Top African Tech Industries Attracting Venture Capital Funding
This article was contributed to TechCabal by Seth Onyango via bird story agency. Africa’s tech ecosystem is attracting billions of dollars, thanks to dynamic startups whose innovation and creativity are reshaping industries and unlocking new opportunities. The young population and digital connectivity are further fueling growth. From the fintech startups driving financial inclusion to the agri-tech startups improving food security, the impact of these startups is nothing short of transformational. Here are the ten most-funded tech industries: 1. Fintech (31.5%): Fintech continues to dominate the African market, driven by a growing demand for digital financial services. Mobile money solutions are at the forefront, offering alternatives to traditional banking that appeal to millions of unbanked Africans. These digital options are attractive because they provide more portable and accessible financial services than traditional banking, which is often limited by paperwork and account maintenance requirements. 2. E-commerce and Retail Tech (11.3%): E-commerce is booming as internet penetration rises and consumer behaviour shifts online. Platforms like Jumia have paved the way, reaching millions across the continent. Retail tech is tapping into social commerce, logistics optimisation, and direct-to-consumer business models, meeting the growing appetite for convenient shopping experiences. 3. E-health (10.1%): E-health startups are addressing the challenges of inadequate healthcare infrastructure. Telehealth services are reducing the barriers to medical advice, while digital platforms like Helium Health in Nigeria are digitizing patient records. The rise in smartphone usage has made virtual care possible, improving access to healthcare even in remote regions. 4. Logistics (6.9%): With a fragmented infrastructure across many African regions, logistics startups are innovating to streamline the supply chain. Companies like Kobo360 offer on-demand logistics services, helping businesses transport goods efficiently. Drone deliveries are gaining traction in Rwanda and Ghana, showing the creativity of solving delivery problems in challenging terrains. 5. Agri-tech (5.9%): Agri-tech is key to enhancing productivity in a sector that employs over 50% of Africa’s workforce. Startups like Twiga Foods connect farmers directly to markets via mobile apps. They’re also using AI to predict crop diseases and optimize farming practices, addressing the critical challenge of food security. 6. Ed-tech (5.7%): The continent’s education system faces resource constraints, and ed-tech startups are filling the gaps. Digital platforms provide courses and vocational training to millions. Eneza Education in Kenya, for example, offers curriculum-aligned learning via SMS, while other companies are working to expand coding and technical skills training. 7. Energy (4.9%): Off-grid and renewable energy solutions are crucial as only 43% of the population has reliable electricity. Solar energy startups like M-KOPA offer pay-as-you-go solar home systems, while microgrids power entire communities. These innovations are helping bridge the energy access gap sustainably. 8. Transport (3.9%): Transport startups alleviate traffic congestion and provide mobility solutions in rapidly growing urban areas. Ride-hailing services like Bolt are popular, and some companies offer motorbike taxis for better accessibility. There’s also a focus on electric vehicles, and startups are working to provide charging infrastructure. 9. Recruitment and HR (3%): African job markets often struggle with skills mismatches and informal hiring processes. Recruitment startups are streamlining talent searches by digitizing the hiring process and leveraging AI for candidate matching. Companies like Shortlist in Kenya are finding ways to align employers with the right candidates, more efficiently. 10. AI (2%): Though small, the AI sector is growing as local startups tap into machine learning for various applications. DataProphet in South Africa uses AI to optimize manufacturing processes, while other startups are building natural language processing for African languages. AI in agriculture, healthcare and education promises further transformation.
Read MoreFirst Bank Limited appoints Ebenezer Olufowose as chairman
First Bank Holdings the parent company of First Bank Nigeria has appointed Ebenezer Olufowose as chairman of its banking subsidiary following the completion of Tunde Hassan-Odukale’s12-year tenure. In April, Adesola Adeduntan, the CEO of First Bank of Nigeria Limited, resigned after spending nine years in the position. Following his resignation, the group canceled the extraordinary general meeting planned for April 30, 2024, to approve plans for a capital raise. Adeduntan and Odunkale were the only survivors of a 2021 CBN-led boardroom shake-up that swept away all the bank’s directors. With both gone, the bank will look forward to getting back on the road for recapitalisation. Ebenezer Olufowose, the group managing director of First Ally Capital Limited, was appointed to the board of directors of First Bank of Nigeria Limited on April 29, 2021 The new chairman who holds a first-class honours degree from the University of Lagos, started his banking career in 1985 at NAL Merchant Bank Plc. He has worked for 36 years in the financial services industry with specific experiences in corporate finance, project finance, and investment banking to the board. Before joining the board, he was executive director at Access Bank Plc, and Citibank Nigeria, where he led Citigroup’s origination, structuring, and evacuation of corporate finance and investment banking transactions in Nigeria, according to a filing on the Nigerian Exchange.
Read MoreBosun Tijani’s internet access target at risk as rising taxes, costs squeeze telecom operators
In the seven months since Bosun Tijani became Minister of Communications, Innovation, and Digital Economy, internet access has declined from 45.57% to 43.53%. It’s an early challenge for a minister who set a goal of 70% internet penetration by 2025. Tijani’s early focus has been 3MTT, a program to train 3 million Nigerians on digital skills. He has also begun plans to create an AI framework. But without increasing internet access, these goals will be difficult to achieve. In March, the minister set up a $2 billion fibre fund to connect the 774 local government areas in the country. The World Bank and a few partners have indicated an interest in the project, but a source close to the minister said talks are still ongoing to get other partners involved. For telecom operators, these measures do not solve the immediate challenges. The telecom companies responsible for expanding internet access face several problems: fiber cuts, multiple taxes, excessive right-of-way fees, insecurity, high energy costs, and inflation. The Federal government also plans to reintroduce a 5% telecom service tax it suspended in 2023 as part of negotiations with the World Bank for a $750 million loan meant to boost electricity infrastructure in the country. If that telecom tax is reintroduced, it will increase the taxes companies pay to the federal, state, and local governments to 53, according to the Association of Licenced Telecom Operators of Nigeria (ALTON). On May 2, three operators, MTN, Airtel, and Globacom saw their operations disrupted by an agency of the Kaduna State government which sealed off six base stations over claims of unpaid N5.3 billion taxes. “Nigeria is not going to meet its broadband penetration target,” said Ikemesit Effiong, partner and head of research at SBM Intelligence. Data released by SBM Intelligence in April 2024 found that Nigerians now spend less on communication and entertainment despite relative price stability in voice and data tariffs. Airtel’s profit plunged by 99% in 2023 and revenue dipped 5.3% to $4.9 billion, forcing the company to outsource more of its tower operations to IHS. It also initiated a share buy-back programme to reduce its debt exposure. On Monday, April 22, 2024, the company bought back 11.9 million shares from Citigroup. On an investor call in March, Ralph Mupita, CEO of MTN Group said the company aims to cut its expenses by $368.51 million (7-8 billion rand) in the next three years, especially in Nigeria. It also plans to raise the prices of its data and voice services. The company also plans to reduce its capital expenditure in 2024 and focus on maximising the utility of its previous investments. “The company will optimise latent capacity and implement radio planning strategies to minimise potential impacts and disruptions to MTN’s network quality,” MTN noted in a corporate filing on May 3, 2024. Broadband penetration, which measures a population’s access to the internet, depends on the investments telecom operators make in infrastructure, three industry experts told TechCabal. Those investments have declined since 2021 when the industry hit a peak of over ₦1 trillion and foreign investment of $753 million. With domestic and foreign investments down by almost half from 2022, operators are trimming operational costs. That tradeoff has meant little improvement in the quality of internet service. The country’s internet speed remains one of the lowest in the world at 17.65 Mbps, ranking 148 out of 172 countries in January 2024, according to a report by Data Pandas’. The global average speed is over 50 Mbps, and South Africa leads the continent with a broadband speed of 54Mbps. Access is also unevenly distributed with urban areas experiencing more quality internet than rural areas. “Broadband infrastructure will only be deployed by operators in areas where they are confident there will be returns on their investments,” said Rotimi Akapo, partner and head of Telecommunications, Media, and Technology Practice Group, at Advocaat Law Practice. Operators are also choosing to invest in the states with friendly regulations. Only four states have waived expensive right-of-way fees, which are charged for laying fibre optic cables. Some experts believe this may lead to preferential broadband access. TechCabal also learned that tower operators are switching off some base stations due to difficulty in sourcing diesel to power them. In March 2024, the average price of a litre of diesel was N1,341 up from N840 in March 2021. Tower operators depend on electricity provided mainly by diesel-powered generators. Gbenga Adebayo, president of ALTON believes the industry should review service tariffs. Telecom service tariffs have not been reviewed in the past ten years despite macroeconomic changes. He also pointed out that every other industry has increased prices including government-owned service providers except telecom operators. “The federal government must put its teeth into this fight to compel states to either relinquish or at least significantly reduce the right of way fees that we have now,” said Ikemesit Effiong.
Read MoreAirtel mobile money to IPO in 2025
Airtel Africa will take its mobile money unit public in 2025 even as it plans to expand the service to more African countries. The service is currently active in fourteen countries. “We will list next year. We will continue to bring additional countries into the envelope. We are still a year from that IPO,” said CEO Olusegun Ogunsanya. He did not disclose details regarding the preferred stock exchange for the listing. Airtel Money is Airtel Africa’s fastest-growing arm, with a potential valuation surpassing $4 billion. Its performance stands in contrast to the company’s earlier released financial results, significantly impacted by challenging macroeconomic conditions that affected profitability for most of the financial year. These headwinds contributed to an $89 million loss after tax, a sharp decline from a $750 million profit recorded at the end of last year. Despite the overall financial challenges, the mobile money unit emerged as a bright spot alongside its data revenues. Airtel mobile money’s transaction value increased by 38.2% in constant currency with an annual transaction value of over $112 billion in reported currency. Year-on-year, mobile money customers grew 20% to 38 million, driven by a continued strong performance in East Africa and Francophone Africa. Airtel’s planned mobile money IPO follows a trend of investment in African mobile mobile money providers. Two years after its $100 million investment in Airtel Money, Mastercard acquired a minor stake in MTN’s mobile money arm. Airtel Mobile money is strongest in six markets, four of which are in East Africa: Zambia, Uganda, Tanzania, and Malawi. The other two are Gabon and DRC Congo, in the Francophone markets, the CEO said. Part of the winning strategy includes first mover advantages, key infrastructure and distribution. Ogunsanya said Airtel leads the Zambia and Malawi market. In Uganda, the competition is low because only two operators exist, while only three operators exist in Tanzania. “We were the first to deploy ATMs, giving us a significant head start,” Ogunsanya explained. “Our network boasts 29,000 exclusive mobile money branches, along with a well-established system. We have been effective in leveraging our infrastructure to our advantage.”
Read MoreM-Pesa and data revenue push Safaricom to first profit growth in 3 years
Kenya’s Safaricom, East Africa’s most profitable company, has posted a 1.2% increase in net profits to $480.84 million (KES62.99 billion) in the full year ending March 2024, driven by strong mobile money service and internet growth. Revenues from M-Pesa grew 20% year-on-year, reaching $1 billion (KES140 billion) from $891.3 million (KES117.2 billion) in 2023 while mobile data revenues rose 18% to $1.4 billion (KES189.8 billion). Voice revenue declined 0.6 % to $608.4 million (KES80.5 billion). M-Pesa’s growing profitability was driven by strong performance in B2B (39.8%) and P2P (15.4%) payments and rising uptake of the firm’s global payments platform which rose 20% year-on-year. The firm’s operating profit increased 20% to $1 billion (Sh140 billion), becoming the first East African listed firm to cross the billion-dollar milestone. Overall, the telco’s Kenyan unit profits jumped 13.7% to $644.4 million (KES84.74 billion) but were dragged to $324.4 (KES42.66 billion) because of higher costs tied to its entry into the Ethiopian market. Safaricom is betting on Ethiopia to grow its regional dominance as the growth in the Kenyan market slows. Peter Ndegwa, Safaricom’s chief executive, told investors on Thursday that the firm is looking to break even in 2015. “We are extremely pleased with what we have been able to achieve as a group despite the significant startup costs in our Ethiopia business. We expect that from 2025, Ethiopia will start being a significant growth contributor at group level for both top and bottom line,” Ndegwa said. Ndegwa added that the regulatory environment in Ethiopia has boosted the telco’s confidence in the market, which was its first major expansion outside Kenya. In April 2024, the Ethiopian Communications Authority (ECA), the telecommunication regulator, cut mobile termination rates (MTR), leveling the field for the players in the market. “We have doubled our active customer base to 4.4M, we have built a world-class network that is currently almost half Kenya’s size, and are on track to meet our license obligations,” Ndegwa said.
Read MoreNIBSS faces billion-naira lawsuit: ex-Chief Risk Officer alleges wrongful termination, fraud
A former chief risk officer of the Nigeria Inter-Bank Settlement System (NIBSS), Temidayo Adekanye, has sued the switching company for unlawfully terminating his appointment months after he raised concerns about financial impropriety. The former NIBSS executive is asking the National Industrial Court to award damages of one billion naira for wrongful termination and breach of contract, court documents seen by TechCabal show. He is also asking for ₦250 million in special and general damages, ₦150 million in compensation for infringement of his fundamental rights, and ₦10 million as the cost of legal proceedings. Alternatively, Adekanye, 52, asked the court to compel NIBSS to “pay him the full amount of salaries, allowances, and other emoluments that he would have earned on the unexpired remaining years upon attainment of 60 years.” He also prayed the court to mandate NIBSS to pay him 2% of its profit before tax declared for 2023 and “other entitlements applicable to the claimant in the circumstances.” At the heart of his lawsuit is the claim that he was wrongfully fired after sharing concerns internally about “serious financial misappropriation, corporate governance, and fraud” at NIBSS, the industry-owned operator of the Nigeria Central Switch. The allegations of financial impropriety and fraud at NIBSS will raise serious concerns about the integrity of Nigeria’s financial system. “We respect the judicial process and believe it is essential to allow the legal process to take its course without interference or speculation,” a spokesperson for NIBSS said via email. “The referenced case in the National Industrial Court is not founded on any crime but what the Claimant perceives as an unlawful termination.” Per court filings, Adekanye alleged fraudulent activity connected to Afrigo, a domestic card scheme launched in 2023, and NQR, a platform for QR-code payments. He also raised similar concerns about a cloud migration project. The former chief risk officer told the court that he requested information on the company’s financial records and third-party contracts from the Chief Financial Officer (CFO), Company Secretary/Head of Legal, and Managing Director, but was denied access. He took his complaints to the board audit and risk committee on November 13, 2023. Shortly after, Adekanye was asked to resign and was offered ₦160 million in severance or risk immediate termination of his employment in a meeting with the company’s Head HR, HOD Legal/Company Secretary, Executive Director, Business Development, and CFO on January 15, 2024. His request to review the offer was refused, and eventually, he was fired. The position of Chief Risk Officer was also eliminated within the corporate governance structure of NIBSS. “Rather than act swiftly on the concerns raised by him, the defendant [NIBSS] changed its corporate structure and organogram to eliminate the claimant’s [Adekanye] office in a calculated attempt to oust his jurisdiction and stultify his duties as the Chief Risk and Compliance Officer,” the court papers read. The National Industrial Court has fixed May 20 for the first hearing.
Read MoreAirtel Africa profit plunges 112% on currency devaluation despite subscriber growth
Airtel Africa, a telecommunications firm with a presence in 14 African countries, has seen its revenue dip 5.3% to $4.9 million, hit by significant currency devaluations in Nigeria, Malawi, Zambia, and Kenya, according to company’s financial statements for the year ended 31 March 2024. These headwinds also contributed to an $89 million loss after tax, a 111.9% dip from a $750 million profit recorded at the end of last year. Despite profitability challenges, the telecom giant grew its entire customer base by 9% to reach 152.7 million. This positive performance comes despite challenging macroeconomic conditions that impacted profitability for most of the financial year. Airtel Africa acknowledged the negative impact of currency fluctuations on business growth across the continent. Last quarter, the telco’s profits plunged by almost 99%—recording $2 million in profits compared with the $523 million it made in 2022—due to currency devaluation. The company is actively reducing its US dollar debt burden and accumulating cash reserves at the holding company level to cover outstanding obligations. Key takeaways: Airtel Africa reported revenue of $4.9 million for the year ended 31 March 2024 It lost $89 million in profits, down 111.9% Mobile money customers grew 20% to 38 million “We will continue to focus on reducing our exposure to currency volatility. At the beginning of March, we launched our first buyback programme reflecting the strength of our financial position,” said Olusegun Ogunsanya, Airtel’s CEO, who is expected to retire next month. “The growth opportunity that exists across our markets remains compelling, and we are well positioned to deliver against this opportunity. We will continue to focus on margin improvement from the recent level as we progress through the year.” The telco’s financial statement also reported that its group mobile services revenue grew by 19.4%, driven by voice revenue growth of 11.9% and data revenue growth of 29.2%. Mobile money revenue grew by 32.8% in constant currency, with a continued strong performance in East Africa of 36.0% and Francophone Africa of 22.3%. Similarly, the telco experienced data and mobile money growth as the penetration of these services continued to rise, driving an increase in data customers to 64.4 million and a 20.7% increase in mobile money customers to 38 million.
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👨🏿🚀TechCabal Daily – A micro retreat
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning If you’re interested in business, politics, culture, and technology, Big Cabal Media has something new for you. Subscribe now to The Big Daily newsletter for the most important news out of Nigeria, delivered to your inbox every weekday morning. Subscribe now → thebigdaily.substack.com. In today’s edition Microsoft layoffs of staff at its Nigerian ADC Lesaka acquires Adumo Alerzo’s fourth round of layoffs iProcure files for bankruptcy The World Wide Web3 Opportunities Layoffs Microsoft lays off engineers at African development centre In 2019, Microsoft launched its Africa Development Centre with one goal in mind: recruiting world-class African engineering talent. The development centre was Microsoft’s 7th globally and the first on the continent. The development centre was launched with much fanfare, with Microsoft promising to pour over $100 million worth of investment into the centre over the next four years. The tech giant also set an ambitious goal to recruit 500 full-time engineers by the end of 2023. At the time of its launch, Microsoft was among the first global tech companies to recruit talent from the continent. The centre would go on to employ 120 engineers and 200 total staff members over the next five years before the eventual layoff of its entire engineering team. “A workforce adjustment”: Yesterday, Microsoft announced that it was letting go of its entire engineering team. The company chalked up this decision to “organisational and workforce adjustments” as it “continues to prioritise and invest in strategic growth areas for our future and in support of our customers and partners.” Affected employees will receive severance packages of two-month salary and continued health insurance. Is Microsoft making a retreat? There are speculations as to whether Microsoft might be retreating from Nigeria, as macroeconomic headwinds have caused several businesses—Procter & Gamble, GSK Plc, and Bayer AG—to retreat. Nigeria, Africa’s most populous country, is faced with an ailing currency, an FX shortage, and an increasing inflation rate, which have reduced the purchasing power of its people, making it tougher for businesses to grow. The layoffs also occur within the broader context of Microsoft layoffs globally. Last year, Microsoft laid off about 10,000 people. In January, the tech giant cut 1,900 jobs in its gaming division. So far, over the past two years, the company has shed over 16,000 jobs globally. Read Moniepoint’s case study on family-owned businesses Family-owned businesses are everywhere, shaping our world in ways you might not expect. We’ve found some insights into how they work, and we’d love to share them with you. Dive in right away here. M&As Lesaka acquires Adumo Fintech led mergers and acquisitions figures across the continent in the first quarter, contributing 5 out of 12 of the total M&A conducted on the continent. Mastercard’s acquisition of a small slice—a 3.8% stake—in MTN’s fintech arm for $200 million was the poster child for these acquisitions. Fintechs across the continent are not resting on their horses. An $85 million acquisition: South Africa’s publicly listed company, Lesaka Technologies, is in the process of acquiring payment platform Adumo for R1.59 billion ($85 million) in cash and equity. According to local media, the deal will be completed in the third quarter of 2024. Launched in 2019, Adumo provides POS devices, integrated payments, and reconciliation services to merchants and consumers. The company claims to process over R24 billion ($1.3 billion) annually and has 23,000 merchants and 240,000 consumers using its services, respectively. What’s in for both companies? Lesaka is South Africa’s largest payment switch company, not owned by a bank. The acquisition of Adumo will help Lesaka stamp its foothold in new African markets, including Namibia, Botswana, Zambia, and Kenya. The acquisition will also enable Lesaka to offer its widely used card-acquiring POS device company, Kazang, in these new markets where competitors like YOCO are absent. Adumo is Lesaka’s latest acquisition. In February, fintech acquired data analytics and merchant service company Touchsides—which was formerly owned by Heineken—for an undisclosed sum. Enjoy hassle-free transactions with Fincra Collect payments without stress from your customers via bank transfer, cards, virtual accounts & mobile money. What’s more? You get to save money on fees when you use Fincra. Start now. Layoffs Alerzo lays off at least 70 people In more news about layoffs, B2B e-commerce company Alerzo has downsized its workforce for the fourth time. In 2022, Alerzo effected its first-ever layoffs by firing over 200 workers across its warehouse operations teams after it digitised their roles. By March 2023, it laid off another 400 staff as it closed 14 warehouses across Nigeria. Eight months later, in November 2023, it laid off 100 workers across its warehouse teams for similar reasons. Now, TechCabal has confirmed from sources close to the business that Alerzo’s fourth round of layoffs happened in February 2024. This time, the company cut at least 70 jobs in a bid to cut costs and extend its runway. The layoffs largely affected people who worked in the warehouse and junior employees at the front offices. This happened despite the e-commerce company raising an undisclosed amount of capital twice last year. Why is this happening? Insiders suggest the layoffs were a cost-saving measure to extend how long Alerzo will stay in business but the company maintains the decision was made to digitalise operations and build a long-term sustainable business model. The company acknowledged the recent workforce reduction in February, stating it had a larger team of nearly 1,500 employees at the time. While expressing regrets over the layoffs, the company emphasised its efforts to reduce the number of employees affected. “All those who were laid off were still given severance packages and had health benefits extended for an additional three months,” Alerzo told TechCabal. The e-commerce startup, founded in 2018 by Adewale Opaleye, secured early funding in 2020 with a $525,000 pre-seed round followed by a $5 million seed round later that year. The company’s success continued in 2021 with a $10.5 million Series A
Read MoreExclusive: Kenyan agritech iProcure files for bankruptcy after investors’ snub
iProcure, the Kenyan agritech startup that raised $17.2 million from investors in ten funding rounds, filed for bankruptcy on April 26 after failing to convince existing and new investors to inject more capital into the business. The company’s co-founder and director Stefano Carcoforo told a Kenyan court the company was struggling to fund operations and bankruptcy protection was necessary because it could not pay its debts. While Carcoforo did not disclose the company’s liabilities, one person with knowledge of the business estimated its debts at over $1.5 million (KES197.25 million). “I, Stefano Francesco Carcoforo sincerely declare that the company is not able to pay its debt as and when they fall due,” Carcoforo said in an affidavit filed in court. Exclusive: After two fundraises in 2023, Alerzo cut its workforce in February due to “digitization” “The company has lately been unable to meet its financial obligations on a day-to-day basis. At that point, the company approached its shareholder and other potential investors to pump in more investments to enable the company to trade normally in the market.” iProcure was founded in 2013 by Carcoforo, Nicole Galletta, Patrick Wanjohi, and Bernard Maingi to help distributors of agricultural inputs like fertilisers source products from manufacturers. The startup’s struggles speak of difficulties facing African tech startups that raised capital from investors in the early days on the promise of rapid growth and have been unable to hit profitability. “That failing to attract more investment, the company sought the protection of the law under the Insolvency Act of 2015, by appointing a qualified administrator under the law, to manage the company’s affairs and property of the company,” Carcoforo told the court. Makenzie Muthusi, a partner at KPMG advisory arm, was named administrator. The startup has had 10 rounds of fundraising, the latest being in 2023, where it received a grant from USAID East Africa Trade and Investment Hub and Spark Accelerator.
Read MoreExclusive: After two fundraises in 2023, Alerzo cut its workforce in February due to “digitization”
Alerzo, the B2B e-commerce company backed by Nosara Capital and FJ Labs, laid off at least 70 employees in early February despite raising funds twice in 2023. Two people familiar with the matter said the layoffs were driven by a need to cut costs and extend runway. However, the company said digitisation and a need to create a sustainable business drove the decisions. The company has laid off employees twice in the past year, reducing its headcount by at least 400 in 2023. Many affected employees were warehouse staff and the company claimed improved technology and efficiency were key factors. The layoffs in February 2024 also affected junior employees at warehouses and front offices, two persons familiar with the matter told TechCabal. Alerzo confirmed the layoffs but declined to share the number of employees affected. “In February we also had a large workforce of almost 1500 employees. While any layoff is regrettable, we’ve done our best to limit the amount affected,” the company said in a statement to TechCabal. “All those who were laid off were still given severance packages and had health benefits extended for an additional three months.” As the startup cut costs, it raised funding twice in 2023 but did not disclose the funding amounts. It is unclear if existing investors participated in both funding rounds. Per Crunchbase, Alerzo raised “undisclosed non-equity assistance” after it was selected as a member of the June 2023 cohort of World Economic Forum’s Technology Pioneers. Three people familiar with the conversations claimed the company also raised funding in April and September 2023. “We did raise some capital in 2023 but are unable to disclose the amount,” a spokesperson for the company said. Founded in 2018 by Adewale Opaleye, Alerzo raised $525,000 in pre-seed funding in 2020 and $5 million in a seed round in 2020. Its $10.5 million Series A round was also well-publicised. It also raised an undisclosed amount in a January 2022 Series B round. Struggles in Africa’s B2B e-commerce Alerzo’s layoffs highlight the difficulty of the B2B e-commerce model in Africa. Many startups in the sector set out to solve the inefficient distribution of goods to millions of small retailers in Africa backed by big VCs and millions of dollars in funding. Instead, many have found themselves in a fix, distributing similar products from FMCGs, with little or no differentiation from their competitors. “Everyone is collecting from the same FMCGs and distributing to the same retailers. And because consumer spending is shrinking, the volumes the retailers are buying is reducing,” one person with knowledge of the industry said. “The other problem is that there’s also a price war in a shrinking space.”Startups also compete with big-time “offline” distributors who move huge volumes from FMCGs without steep technology and marketing costs. “One of the biggest distributors for a particular FMCG buys products worth up to ₦10 billion monthly and their operation is pretty small. Those volumes are more than what most B2B e-commerce startups have,” said one person with knowledge of the sector. The ability to move such huge volumes attracts incentives and the best rates from the FMCG companies. These informal distributors have also built a strong network of customers over the years.
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