👨🏿🚀TechCabal Daily – Binance executive arrested in Kenya
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning TechCabal Insights has partnered with the Japan International Cooperation Agency (JICA) to release a report on the Nigerian startup scene. The report covers the state of the Nigerian startup ecosystem by taking a bird’s eye view of the macroeconomic and regulatory events that continue to shape it. It provides a robust SWOT analysis of the tech landscape, the factors that can catalyse the growth of Nigerian startups, and sectors where innovation can drive this growth, among other vital information. Get the actionable insights you need to navigate the Nigerian startup scene. Download your FREE report here. In today’s edition Binance executive arrested in Kenya Thepeer to return $350,000 to investors after shutdown TLCom closes $154 million fund SA licenses more crypto companies Bolt to onboard 1,000 electric bikes in Kenya The World Wide Web3 Opportunities Crypto Binance executive arrested in Kenya While Africa has seen its fair share of sluggish extradition processes, with cases languishing for years in legal limbo, the unfolding saga of Nadeem Anjarwalla, a Binance executive who escaped custody in Nigeria and fled to Kenya using a smuggled passport, has taken a surprisingly swift turn. A short-lived escape: One week after Nigeria asked Kenya to arrest and extradite Anjarwalla, the Kenyan police, in collaboration with Nigerian authorities and Interpol, have reportedly arrested Anjarwalla with plans to expedite his extradition back to Nigeria within the week. Anjarwalla’s story began in February when Nigerian authorities detained him and another Binance executive, Tigran Gambaryan, on suspicion of tax evasion. Nigerian authorities seized their travel documents, which marked the beginning of a tumultuous series of events that would ultimately see Anjarwalla escaping the country to Kenya on March 25, leaving Gambaryan behind to face money laundering charges. Zoom out: Binance and its executives face charges in Nigeria for tax evasion, currency speculation, and money laundering of an alleged $35.4 million. One executive, Gambaryan, pleaded not guilty and applied for bail but it was denied due to Anjarwalla’s escape. Gambaryan’s bail hearing was reportedly rescheduled for yesterday, April 22, but it is unclear at this point what the verdict is. *This is a developing story. 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. Shutdowns Thepeer to return $350,000 to investors after shutting down The Nigerian startup scene has seen its fair share of success stories in recent years. Fintech companies like Flutterwave and Paystack have become household names and facilitated digital payments across the continent. But the journey for startups can be challenging and newer ventures grapple with the harsh realities of the market. This year alone, two promising startups have closed shop. In January, Cova, a wealthtech platform aiming to be the one-stop shop for asset management, shut down due to challenges in gaining traction. Cova, however, chose to return some capital to its investors, even in defeat. In April 2024, Thepeer, an API startup focused on connecting business wallets, followed suit. Now, the startup is expected to return about $350,000 of the $2.3 million it raised to investors after it promised them 20% of their funds back (around $460,000.) Challenges faced: Although Thepeer had runway for another 20 months, it shuttered operations due to its inability to secure product-market fit. According to a source with knowledge of the company’s finances, despite processing over $500,000 in transactions during the first three quarters of 2023, the company generated less than $1,000 in revenue. Sources also claim that before Thepeer shut down, it explored alternative products like fraud prevention but wasn’t convinced enough to pivot with investor funds. Acquisition talks with other startups also didn’t materialise. 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. Funding TLcom Capital raises $154 million for TIDE Africa II In 2023, African startups raised $3.2 billion, the lowest figure since the $2.1 billion in 2020. Despite the recent slowdown in global venture capital funding, there’s good news for African startups looking for funding as TLcom Capital, a Nairobi-based venture capital (VC) firm has successfully closed its TIDE Africa II fund at $154 million. This new fund is a significant increase compared to TLcom’s first Africa-focused fund, which closed at $71 million in 2020. The larger size reflects growing confidence in the African tech ecosystem as local VC firms like TLcom are stepping up to fill the gap. Who are the investors? Leading institutions like the European Investment Bank (EIB) and Visa Foundation are backing TIDE Africa II. TLcom will invest in 20-25 startups, primarily focusing on seed or Series A funding rounds, ranging from $1 million to $3 million. TLcom Capital also plans to fund female-founded tech startups. TLcom was an early investor—$2 million—in FirstCheck Africa, a female-focused pre-seed fund launched in January 2021. What to look out for: The fund will enable TLcom to expand its reach to Egypt and South Africa, partnering with local founders who are tackling Africa’s biggest challenges with innovative solutions. Investments have already been made in promising companies like LittleFish, a software company enabling payment and banking products for retail-focused SMBs, and Cairo-based logistics company ILLA. Accept fast in-person payments, at scale Spin up a sales force with dozens – even hundreds – of Virtual Terminal accounts in seconds, without the headache of managing physical hardware. Learn more → Crypto More crypto businesses licensed in South Africa Yesterday, South Africa’s Financial Sector Conduct Authority (FSCA) approved 16 extra operating licences for crypto businesses. This, in addition to the 59 operating licences approved in March 2024, brings the total number of licenced crypto companies to 75. Altcoin Trader, Luno and VALR (pty) LTD were some of
Read MoreAfrica’s digital future: Why transparent data is key to financial inclusion
This article was contributed to TechCabal by Sabine Mensah. While on a speaking tour in 2022 to share findings from a report I co-authored, a central bank official from West Africa shared a key observation. The report aimed to document the relationship between financial inclusion and the infrastructure provided by inclusive, instant payment systems, based on data available publicly. But as the central bank official shared, the research was inaccurate, because the publicly available data their country provided was wrong. Within a month, the central bank had updated its website and issued a press release with official statistics. This experience illustrates the importance of accurate data to inform advocacy and motivate greater transparency in public sector efforts. We need more of that transparency as we work to expand financial inclusion through the catalyst of making digital payments more available and accessible to Africans. Robust data is key for growing a market Much of the world is starting to focus on the incredible power of Instant Payment Systems (IPS) as a foundational enabler of financial inclusion. IPS are public or public-private sector payment platforms capable of processing retail payments from any financial provider in real-time and 24/7. The 32 IPS in Africa processed nearly 32 billion transactions worth about $1.2 trillion in 2022, as reported in the AfricaNenda State of Inclusive Instant Payment Systems in Africa Report, 2023. The volume and value of payments made by IPS to date represent massive progress from ten years ago. Yet there is so much more to do. While impressive, these statistics underestimate the true picture since the data for 10 out of the 32 live IPS on the continent are not publicly available. Furthermore, despite the growth in payment system availability, nearly half of the population across Africa does not live in a country with instant payment system capabilities. In those environments, making direct digital payments is inaccessible to all but the most affluent consumers and merchants, and expensive for everyone. Lower-income customers, and those living in areas with limited connectivity, have no other option but to use cash, which is easily lost or stolen and requires physical proximity to transact with. Cash also leaves no paper trail, and therefore does not allow users to build a financial track record that lenders can use to underwrite credit. What does this have to do with payment ecosystem data? Data is a great motivator. It enables central bankers and payment ecosystem participants to benchmark their payment system status with their peers, share learnings, communicate urgency, and show progress. There is precedent for data driving consensus and elevating the importance of an issue. Before the launch of the Global Findex Database in 2011, for example, there was no comprehensive source of global, demand-side data on how adults around the world access and use financial services. Today, the Global Findex is the benchmark by which the UN measures progress toward Sustainable Development Goal 8.10.2 on financial inclusion and informs national financial inclusion strategies for many countries globally. In the ten years since its first edition, financial access has grown by more than 70%, partly motivated by the ability to see where progress is happening and where it lags. We need similarly comprehensive, trusted, and detailed insights into digital payments availability and usage in Africa—in this case, informed by both supply-side and demand-side data. AfricaNenda set out in 2021 to begin creating those insights to share them openly as a public good. Our annual State of Inclusive Instant Payment Systems in Africa (SIIPS Report) is the product of that effort. As we begin research for SIIPS 2024, our third edition, we have a clearer insight into the data gaps we still need to fill, given our set goals. They are, first, to document the landscape of instant payment systems across the continent; and second, to establish a standard definition of inclusivity in payment systems that we could use to map the existing payment systems along an inclusivity spectrum. This effort requires both qualitative and quantitative data. We have faced challenges attaining both. Regarding qualitative data, creating a comprehensive landscape of instant payment systems requires details about the 32 live IPS across the continent, including their scheme rules, ownership structures and governance, as well as product details related to channels and supported payment types. These facts have been surprisingly difficult to access consistently. Despite the proliferation of IPS across the continent, there is a lack of public access to this basic information. Regarding quantitative data, we have been collecting transaction data related to the volume and value of transactions running through IPS. The challenge here is the availability of one of both availability and standardisation since not all IPS operators and central banks share this data and those who do use different data collection methods to report it. Furthermore, very few differentiate between on-us transactions that are processed and cleared by a single institution (this is usually for transactions between customers of the same institution) vs. off-us/switched transactions between customers of different institutions or using different payment mechanisms. For SIIPS 2023, only Bank of Ghana and NatSwitch Malawi provided disaggregated on-us and off-us/switched transactions. In the realm of inclusivity, transaction data also is not gender disaggregated, making it difficult to assess whether these systems are reaching traditionally underserved groups. Payment inclusivity in Africa starts with ecosystem transparency Between the launch of AfricaNenda’s first research notes and the inaugural SIIPS report in 2022, we have evolved our research methods to try to fill some of the data gaps revealed by our interaction with the central banker referenced above. Our early research relied exclusively on secondary (desktop) research using publicly available data and information. We have since evolved to a mixed method approach that adds key informant Interviews and detailed case studies on select IPS, as well as quantitative consumer surveys and one-on-one interviews that incorporate the end-user perspective for select markets. For the SIIPS 2023 report, we added the step of sending an official letter of request for transaction data
Read MoreBreaking: South Africa grants crypto licences to Luno, VALR and 73 other companies
In March, South Africa’s financial conduct regulator approved 59 operating licences for crypto businesses but did not share the names of beneficiaries of the country’s first-ever crypto licences. On Monday afternoon, the Financial Sector Conduct Authority (FSCA) approved 16 extra licences, bringing the number of licenced crypto companies to 75 from. The FSCA received 374 applications. Luno and VALR, two global crypto exchanges, are the most recognisable names on the list. Luno’s license allows the company to provide crypto advisory and intermediary services while VALR’s license allows the company to provide advisory, intermediary and investment management services. Binance, one of the biggest global crypto exchanges, did not make the list. The move signals South Africa’s continuing acceptance of the crypto regulatory environment. And with the regulator expected to approve even more licences, it will position South Africa as one of the continent’s crypto-forward countries. “Any entity that did not apply for a license and continues activities will be investigated and there will be consequences for such actions,” said Felicity Mabaso, the divisional executive for licensing at the FSCA. The licensed entities will be subject to ongoing supervision after licensing, while investigations into people conducting crypto-related financial services without authorisation will begin. The licences were granted to crypto companies with diverse business models, including advisory services, exchanges, payment gateways, crypto-to-crypto and crypto-to-fiat conversion, crypto asset arbitrage, tokenisation, provision of index-based products, and wallet services. *This is a developing story
Read MoreExclusive: The Peer will return $350,000 to investors after shutting down
When The Peer, a Nigeria-based API startup, shut down in April, the business still had up to twenty months of runway. The shutdown, which its founders blamed on an inability to find product-market fit, means investors will get some of their money back. According to one investor familiar with their finances, the startup is expected to return about $350,000 of the $2.3 million it raised to investors. The company’s burn rate was less than $20,000 monthly, the same person said. The Peer’s decision to shut down early— a counterintuitive idea in a world where startups are encouraged to hang in there—may sometimes lead to better outcomes. At least fifteen high-profile African startups closed their doors in 2023 as macroeconomic conditions worsened and VC funding declined. Those shutdowns often meant investors’ funds went to zero. Before shutting down, the startup experimented with other products and business lines, such as fraud prevention, but it was not convinced that any pivot should be made with investor money, one person with direct knowledge of the matter said. Some of The Peer’s investors include Chipper Cash, Flutterwave, Sunu Ventures, Byld Ventures, Timon Capital, Raba Partnership, Musha Ventures, RaliCap, Uncovered Fund, and angel investors like Ezra Olubi and Prosper Otemuyiwa. TLcom Capital closes $154 million fund for early-stage African startups Founded in 2021 by Chike Ononye and Michael Okoh to connect business wallets, The Peer raised $220,000 in a pre-seed round and an additional $2.1 million in a June 2022 seed round that valued the company at $5 million. Investors were told they would receive 20% of their funds back (around $460,000), but one person said The Peer’s seed round was less than the $2.1 million announced, implying a lower refund. The Peer’s cofounders did not respond to multiple requests for comments. Although the product held promise—an investor in its seed round likened it to Flutterwave—it failed to find scale and generate meaningful revenue. The Peer generated less than $1,000 in revenue after processing more than $500,000 in the first three quarters of 2023, according to someone familiar with the startup’s finances. The Peer’s APIs allowed customers to move money between wallets. For example, a Foodcourt (food delivery business) customer could move money from their wallet to fund a Paga (fintech) wallet or make payments online with funds from their Foodcourt wallet with The Peer’s payment gateway. To deliver the product, The Peer had to convince several businesses to integrate its payment product. An industry veteran who asked not to be named told TechCabal that those conversations and subsequent integrations could take months. African markets aren’t ready for wallet-to-wallet transactions at scale, said one person familiar with The Peer’s business. That person also cited challenges with compliance and an absence of consistent support from the startup’s fintech partners. Meanwhile, the businesses they hoped to sell to often had many options, including more established payment companies like Paystack and Flutterwave. In a blog post, The Peer’s co-founders said they “could not align the startup’s product with the market’s needs.” “The overall acceptance of wallets as a viable payment option didn’t grow as rapidly as we had hoped,” they wrote. Before the startup shut down, it held talks with several startups for a possible acquisition, but an acquisition never materialised. “I think their product came too early for the market,” an industry expert said.
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Next Wave: Is there a way to tame Apple’s anti-competitive behaviour?
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 21 April, 2024 Apple’s iPhone 12 Pro | Pixbay Apple, the American iPhone and MacBook maker, is excellent at market analysis, planning, and identifying an optimal course of action before launching its products or services. It continuously monitors product use and market trends and adapts its strategy based on these insights. It may sometimes delay launching a popular feature in rival products just to ensure it works perfectly before going to market. This tactic has single-handedly made it a top digital products maker as its customers genuinely love its products and services. However, Apple’s approach isn’t without criticism. The company’s locked ecosystem and, to some extent, anti-competitive behaviour, frustrates its users. Some people argue that Apple prioritises vision over customer and expert input, particularly regarding how it structures and sells products and services. This “disregard” is the reason the company is currently in trouble with regulators in the European Union (EU) and US. Next Wave continues after this ad. We have amazing news! TechCabal’s WhatsApp channel is live! Get the latest insights from our newsroom on WhatsApp! What’s more? You get to interact with our reporters and get exclusive peeks at the reporting process. Click here to get started Locking in customers and anti-competitive practices Apple devices are known for their user-friendly interface, but this comes at a cost. Users have minimal control over how their iPhones or iPads run, and features like hardware compatibility or using alternative app stores are restricted. (This is no longer the case in the EU region, where Apple has been directed to allow customers to sideload apps from other sources.) Apple’s tight control extends to its App Store, which has been the sole platform for installing apps. Developers have been made to adhere to strict guidelines; Apple also takes a 30% cut on all App Store-related transactions such as in-app purchases, significantly eating into developer earnings. Apple has also been accused of favouring its own apps and delaying approvals for its rivals’. Partner Content: Read: TECNO launches the powerful CAMON 30 Pro 5G phone as part of its CAMON 30 series here. This control fosters a “closed ecosystem” where users are heavily incentivised to use Apple products. For example, seamless integration between devices, effortless data transfer, and the exclusivity of iMessage all make switching to non-Apple products a challenge. Apple has further been criticised for making repairs outside its authorised centres difficult and expensive, potentially forcing upgrades for minor issues. These practices raise concerns about user freedom. Next Wave continues after this ad. GITEX Africa returns a second time on May 29–31, 2024 to Marrakech, Morocco, discussing ways to accelerate the continent’s digital health revolution. GITEX is the continent’s largest all-inclusive tech event renowned for uniting the brightest minds in the technology industry Grab your tickets here Are regulators doing enough? The debate about these issues is complex. Apple says that its tight control ensures a high-quality user experience and protects user privacy. However, this may stifle innovation, in the sense that Apple’s 30% App Store commission cuts deeply into developer earnings, which may discourage other developers from publishing their apps for Apple products. Besides, this “tax” limits investment in existing apps and introduces barriers to app developers struggling to turn a profit. Regulators have been on the lookout for abuses: the EU last month hit the tech giant with a nearly $2 billion fine for antitrust violations (antitrust law requires technology corporations identified as “gatekeepers” to make sure their products are open and interoperable. It forbids these companies from favouring their services over those of others). The EU regulators accuse Apple of abusing its power over music streaming services and preventing app developers from promoting cheaper alternatives from outside the App Store. Next Wave continues after this ad. On April 26th, H.M Hannatu Musa Musawa, the Minister for Art, Culture & the Creative Economy, alongside distinguished experts, will speak at the DICE Ecosystem Mixer 2.0, with a focus on Africa’s creative economy. Register here for a chance to attend. Antitrust cases are complex and hard to prove. At the same time, tech companies like Apple, which could hit a $4 trillion market cap, have significant resources to fight legal challenges. Even if Apple loses its current case with the EU, the penalties may not be enough to fundamentally overhaul its business model. And rulings may only address specific practices, leaving room for Apple to find workarounds. Perhaps, the responsibility to regulate Apple should not fall upon the EU alone because while the EU benefits from clear regulations explicitly outlining its rules, the same cannot be said for other regions such as the US, where officials are addressing antitrust issues associated with tech companies through the court system. Essentially, while the EU has specific rules for certain situations, the US does not have a single law that bans antitrust behaviour. Rather, whenever an antitrust case comes up, it must be argued through the court system, on a case-by-case basis, which can be cumbersome. Next Wave continues after this ad. TechCabal Insights are excited to announce the launch of a new website! They are now making it easy for you to read your favourite data stories and download your favourite reports. Check out our new website Developers deserve fairness Regulators must compel Apple to end forced in-app purchases. This will allow developers to offer alternative payment channels for more choice, and potentially at lower prices. Apple could still earn revenue with a commission on these transactions. Developers have complained that Apple’s app review process is unnecessarily stringent. Apple should set up fair and clear app review guidelines, as this will ensure that developers understand why apps are rejected
Read MoreFirst Bank names Olusegun Alebiosu acting CEO after Adeduntan’s surprise exit
FBN Holdings, the parent company of Nigeria’s oldest bank, has appointed Olusegun Alebiosu as acting chief executive officer of First Bank of Nigeria after the surprise resignation of CEO, Adesola Adeduntan. Until this appointment, Olusegun Alebiosu was the bank’s executive director, chief risk officer, and executive compliance officer, according to a filing to the Nigerian Exchange Limited (NGX). The appointment takes effect immediately and is subject to the Central Bank’s approval. Adeduntan retired from the bank last week “to pursue other interests” after leading the lender for a record nine years. His sudden resignation came eight months before the expiration of a third term in December 2024. A defining moment of Adeduntan’s tenure was his controversial dismissal in 2021 by the then-board, followed by his reinstatement by the Central Bank. “The Board of Directors expressed gratitude to Adeduntan for his exemplary leadership in the last nine years during which he superintended the transformation and growth of the Bank and wish him well in his future endeavors,” the lender said. Alebiosu, who joined First Bank in 2016, takes charge of the 130-year-old financial institution as it seeks to raise fresh capital in line with new capitalisation requirements from the regulator. Last Friday, the bank canceled the extraordinary general meeting to seek shareholders’ approval to raise ₦300 billion. He has over three decades of banking experience and previously held top positions at Coronation Merchant Bank, African Development Bank Group, and United Bank for Africa. He holds a bachelor’s degree in Industrial Relations and Personnel Management and two master’s degrees in International Law and Diplomacy from the University of Lagos and Development Studies from the London School of Economics and Political Science. FBN Holdings grew its profits by 127% in 2023, according to its unaudited financial statements. In January, it appointed billionaire businessman, Femi Otedola, as the new chairman of its board of directors.
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👨🏿🚀TechCabal Daily – Nigeria bags an LLM
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning From politics to technology, Big Cabal Media’s got you covered. Sign up to The Big Daily newsletter for the most important news out of Nigeria, delivered to your inbox every weekday morning. Subscribe now at thebigdaily.substack.com. In today’s edition Nigeria announces first multilingual Large Language Model Stricter penalties for fibre damage in Nigeria Shareholders give nod for Access’ $1.8 billion capital raise Beltone Ventures and CI Capital launch $30 million African fund The World Wide Web3 Jobs AI Nigeria announces first multilingual Large Language Model Nigeria has taken a significant leap forward in the field of Artificial Intelligence (AI). After a four-day National Artificial Intelligence Strategy Co-Creation Workshop in Abuja, Bosun Tijani, Nigeria’s minister of communications, innovation and digital economy has revealed the country’s first multilingual Large Language Model (LLM) and three other initiatives. Sidebar: An LLM is an AI tool trained to process and respond to queries in multiple languages. Tijani revealed the AI tool is being developed through a partnership between a Nigerian AI company, Awarritech, a global tech company, DataDotOrg, the National Information Technology Development Agency (NITDA), and the National Centre for AI and Robotics (NCAIR), which he also announced its relaunch. The LLM will be trained in five low-resource languages, alongside English, to ensure inclusive language representation within AI datasets. Additionally, over 7,000 fellows from Nigeria’s Three Million Technical Talent (3MTT) programme will support the LLM project. The workshop also convened over 120 AI experts to develop a comprehensive policy to advance AI adoption across the country, Tojani also noted that the National Artificial Intelligence Strategy received $3.5 million in seed funding from interested parties. The three other initiativesinclude launching The Nigeria Computing Infrastructure Pilot, to address resource limitations for AI projects, the Nigeria Artificial Intelligence Collective to drive collaboration among AI stakeholders, and Rapporteur AI, a world-first tool to automate report generation for increased efficiency. 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. Telecoms Stricter penalties for fibre damage in Nigeria Last month, millions of Africans across Nigeria and South Africa suffered internet blackouts after a major subsea cable was cut. While the cause of the cable cut is still unknown, damage to internet and telecom cables isn’t new to telecoms. In 2023, MTN Nigeria experienced over 6,000 disruptions to its fibre network, resulting in numerous hours of service interruptions. The company invested ₦11 billion ($9.5 million) to relocate 2,500 kilometres of susceptible fibre cables between 2022 and 2023. Consequently, MTN expressed concerns to the government about spending billions of naira to fix damaged broadband cables. Now, Nigeria’s ministry of works is set to criminalise the destruction of broadband fibre cables. It will be signed into law as an executive order by President Bola Tinubu. This move comes in response to ongoing damages and grievances expressed by MTN Nigeria Communications Plc and other telecommunications firms that are losing billions of naira due to this damage. Fixing cable cuts caused MTN and Airtel ₦27 billion ($23.5 million) in losses in 2023 JSYK: Broadband fibre cables transmit high-speed internet. They offer faster and more reliable internet connections compared to traditional copper cables, making them increasingly popular for providing internet services to homes and businesses. Damage to these cables can cause service outages, financial loss for telecommunications companies and communication disruptions. A new line: While there are existing laws against vandalism in Nigeria like Section 451 of the Criminal Code which punishes vandalism with 2 years imprisonment. , this new regulation aims to enforce stiffer penalties on offenders and focus on underground network cables. It will also focus on construction companies, as they’re often the culprits. Tony Izuagbe Emoekpere, who leads the Association of Telecommunications Companies of Nigeria, expressed his optimism about the upcoming presidential order. Speaking on behalf of telecoms, Emoekpere believes the new law could help the industry grow and attract more investment. 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. Banking Access Holdings secures shareholder backing for $1.8 billion capital raise In March 2024, Access Holdings, the parent company of Nigeria’s largest bank by asset base— Access Bank— announced plans to raise $1.8 billion through a bond or share sales and a rights issue targeting existing shareholders. On April 19, shareholders of Access Holdings approved its plan to raise $1.8 billion in capital. This will address the Central Bank of Nigeria’s (CBN) new capital requirements of $364 million, support the company’s ongoing working capital needs and fund organic growth for its banking and non-banking subsidiaries. Shareholders also approved the payment of a final dividend of ₦1.80 kobo per every ₦0.50 Kobo ordinary share, a 28% improvement from the corresponding period in 2022. A stellar financial performance: The news comes on the heels of Access Holdings reporting a 335% increase in pre-tax profit, an 87% surge in gross earnings, and a 306% growth in profit after tax for the 2023 financial year. This capital raise positions Access Holdings for continued expansion with plans to expand its operations over the next four years as it targets becoming one of the continent’s largest lenders. Accept fast in-person payments, at scale Spin up a sales force with dozens – even hundreds – of Virtual Terminal accounts in seconds, without the headache of managing physical hardware. Learn more → Funding Beltone Ventures and CI Capital launch $30 million African fund In a move to support the Middle East and North Africa (MENA) region’s early-stage tech ecosystem, Beltone Holding’s venture capital arm, Beltone Venture Capital (BVC), has partnered with CI Venture Capital, a subsidiary of Abu Dhabi’s Citadel International Holdings, to launch a $30
Read MoreTLcom Capital closes $154 million fund for early-stage African startups
TLcom Capital, a Nairobi-based VC firm that has backed startups like Vendease, Seamless HR, and uLesson, has reached a final close for TIDE Africa II, a $154 million fund focused on early-stage startups. The fund reached the first close of $70 million in January 2022 and was expected to hit a second close by the end of that year. It took over two years to reach and surpass the funding target. Maurizio Caio, founder and managing partner at TLcom Capital, said the delay was because they received large investments requiring some documentation adjustments. TIDE Africa II is roughly two times the size of TLcom’s first fund ($71 million), which closed in February 2021. Startup funding in Africa has slowed since 2022 as global venture capital appetite declined. In 2023, African startups raised $3.2 billion, the lowest figure since the $2.1 billion in 2020. As foreign capital gradually disappeared from the ecosystem, led by the exodus of 400 unique investors, local venture capital firms like TLcom have stepped up. The VC firm starts investing at the seed stage or Series A and follow-up capital for portfolio companies that have reached their growth stages. “The $1 to $3 million range is the range of our first check,” Caio said. TLcom Capital also plans to fund female-founded tech startups. With a commitment of $2 million, TLcom was an early investor in FirstCheck Africa, a female-focused pre-seed fund launched in January 2021. The company’s ambition is to show the global VC market in the next three to five years that the African tech ecosystem can bring in great returns. It is targeting investments in 20-25 startups. “We are maintaining the same investment strategy for TIDE Africa Fund II as we had for our first fund, which made over 80% of its investments at Seed or Series A,” Caio said. Investors in the TIDE Africa Fund II include the European Investment Bank (EIB), Allianz, DEG Impact’s joint venture, AfricaGrow, Visa Foundation, and Bertelsmann. Apart from expanding to Egypt and South Africa, the new fund enables TLcom to partner with African founders to tackle the continent’s biggest and most complex challenges with innovative solutions. TIDE Africa Fund II has already been deployed in South Africa and Egypt with Cape Town-based LittleFish, a software company enabling payment and banking products for retail-focused SMBs, and Cairo-based ILLA, a middle-mile logistics company.
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Partech; its €280 million fund, backing bold founders, and being intentional about exits
In February, Partech, the global VC firm that has backed companies like TradeDepot and Wave, fully closed ‘Partech II,’ a €280 million Africa-focused fund—the largest on the continent. It was a delightful turn of events for the VC firm that initially targeted raising €230 million, and for a continent that saw VC funding decline by 46% in 2023. Partech Africa II attracted significant interest from individual and international institutional partners, such as family offices and development finance institutions (DFIs). This is partly attributed to Partech’s regional experience, as evidenced by the $500 million acquisition of a portfolio company Sendwave, and the attainment of unicorn status by Wave, another portfolio company. The VC fund is led by general partners Tidjane Dème and Cyril Collon, who, before joining Partech, operated several businesses in Africa. They joined the VC firm in 2016—three years before its first Africa-focused VC fund, Partech Africa I, closed at $143 million. Partech Africa II invests across various sectors, with current holdings in e-commerce, healthcare, and real estate. The previous fund invested in 17 companies across seed to Series C stages. Partech II will priortise Series A and B rounds, with investment sizes ranging from $1 million to $15 million per startup. The new fund has already made three investments in Revio, a South African payment startup, an undisclosed e-commerce platform in Senegal, and an undisclosed real estate startup in Egypt. TechCabal sat down with Tidjane Dème, one of the general partners. He described the firm’s investment approach in Africa, what Partech seeks in founders and the businesses they back, and how the fund is intentionally working towards exits. TC: Before the Africa-focused fund, Partech Africa Fund I, was closed, the global VC fund made two investments in Africa: Yoco (a South African fintech) and TradeDepot (a Nigerian retail technology startup). Why was it necessary to create a separate fund for African Investment? TD: Africa needed local investment; that is what we wanted the fund to be. Before joining Partech, Cyril and I worked extensively in Africa in positions that gave us a unique perspective on the emergence of a younger generation who, instead of seeking jobs, were starting companies to tackle fundamental problems in climate, energy, health, and more. However, they consistently complained about the lack of access to capital needed to validate and scale their innovations. Founders need a specific kind of capital: ‘smart capital’. Local banks are incapable of providing it, but venture capitalists can. At the time, however, the local VC landscape was quite nascent, and foreign VCs were not equipped to address this market because their funds were not dedicated to Africa. The other important point for us was that this investment needed to be based on commercial returns, and not [charitable] impact. That was the challenge that inspired our first Africa-focused VC fund. It is also why we started sharing those numbers in the form of annual reports. Our hypothesis has been thoroughly validated over the years. The numbers showed that this ecosystem was growing faster than any ecosystem in the world. It grew 10x in the last eight years, and some returns have started materialising for some investors. Today, it is a no-brainer for any global investor; you can invest profitably in African startups. You mentioned smart capital. Can you elaborate on what makes venture capital smart? TD: There are two fundamental qualities of VC capital, that are a necessity to drive startups everywhere, including in Africa. The first is the willingness to take early-stage risks. When investing in seed companies anywhere in the world, venture capital is smart enough to understand that roughly 80% will fail. This isn’t because they’re bad ideas; it’s because they’re so early-stage that inherent uncertainty exists. Venture capital is smart capital because it recognises that by picking the right 20% that succeed, they can make up for all the losses. The second smart aspect of VC is the way it invests in early-stage startups. The typical founder is in their mid-twenties, and the startup might be their first job. If successful, the startup will grow from this small team to hundreds in the next five years. The founders will transition from “this is my first job,” to leading a team of hundreds or running a complex, multi-million dollar company. This is a journey of immense learning and growth for the entire team. They need experienced advisors, expertise, models, and frameworks to guide their thinking and building – all of which VC brings to the table. This is what smart capital means. There has been a lot of talk about how venture capital, considering its growth-at-all-cost approach, is not suitable for building in Africa, where the business environment is riddled with regulatory uncertainty and economic hardship. What do you think of this? TD: Venture capital funding can only work if the fund can expect a 10x return on the few (20%) that succeed. This needs to happen within a short timeframe (5-7 years). For this to work, the companies need to grow very fast. However, some companies do not grow as fast, despite being great businesses. Such businesses will not do well with just venture capital. They need other types of investors, such as traditional private equity, angel investors, family offices, and more. Even for fast-growing startups, venture capital can’t cover all their needs throughout their journey. Why should a company give away part of their equity to raise funding for a short-term need? In such cases, what startups need is venture debt. Unlike traditional bank loans, venture debt doesn’t require significant existing assets. Instead, it’s secured by the purchased equipment and the projected cash flow return. Unfortunately, access to venture debt and affordable working capital providers remains limited in Africa. However, the African market is still young. As it matures, we can expect a wider range of funding options to emerge, alleviating the current over-reliance on venture capital for needs that could be better served by other instruments. Beyond limited access to working capital, what
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Nigeria’s works ministry is finalising a regulation that will criminalise fibre damage after fixing cable cuts caused ₦27 billion in losses to MTN and Airtel. The regulation will enforce stiffer penalties on offenders and focus on underground network cables, as several laws already criminalise vandalism, according to Bloomberg. Nigeria has a long-standing vandalism problem that causes billions of dollars of damage but for the telco sector, one of Nigeria’s most productive sectors, vandalism can cause several hours of outages and severe losses. Last year, MTN, the country’s largest telco, suffered more than 6,000 cuts on its fibre network and several hours of outages. The telco spent ₦11 billion to move 2,500 kilometres of vulnerable fibre cables between 2022 and 2023, which led the telco to complain to the government that it was spending billions of naira to fix damaged broadband cables. The regulation will also focus on construction companies, as they often damage these underground cables. In February, MTN’s customers suffered more than five hours of outages after fibre damage in three different locations was caused by a road construction firm, an oil serving company and a fire. Nigeria’s telco industry has struggled with rising operating costs after the government devalued the Naira twice and a sharp increase in electricity and fuel prices. Last year, Airtel recorded a 99% decrease in profits following currency devaluation in its biggest markets, while MTN reported a loss for 2023, its first in three years after a Naira devaluation and rising costs of doing business ate into its margins. The telco reported a loss after tax of ₦137.0 billion in 2023 compared to profits of ₦348.7 billion in 2022.
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