots at some of our most prominent startups? Here they are for Piggytech, and for Eden Life. Get to know them! Events In October, TechCabal hosted over 2,000 persons for two days at our flagship tech conference in Lagos—Moonshot. Were you one of them? You can read everything we wrote about it here and watch videos from the event on our YouTube channel. And wait: next year, Moonshot will be back and bigger. It will be for three days, from October 9–11! Click here to join the waitlist for Moonshot 2024. We didn’t just host an event, we were guests at some: Next Fintech Forum in Abidjan, Africa Tech Festival in Cape Town, Africa Fintech Summit in Zambia, Norrsken Africa Week in Rwanda, and Africa Startup Conference in Algeria. From the Africa Startup Conference, read our special TC Daily dispatch from Algeria, and also Ganiu Oloruntade’s report on Algeria needing to open up to drive innovation on the continent. Ephraim Modise was our man at the Africa Tech Festival and he wrote about how Africa can replicate Estonia’s startup success. We’ve actually discussed this topic at length on Next Wave, with a focus on Kenya. Read that here. We also attended an investor summit in Uganda and wrote about the country’s push to become central to innovation in East Africa. Thank you, over and over! We can’t have told these stories without your readership, feedback, and engagement. As we go into 2024, we will continue to deliver excellent reporting on tech and business on the continent, and we hope you’ll join us for the ride! Is something interesting happening in your area that might interest us? Email us at team@techcabal.com. Happy new year in advance! Muyiwa Olowogboyega Kelechi Njoku We’d love to welcome you at Moonshot in October 2024. Click here to join the waitlist!
Read More- December 28 2023
Nigeria’s tech ecosystem scored major policy wins in 2023, but it could win better next year
2023 was a remarkable year for Nigeria’s tech ecosystem. Despite the decline in venture funding, layoffs, and shutdown of some startups, the ecosystem scored some major wins from the policy side. We saw the introduction of policies aimed at supporting startups and innovation. The appointment of a member of the tech ecosystem into the federal cabinet also created a new level of validation. This leaves a trail of both opportunities and unforeseen challenges for next year. In March, Nigeria became the first country in Africa to adopt open banking regulations that allow banks to share customer data with third-party service providers—fintechs and mobile money operators. This move promised increased data sharing and innovation, empowering consumers with control over their data. However, the initial excitement was dampened by a proposed plan by Nigeria’s Central Bank to centralise open banking operations through the National Inter-Bank Settlement System (NIBSS). The apex bank would later rescind the decision following pushback from industry stakeholders. Also in March, Osun state made headlines after cancelling right-of-way fees, allowing telecom companies and internet providers to lay fibre optic cables for free. The move was aimed at attracting startups to set up shop in the state. Osun also unveiled plans to domesticate the Nigerian Startup Act. The Nigerian government also launched a $618 million fund under the Investment in Digital and Creative Enterprises (iDICE) initiative to promote innovation and entrepreneurship in the digital, technology, and creative industries. May came with a twist as Nigeria’s Central Bank revoked the operating licences of more than a hundred financial institutions across the country for non-compliance. One of the affected banks is the Softcom-owned digital bank Eyowo. Another remarkable event in May was the last-minute attempt by former Nigeria’s minister of communications and digital economy, Isa Ali Pantami, to amend the already passed Nigeria Startup Act, just days before ex-president Muhammadu Buhari’s tenure ended. Similarly, a controversial bill that seeks to ascribe new powers to the National Information Technology Development Agency (NITDA), Nigeria’s governing body for information and technology, passed a public hearing at the Senate, despite pushback from stakeholders. In June, President Bola Tinubu signed the Nigeria Data Protection Bill 2023 into law. The new law provides a legal framework for protecting and regulating personal information in the country. In another development, following the unification of the exchange rate, the central bank announced new rules that allow beneficiaries of diaspora remittances to receive payments in naira. The move birthed new opportunities for fintechs and traditional banks. But on the flip side, the new FX regime affected how Nigerian startups report revenue to their foreign investors. In August, Bosun Tijani, co-founder of CCHub—adjudged to be one of the most influential tech incubators on the continent—was named Nigeria’s minister of communications, innovation, and digital economy. His appointment brought a new wave of optimism for Nigeria’s growing tech ecosystem which now has a seat at the table. In October, the minister formally unveiled his plans to train 3 million technical talents in four years. In the same month, OPay, Meta, and DHL were investigated by Nigeria’s Data Protection Commission (NDPC), for alleged data privacy violations—claims that the companies denied. In November, the minister flagged off the pilot phase of the ambitious plan to train 3 million technical talents. A total of 30,000 will be trained in three months. The same month, the Nigerian government launched its Startup Support and Engagement Portal thirteen months after its Startup Act was signed into law. The portal will facilitate the labelling of Nigerian Startups and the registration of venture capitalists, angel investors, accelerators, incubators, and innovation hubs. Other benefits include tax incentives, access to financial resources, and fund management as well as collaboration with relevant government agencies. In December, Nigeria’s Central Bank removed a two-year restriction on cryptocurrency transactions but introduced stringent guidelines for financial institutions. Ultimately, 2023 was a year of regulatory highs and lows for Nigeria’s tech ecosystem. One thing is clear: the ecosystem will be counting on one of its own to push policies and programs to spur its growth. More importantly, collaboration and engagement with the government are a no-brainer.
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- December 25 2023
A Next Wave of 2023’s Next Waves
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 24 December, 2023 In no order, here are 5 top picks from the 51 Next Wave editions we published this year. Hey friend! Thank you for sticking with the Next Wave team throughout the perma-crisis of this year. We published 51 Next Wave editions this year. In the second half of the year Joseph Olaoluwa and Kenn Abuya, both senior reporters at TechCabal, joined me to write these Sunday letters, and we crossed the 50,000 subscribers mark. Some of you wrote to tell us what you liked about particular Next Wave editions. Some wrote almost full-length replies with suggestions, questions, and additional insight. We enjoyed reading your thoughts. Knowing you read this newsletter makes it worthwhile! 2023 has been a year of maturing for everyone who is part of the progress of Africa’s technology and venture capital industry. And there has been no lack of schadenfreude or “I told you so”. To wrap up this year, we’re bringing back five Next Wave editions that are neither a complaint nor an I told you so. Happy re-reading! 1. A modern retail wave is building up across Africa One of our long reads this year was this piece about how supermarkets and small malls are springing up across parts of Africa and leading in the formalisation of the retail business on the continent. I wrote: “Small-scale modern retail in Africa will not completely replace open markets in Lagos, souks in Cairo, or storied markets like Karatina in central Kenya. But a subtle shift that can become a major marker of African retail is underway.” Africa’s Coming Retail Revolution was written in the middle of September. Two months later in November, the Economist published Africa’s Supermarket Revolution. It felt good to be ahead 2. The hard limits of retail digitalisation in Africa Early in the year, our friends at DFS Lab contributed this gem on why digitising Africa’s vast retail sector is tougher than most people expect. As we’ve seen from news coverage on the subject, this essay has borne itself out. “Once you factor in acquisition and distribution costs, these models break and are forced back to serving those living on $10/day or more, which are only 5% of the continent’s population,” Chernay Johnson former director of research, DFS Lab, wrote. “Unless you’re able to fundamentally innovate around your cost structure, B2C marketplace models selling food and necessities potentially break under this logic.” Partner Content: Web Summit Qatar is partnering with The FutureList to invite top African tech startups to exhibit in Doha in February 2024. Read all about it here. 3. The mental price of being a founder Entrepreneuring in Africa will take a toll on the health of the people brave enough to attempt it. Physical health problems are bad enough, but the unseen mental scrimmage that early-stage entrepreneurs face daily can be more paralysing. In a year where well-funded companies have fallen apart due to mismanagement, outright fraud, an inability to raise funding, or even leadership fights, Joseph Olaoluwa reminded us that tech bros and sisters are human beings too. 4. What has $15 billion of investments in African startups taught investors? In the last eight years, African startups have received at least $15 billion in venture capital investments. Briter Intelligence data puts this figure at $20 billion since 2013. When risk money is invested we are supposed to learn what works, what doesn’t work and how to create outsize returns in a market system. Outsize returns do not only have to be capital gains, although that is desirable and the primary motivation in many cases. But the best metric to measure outsize returns is the social impact of a venture, in a market system. Twenty years ago, we saw the mobile revolution take off and create a sea change by facilitating communications. As we approach the first decade of institutional venture capital in Africa, we need to find the boldness to share data, knowledge and lessons. Partner Content: Sparkle MFB, the fintech founded by Uzoma Dozie of Diamond Bank fame is launching its lending product Read all about it here. 5. Is francophone Africa taking the stage? In 2021, Wave, a fintech founded in Senegal became the first $1 billion+ company in Senegal, and the first to emerge outside of the Big Four—Nigeria, South Africa, Egypt and Kenya. Three of the Big Four have the English language as one of the languages used in official documents in business, generally. So when Wave raised a $200 million war chest, it was guaranteed to get attention. If any African company raises $200 million, it’s huge news. But investors, including the IFC, putting $200 million into a company in Senegal has arguably done, for francophone Africa, something akin to what Stripe’s acquisition of Paystack in 2020 did for Nigeria. It put a spotlight on the mostly unheard progress of technology in the region. People sat up and took notice. Bonus This overview series of the tech ambition and opportunity in Tunisia, Mauritius, Rwanda, Ethiopia and Kenya. And this essay on how to sell the “Invest in Africa Message”. Partner Content: WeTech, the community for women in Nigeria’s tech ecosystem hosted their first conference earlier this month. Here’s what it was all about. You can also browse the full archive of 2023 Next Waves. Do let us know which Next Wave edition was your favourite? Happy holidays! Abraham Augustine, for team Next Wave Partner Content: 2023 has been a wild ride for everyone. If you’re a founder, please share your thoughts on the outlook of tech in Africa. Click here to start. Only 1 week is left for startups
Read More- December 23 2023
Wasoko and MaxAB say merger will create a clear e-commerce leader with tens of millions of runway
A planned merger between MaxAB and Wasoko, the Tiger Global-backed Kenyan e-commerce startup, will make the new entity a clear leader in Africa, leaders of both firms told TechCabal. According to Daniel Yu, CEO of Wasoko and Belal El-Megharbel of MaxAB, the deal which is still in preliminary stages is expected to be finalised in the first quarter of next year. The merger is already being touted as the largest private tech deal in Africa. Wasoko was last valued at $625 million after it raised $125 million last year. The firm says it has received $113 million out of that investment. El-Megharbel of MaxAB declined to disclose the valuation at which his firm raised $40 million in October 2022. Both executives declined to comment on their valuation expectations for the new company. “This is not a new discussion; this is really about a friendship and partnership that has been ongoing for years, and for us, it’s about taking things to the next level,” Yu said, adding that the combined company will have more “runway with tens of millions of dollars on the balance sheet.” The deal will be structured as an equity consideration, which means that existing shareholders simply get a share of the new company upon completion of the merger. It gives wiggle room for investors who backed both companies and potentially allows VC firms to preserve most of the valuation at which they purchased their stake in either of the firms. According to Daniel Yu of Wasoko, independent investors and board members on both sides are part of the talks. Wasoko and MaxAB have raised almost $245 million from venture capital investors. “This is a super tough business to crack. It requires a specific type of talent and well-capitalised companies to be able to crack it,” MaxAB’s El-Megharbel told TechCabal. “Before 2001, over 10 companies were trying to do what Amazon was doing. After a crisis hits there usually emerges a clear winner,” he added. Bringing both firms together would help them maximise their chances to come out tops. Between 2019 and 2022, venture capital investors poured money into entrepreneurs building tech companies that focused on bringing Africa’s informal wholesale market for consumer goods online. Dubbed ‘B2B e-commerce’ as opposed to the direct-to-consumer e-commerce model of Jumia and Souq.com (acquired by Amazon), B2B e-commerce was described as more suited for the African experience because its primary customers were street shops and small retailers in African cities and towns.More recently, B2B e-commerce has struggled, and to startups in the space, including Wasoko have laid off hundreds of staff and paused expansion plans. In social media chatter on X (formerly Twitter) and private conversations on WhatsApp and Telegram seen by TechCabal, investors and founders speculated that one or both firms were struggling, hence the merger. El-Megharbel and Yu dismissed those concerns. “The market is used to these deals happening in these specific incidences, so this is they just haven’t seen another way of doing this,” El-Megharbel said, “We and Wasoko have approached this at a point when we did not have to do it because once you have to do it, the companies are struggling at that time. Daniel and I are mature and humble enough to figure out that if we wait longer than this, it would probably be uglier for both companies or at least for one of them. The sooner, the merrier for this deal to happen.” “Shareholders on all sides are extremely excited about what is happening,” Wasoko’s Yu said. “This is a 1 plus 1 equals 3. This transaction will establish us as the clear B2B e-commerce leader in Africa.”
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