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Africa Roundup: Nigerian fintech gets $360M, mints unicorn, draws Chinese VC

November 2019 could mark when Nigeria (arguably) became Africa’s unofficial capital for fintech investment and digital finance startups.

The month saw $360 million invested in Nigerian-focused payment ventures. That is equivalent to roughly one-third of all the startup VC raised for the entire continent in 2018, according to Partech stats.

A notable trend-within-the-trend is that more than half — or $170 million — of the funding to Nigerian fintech ventures in November came from Chinese investors. This marks a pivot (to tech) in China’s engagement with Africa. We’ll get to that.

Before the big Chinese-backed rounds, one of Nigeria’s earliest fintech companies, Interswitch, confirmed its $1 billion valuation after Visa took a minority stake in the company. Interswitch would not disclose the amount to TechCrunch, but Sky News reporting pegged it at $200 million for 20%.

Founded in 2002 by Mitchell Elegbe, Interswitch pioneered the infrastructure to digitize Nigeria’s then predominantly paper-ledger and cash-based economy.

The company now provides much of the tech-wiring for Nigeria’s online banking system that serves Africa’s largest economy and population. Interswitch offers a number of personal and business finance products, including its Verve payment cards and Quickteller payment app.

The financial services firm has expanded its physical presence to Uganda, Gambia and Kenya . The Nigerian company also sells its products in 23 African countries and launched a partnership in August for Verve cardholders to make payments on Discover’s global network.

Visa and Interswitch touted the equity investment as a strategic collaboration between the two companies, without a lot of detail on what that will mean.

One point TechCrunch did lock down is Interswitch’s (long-awaited) and imminent IPO. A source close to the matter said the company will list on a major exchange by mid-2020.

For the near to medium-term, Interswitch could stand as Africa’s sole tech-unicorn, as e-commerce venture Jumia’s volatile share-price and declining market-cap — since an April IPO — have dropped the company’s valuation below $1 billion.

Circling back to China, November was the month that signaled Chinese actors are all in on African tech.

In two separate rounds, Chinese investors put $220 million into OPay and PalmPay — two fledgling startups with plans to scale in Nigeria and the broader continent.

PalmPay, a consumer-oriented payments product, went live last month with a $40 million seed round (one of the largest in Africa in 2019) led by Africa’s biggest mobile-phone seller — China’s Transsion.

The startup was upfront about its ambitions, stating in a company release its goals to become “Africa’s largest financial services platform.”

To that end, PalmPay conveniently entered a strategic partnership with its lead investor. The startup’s payment app will come pre-installed on Transsion’s mobile device brands, such as Tecno, in Africa — for an estimated reach of 20 million phones.

PalmPay also launched in Ghana in November and its U.K. and Africa-based CEO, Greg Reeve, confirmed plans to expand to additional African countries in 2020.

OPay’s $120 million Series B was announced several days after the PalmPay news and came only months after the mobile-based fintech venture raised $50 million.

Founded by Chinese-owned consumer internet company Opera — and backed by nine Chinese investors — OPay is the payment utility for a suite of Opera -developed internet-based commercial products in Nigeria. These include ride-hail apps ORide and OCar and food delivery service OFood.

With its latest Series A, OPay announced it would expand in Kenya, South Africa and Ghana.

Though it wasn’t fintech, Chinese investors also backed a (reported) $30 million Series B for East African trucking logistics company Lori Systems in November.

With OPay, PalmPay and Lori Systems, startups in Africa have raised a combined $240 million from 15 Chinese investors in a span of months.

There are a number of things to note and watch out for here, as TechCrunch reporting has illuminated (and will continue to do in follow-on coverage).

These moves mark a next chapter in China’s engagement in Africa and could raise some new issues. Hereto, the country’s interaction with Africa’s tech ecosystem has been relatively light compared to China’s deal-making on infrastructure and commodities.

There continues to be plenty of debate (and critique) of China’s role in Africa. This new digital phase will certainly add a fresh component to all that. One thing to track will be data-privacy and national-security concerns that may emerge around Chinese actors investing heavily in African mobile consumer platforms.

We’ve seen lines (allegedly) blur on these matters between Chinese state and private-sector actors with companies such as Huawei.

As OPay and PalmPay expand, they may need to do some reassuring of African regulators as countries (such as Kenya) establish more formal consumer protection protocols for digital platforms.

One more thing to follow on OPay’s funding and planned expansion is the extent to which it puts Opera (and its entire suite of consumer internet products) in competition with multiple actors in Africa’s startup ecosystem. Opera’s Africa ventures could go head to head with Uber, Jumia and M-Pesa — the mobile money-product that put Kenya out front on digital finance in Africa before Nigeria.

Shifting back to American engagement in African tech, Twitter and Square CEO Jack Dorsey was on the continent in November. No sooner than he’d finished his first trip, Dorsey announced plans to move to Africa in 2020, for three to six months, saying on Twitter, “Africa will define the future (especially the bitcoin one!).”

We still don’t know much about what this last trip — or his future foray — mean in terms of concrete partnerships, investment or market moves in Africa from Dorsey and his companies.

He visited Nigeria, Ghana, South Africa and Ethiopia and met with leaders at Nigeria’s CcHub (Bosun Tijani), Ethiopia’s Ice Addis (Markos Lemma) and did some meetings with fintech founders in Lagos (Paga’s Tayo Oviosu).

I know pretty well most of the organizations and people Dorsey talked to and nothing has shaken out yet in terms of partnership or investment news from his recent trip.

On what could come out of Dorsey’s 2020 move to Africa, per his tweet and news highlighted in this roundup, a good bet would be it will have something to do with fintech and Square.

More Africa-related stories @TechCrunch

African tech around the ‘net

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India’s Unacademy raises $50 million to grow its online learning platform

Big money continues to flow in India’s growing education market. Bangalore-based Unacademy, which operates an online learning platform to help millions prepare for competitive exams in India, has raised $50 million to further scale its reach.

The Series D financing round was led by Steadview Capital, Sequoia India, Nexus Venture Partners and Blume Ventures, with Unacademy’s own co-founders Gaurav Munjal and Roman Saini also participating in it. The new round means the startup has raised close to $90 million to date.

The four-year-old startup is aimed at students who are preparing for competitive exams to get into a college and those who are pursuing graduation-level courses. Unacademy allows students to watch live classes from educators and later engage in sessions to review topics in more detail. It has 10,000 registered educators and 13 million learners — up from 3 million a year ago.

The startup said it will use the new fund to expand the number of educators it has on the platform, and also add more exam courses, Unacademy CEO Munjal told TechCrunch. It will also improve its product and expand the team.

Unacademy began its journey as a YouTube channel, but has since expanded to its own app where it offers some courses for free and others through a recently launched subscription business. The subscription service — called Unacademy Plus Subscription — has 50,000 users.

Unacademy also maintains an archive of all the classes, giving students the option to reference older lectures at any time through the app. The startup says YouTube is still its largest distribution channel. Overall, the platform sees more than 100 million monthly views across the platforms.

“We are seeing unprecedented growth and engagement from learners in smaller towns and cities, and are also very humbled to see that top-quality educators are choosing Unacademy as their primary platform to reach out to students. In the last few months, we have taken bigger strides toward achieving this mission. We have more than 400 top educators from across the country taking live classes every day on Unacademy Plus. This is available to every student, irrespective of their location,” said Munjal.

Unacademy competes with unicorn Byju’s, which is widely believed to be the largest edtech startup in the world with its valuation nearing $4 billion. Byju’s, which has more than 2.4 million paid subscribers (and over 30 million users), offers courses for students in kindergarten to year 12, in addition to those preparing for competitive under graduation level courses.

India has the largest population in the world in the age bracket of 5 to 24 years. The education space in the nation is estimated to grow to $35 billion in the next six years.

In recent months, Unacademy has grown more aggressive with marketing. Last year it tied up with web-production house The Viral Fever to fund a show called “Kota Factory,” which revolves around the lives of students who are preparing to go to an engineering college. In the midst of it, Unacademy also offered low-cost, discounted subscription plans to attract users to its subscription platform.

Unacademy has presence in Indonesia as well, where as of last year, it had about 30 educators. The startup did not offer an update on how its international ambitions are holding up. A representative of Unacademy told TechCrunch recently that the platform does not rely on ads for monetization.

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pi-top’s latest edtech tool doubles down on maker culture

London-based edtech startup, pi-top, has unboxed a new flagship learn-to-code product, demoing the “go anywhere” Pi-powered computer at the Bett Show education fare in London today.

Discussing the product with TechCrunch ahead of launch, co-founder and CEO Jesse Lozano talked up the skills the company hopes students in the target 12-to-17 age range will develop and learn to apply by using sensor-based connected tech, powered by its new pi-top 4, to solve real world problems.

“When you get a pi-top 4 out of the box you’re going to start to learn how to code with it, you’re going to start to learn and understand electronic circuits, you’re going to understand sensors from our sensor library. Or components from our components library,” he told us. “So it’s not: ‘I’m going to learn how to create a robot that rolls around on wheels and doesn’t knock into things’.

“It’s more: ‘I’m going to learn how a motor works. I’m going to learn how a distance sensor works. I’m going to learn how to properly hook up power to these different sensors. I’m going to learn how to apply that knowledge… take those skills and [keep making stuff].”

The pi-top 4 is a modular computer that’s designed to be applicable, well, anywhere; up in the air, with the help of a drone attachment; powering a sensing weather balloon; acting as the brains for a rover style wheeled robot; or attached to sensors planted firmly in the ground to monitor local environmental conditions.

The startup was already dabbling in this area, via earlier products — such as a Pi-powered laptop that featured a built in rail for breadboarding electronics. But the pi-top 4 is a full step outside the usual computing box.

The device has a built-in mini OLED screen for displaying project info, along with an array of ports. It can be connected to and programmed via one of pi-top’s other Pi-powered computers, or any PC, Mac and Chromebook, with the company also saying it easily connects to existing screens, keyboards and mice. Versatility looks to be the name of the game for pi-top 4.

pi-top’s approach to computing and electronics is flexible and interoperable, meaning the pi-top 4 can be extended with standard electronics components — or even with Littlebits‘ style kits’ more manageable bits and bobs.

pi-top is also intending to sell a few accessories of its own (such as the drone add-on, pictured above) to help get kids’ creative project juices flowing — and has launched a range of accessories, cameras, motors and sensors to “allow creators of all ages to start learning by making straight out of the box”.

But Lozano emphasizes its platform play is about reaching out to a wider world, not seeking to lock teachers and kids to buying proprietary hardware. (Which would be all but impossible, in any case, given the Raspberry Pi core.)

“It’s really about giving people that breadth of ability,” says Lozano, discussing the sensor-based skills he wants the product to foster. “As you go through these different projects you’re learning these specific skills but you also start to understand how they would apply to other projects.”

He mentions various maker projects the pi-top can be used to make, like a music synth or wheeled robot, but says the point isn’t making any specific connected thing; it’s encouraging kids to come up with project ideas of their own.

“Once that sort of veil has been pierced in students and in teachers we see some of the best stuff starts to be made. People make things that we had no idea they would integrate it into,” he tells us, pointing by way of example to a solar car project from a group of U.S. schoolkids. “These fifteen year olds are building solar cars and they’re racing them from Texas to California — and they’re using pi-tops to understand how their cars are performing to make better race decisions.”

pi-top’s new device is a modular programmable computer designed for maker projects

“What you’re really learning is the base skills,” he adds, with a gentle sideswipe at the flood of STEM toys now targeting parents’ wallets. “We want to teach you real skills. And we want you to be able to create projects that are real. That it’s not block-based coding. It’s not magnetized, clipped in this into that and all of a sudden you have something. It’s about teaching you how to really make things. And how the world actually works around you.”

The pi-top 4 starts at $199 for a foundation bundle which includes a Raspberry Pi 3B+,16GB SD card, power pack, along with a selection of sensors and add-on components for starter projects.

Additional educational bundles will also launch down the line, at a higher price, including more add ons, access to premium software and a full curriculum for educators to support budding makers, according to Lozano.

The startup has certainly come a long way from its founders’ first luridly green 3D printed laptop which caught our eye back in 2015. Today it employs more than 80 people globally, with offices in the UK, US and China, while its creative learning devices are in the hands of “hundreds of thousands” of schoolkids across more than 70 countries at this stage. And Lozano says they’re gunning to pass the million mark this year.

So while the ‘learn to code’ space has erupted into a riot of noise and color over the past half decade, with all sorts of connected playthings now competing for kids’ attention, and pestering parents with quasi-educational claims, pi-top has kept its head down and focused firmly on building a serious edtech business with STEM learning as its core focus, saving it from chasing fickle consumer fads, as Lozano tells it.

“Our relentless focus on real education is something that has differentiated us,” he responds, when asked how pi-top stands out in what’s now a very crowded marketplace. “The consumer market, as we’ve seen with other startups, it can be fickle. And trying to create a hit toy all the time — I’d rather leave that to Mattel… When you’re working with schools it’s not a fickle process.”

Part of that focus includes supporting educators to acquire the necessary skills themselves to be able to teach what’s always a fast-evolving area of study. So schools signing up to pi-top’s subscription product get support materials and guides, to help them create a maker space and understand all the ins and outs of the pi-top platform. It also provides a classroom management backend system that lets teachers track students’ progress.

“If you’re a teacher that has absolutely no experience in computer science or engineering or STEM based learning or making then you’re able to bring on the pi-top platform, learn with it and with your student, and when they’re ready they can create a computer science course — or something of that ilk — in their classroom,” says Lozano.

pi-top wants kids to use tech to tackle real-world problems

“As with all good things it takes time, and you need to build up a bank of experience. One of the things we’ve really focused on is giving teachers that ability to build up that bank of experience, through an after school club, or through a special lesson plan that they might do.

“For us it’s about augmenting that teacher and helping them become a great educator with tools and with resources. There’s some edtech stuff they want to replace the teacher — they want to make the teacher obsolete. I couldn’t disagree with that viewpoint more.”

“Why aren’t teachers just buying textbooks?” he adds. “It takes 24 months to publish a textbook. So how are you supposed to teach computer science with those technology-based skills with something that’s by design two years out of date?”

Last summer pi-top took in $16M in Series B funding, led by existing founders Hambro Perks and Committed Capital. It’s been using the financing to bring pi-top 4 to market while also investing heavily in its team over the past 18 months — expanding in-house expertise in designing learning products and selling in to the education sector via a number of hires. Including the former director of learning at Apple, Dr William Rankin.

The founders’ philosophy is to combine academic expertise in education with “excellence in engineering”. “We want the learning experience to be something we’re 100% confident in,” says Lozano. “You can go into pi-top and immediately start learning with our lesson plans and the kind of framework that we provide.”

“[W]e’ve unabashedly focused on… education. It is the pedagogy,” he adds. “It is the learning outcome that you’re going to get when you use the pi-top. So one of the big changes over the last 18 months is we’ve hired a world class education team. We have over 100 years of pedagogical experience on the team now producing an enormous amount of — we call them learning experience designers.”

He reckons that focus will stand pi-top in good stead as more educators turn their attention to how to arm their pupils with the techie skills of the future.

“There’s loads of competition but now the schools are looking they’re [asking] who’s the team behind the education outcome that you’re selling me?” he suggests. “And you know what if you don’t have a really strong education team then you’re seeing schools and districts become a lot more picky — because there is so much choice. And again that’s something I’m really excited about. Everybody’s always trying to do a commercial brand partnership deal. That’s just not something that we’ve focused on and I do really think that was a smart choice on our end.”

Lozano is also excited about a video the team has produced to promote the new product — which strikes a hip, urban note as pi-top seeks to inspire the next generation of makers.

“We really enjoy working in the education sector and I really, really enjoy helping teachers and schools deliver inspirational content and learning outcomes to their students,” he adds. “It’s genuinely a great reason to wake up in the morning.”

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Ne-Yo wants to make Silicon Valley more diverse, one investment at a time

Dressed in a Naruto t-shirt and a hat emblazoned with the phrase “lone wolf,” Ne-Yo slouches over in a chair inside a Holberton School classroom. The Grammy-winning recording artist is struggling to remember the name of “that actor,” the one who’s had a successful career in both the entertainment industry and tech investing.

“I learned about all the things he was doing and I thought it was great for him,” Ne-Yo told TechCrunch. “But I didn’t really know what my place in tech would be.”

It turns out “that actor” is Ashton Kutcher, widely known in Hollywood and beyond for his role in several blockbusters and the TV sitcom That ’70s Show, and respected in Silicon Valley for his investments via Sound Ventures and A-Grade in Uber, Airbnb, Spotify, Bird and several others.

Ne-Yo, for his part, is known for a string of R&B hits including So Sick, One in a Million and Because of You. His latest album, Good Man, came out in June.

Ne-Yo, like Kutcher, is interested in pursuing a side gig in investing but he doesn’t want to waste time chasing down the next big thing. His goal, he explained, is to use his wealth to encourage people like him to view software engineering and other technical careers as viable options.

“Little black kids growing up don’t say things like ‘I want to be a coder when I grow up,’ because it’s not real to them, they don’t see people that look like me doing it,” Ne-Yo said. “But tech is changing the world, like literally by the day, by the second, so I feel like it just makes the most sense to have it accessible to everyone.”

Last year, Ne-Yo finally made the leap into venture capital investing: his first deal, an investment in Holberton School, a two-year coding academy founded by Julien Barbier and Sylvain Kalache that trains full-stack engineers. The singer returned to San Francisco earlier this month for the grand opening of Holberton’s remodeled headquarters on Mission Street in the city’s SoMa neighborhood.

Holberton, a proposed alternative to a computer science degree, is free to students until they graduate and land a job, at which point they are asked to pay 17 percent of their salaries during their first three years in the workforce.

It has a different teaching philosophy than your average coding academy or four-year university. It relies on project-based and peer learning, i.e. students helping and teaching each other; there are no formal teachers or lecturers. The concept appears to be working. Holberton says their former students are now employed at Apple, NASA, LinkedIn, Facebook, Dropbox and Tesla.

Ne-Yo participated in Holberton’s $2.3 million round in February 2017 alongside Reach Capital and Insight Venture Partners, as well as Trinity Ventures, the VC firm that introduced Ne-Yo to the edtech startup. Holberton has since raised an additional $8 million from existing and new investors like daphni, Omidyar Network, Yahoo! co-founder Jerry Yang and Slideshare co-founder Jonathan Boutelle.

Holberton has used that capital to expand beyond the Bay Area. A school in New Haven, Conn., where the company hopes to reach students who can’t afford to live in tech’s hubs, is in development.

The startup’s emphasis on diversity is what attracted Ne-Yo to the project and why he signed on as a member of the board of trustees. More than half of Holberton’s students are people of color and 35 percent are women. Since Ne-Yo got involved, the number of African American applicants has doubled from roughly 5 percent to 11.5 percent.

“I didn’t really know what my place in tech would be.”

Before Ne-Yo’s preliminary meetings with Holberton’s founders, he says he wasn’t aware of the racial and gender diversity problem in tech.

“When it was brought to my attention, I was like ‘ok, this is definitely a problem that needs to be addressed,’” he said. “It makes no sense that this thing that affects us all isn’t available to us all. If you don’t have the money or you don’t have the schooling, it’s not available to you, however, it’s affecting their lives the same way it’s affecting the rich guys’ lives.”

Holberton’s founders joked with TechCrunch that Ne-Yo has actually been more supportive and helpful in the last year than many of the venture capitalists who back Holberton. He’s very “hands-on,” they said. Despite the fact that he’s balancing a successful music career and doesn’t exactly have a lot of free time, he’s made sure to attend events at Holberton, like the recent grand opening, and will Skype with students occasionally.

“I wanted it to be grassroots and authentic.”

Ne-Yo was very careful to explain that he didn’t put money in Holberton for the good optics.

“This isn’t something I just wanted to put my name on,” he said. “I wanted to make sure [the founders] knew this was something I was going to be serious about and not just do the celebrity thing. I wanted it to be grassroots and authentic so we dropped whatever we were doing and came down, met these guys, hung out with the students and hung out at the school to see what it’s really about.”

What’s next for Ne-Yo? A career in venture capital, perhaps? He’s definitely interested and will be making more investments soon, but a full pivot into VC is unlikely.

At the end of the day, Silicon Valley doesn’t need more people with fat wallets and a hankering for the billionaire lifestyle. What it needs are people who have the money and resources necessary to bolster the right businesses and who care enough to prioritize diversity and inclusivity over yet another payday.

“Not to toot the horn or brag, but I’m not missing any meals,” Ne-Yo said. “So, if I’m going to do it, let it mean something.”

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Epic! raises $8 million to keep kids reading in a digital age

 The makers of Epic!, one of many apps jockeying to become a “Netflix for books,” have raised $8 million in a round led by Reach Capital, the education-specialized venture firm. Epic! at its core is an on-demand digital library that includes about 25,000 different books and videos appropriate for kids in elementary school, or between the ages of about five and twelve. Read More

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