Egypt
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Y Combinator, 500 Startups, Plug and Play invest in Odiggo’s $2.2M seed round
Servicing one’s car personally is a time-consuming, expensive and painstaking process. It’s a cycle that can lead to more expensive repairs and safety issues down the line, and no car owner likes that.
Egypt and Dubai-based auto tech startup Odiggo is a platform addressing this problem. It allows car owners to get the help they need by finding car services and parts suppliers from providers around them. Then for the suppliers, it increases their sales and reaches more customers without necessarily spending on marketing.
Odiggo is part of the current YC Summer batch and has secured a $2.2 million seed round before Demo Day. The rosters of existing investors participating in the round are Y Combinator, 500 Startups, and Plug and Play Ventures. Regional VCs like Seedra Ventures, LoftyInc Capital, and Essa Al-Saleh (CEO of Volta-Tucks) also took part.
Ahmed Omar and Ahmed Nasser launched Odiggo in December 2019. The company operates a marketplace that connects car owners with service providers who can solve their problems, from servicing and repair to washing and maintenance. A commission-based model is used and Odiggo charges the car suppliers 20% commission on every transaction.
Over 50,000 car owners across three markets — Egypt, the UAE and Saudi Arabia — use Odiggo. The company also works directly with over 300 merchants. It claims merchant numbers have grown 40% month-on-month while its user base has increased 200% since the start of the pandemic.
“We believe we are at a watershed moment. It is incredible that since COVID hit, Odiggo has experienced over 10 times growth in the last year,” said co-founder Omar.
CEO Omar said with this new round, Odiggo’s priority will be to attain consistent growth while expanding its team across the UEA, Saudi Arabia and Egypt.
L-R: Ahmed Nassir (co-founder) & Ahmed Omar (co-founder and CEO)
He adds that since Odiggo taps into a mix of data sources — including car metrics and internal software, it will use that same information to provide more product offerings.
Odiggo will use part of the funding to continue developing its tech and dashboard software, he said.
“For example, the platform would be hooked up to the car owner’s vehicle and link the vehicle to the marketplace and provide frequent updates of your vehicle condition so you’ll be informed if the tires are low, the oil needs changing, or if a service is required.”
The pandemic has upended the mobility and logistics sectors, especially in MENA, making players like Odiggo gain much visibility from investors. In an industry today worth over $61 billion in the Middle East and Africa alone, Odiggo is looking to become a market leader. It has even more lofty plans to go public in the next three years.
“We are also aiming to be fully focused on spending more on our product and technology, as building an ecosystem to monetize requires more capital. Our target is to go for IPO by 2024 and achieve one billion services booked, and this requires a lot of network effects, infrastructure and technology,” the CEO said.
“We aim to be the first $100 billion company coming out of the region,” added Nasser.
Some of its investors, Idris Ayodeji Bello, managing partner at LoftyInc, and Essa Al-Saleh, are onboard with the startup’s plan despite early days.
“We are excited to back Odiggo through our Afropreneurs Funds in its quest to transform the automotive parts market and provide superior service to clients, starting from MENA. The leadership team of Omar and Nasser, supported by the rest of the employees, have been a joy to work with and we are on a countdown to the IPO,” said Bello in a statement.
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Egyptian ride-sharing company Swvl plans to go public in a $1.5B SPAC merger
Cairo and Dubai-based ride-sharing company Swvl plans to go public in a merger with special purpose acquisition company Queen’s Gambit Growth Capital, Swvl said Tuesday. The deal will see Swvl valued at roughly $1.5 billion.
Swvl was founded by Mostafa Kandil, Mahmoud Nouh and Ahmed Sabbah in 2017. The trio started the company as a bus-hailing service in Egypt and other ride-sharing services in emerging markets with fragmented public transportation.
Its services, mainly bus-hailing, enables users to make intra-state journeys by booking seats on buses running a fixed route. This is pocket-friendly for residents in these markets compared to single-rider options and helps reduce emissions (Swvl claims it has prevented over 240 million pounds of carbon emission since inception).
After its Egypt launch, Swvl expanded to Kenya, Pakistan, Jordan and Saudi Arabia. The company also moved its headquarters to Dubai as part of its strategy to become a global company.
Swvl offerings have expanded beyond bus-hailing services. Now, the company offers inter-city rides, car ride-sharing, and corporate services across the 10 cities it operates in across Africa and the Middle East.
Queen’s Gambit, the women-led SPAC in charge of the deal, raised $300 million in January and added $45 million via an underwriters’ overallotment option focusing on startups in clean energy, healthcare and mobility sectors.
The statement also mentions a group of investors — Agility, Luxor Capital and Zain Group — which will contribute $100 million through a private investment in public equity, or PIPE.
Per Crunchbase, Swvl has raised over $170 million. From an African perspective, Swvl features as one of the most venture-backed startups on the continent. The company has been touted to reach unicorn status in the past and will when this SPAC merger is completed.
The company will aptly trade under the ticker SWVL. The listing will make it the first Egyptian startup to go public outside Egypt and the second to go public after Fawry. It will also make the mobility company the largest African unicorn debut on any U.S.-listed exchange, beating Jumia’s debut of $1.1 billion on the NYSE. In the Middle East, Swvl joins music-streaming platform Anghami as the second startup to go public via a SPAC merger.
Swvl had annual gross revenue of $26 million in 2020, according to the statement, and the company expects its annual gross revenue to increase to $79 million this year and $1 billion by 2025 after expanding to 20 countries across five continents.
On why Queen’s Gambit picked Swvl for this deal, Victoria Grace, founder and CEO, said in a statement that the company fit the profile of what she was looking for: “a disruptive platform that solves complex challenges and empowers underserved populations.”
“Having established a leadership position in key emerging markets, we believe Swvl is ready to capitalize on a truly global market opportunity,” she added.
In May, TechCrunch wrote that SPACs didn’t target African startups for several reasons, including a lack of global appeal and private capital and market satisfaction. Judging by Grace’s comments, Swvl has that global appeal and is ready to venture into the public market despite being in operation for just four years.
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Bosta raises $6.7M to expand e-commerce delivery business across Africa and MENA
Per a recent report by Bain & Co., e-commerce is expected to grow to $28.5 billion in MENA by 2022 from a 2019 value of $8.3 billion. Egypt, one of the most active e-commerce countries in the region, is anticipated to grow 33% annually to reach $3 billion by 2022.
But for any e-commerce business to thrive, its last-mile delivery arm has to be well figured out. Bosta is one such company in Egypt helping small businesses with logistics and last-mile delivery. Today, the company is announcing it has closed a Series A investment of $6.7 million. U.S. and Middle East VC firm Silicon Badia led the round, with participation from 4DX Ventures, Plug and Play Ventures, Wealth Well VC, Khwarizmi VC, as well as other regional and global investors.
This investment comes a year after the company raised a $2.5 million round, which takes its total investment raised to $9.2 million.
Bosta was launched in 2017 by Mohamed Ezzat and Ahmed Gaber. The company offers next-day delivery to customers and handles exchange shipments, customer returns and cash collection.
The idea for Bosta came during Ezzat’s time at Lynks, his previous consumer goods startup. Lynks, the first YC-backed company from Egypt, allows people in Egypt to buy brands from the U.S., China and the U.K.
As co-founder and COO at Lynks, Ezzat was responsible for logistics, international clearance and last-mile delivery. In 2016, Egypt experienced an economic downturn coupled with the Egyptian pound devaluation and government restriction on imports. For Lynks it meant slow growth, but Ezzat was concerned about fixing the last-mile delivery bit, which, according to him, was a huge pain point.
“My nightmare was always the last mile. And at that time, you know that e-commerce is still very, very small. So it’s only 1% of the whole retail value,” he told TechCrunch. “So I was always thinking, how come if we want the e-commerce to grow, and we don’t have any strong company when it comes to last-mile because, in the end, every transaction on an e-commerce platform is a transaction on a courier platform.”
E-commerce is a fragmented sector where 80% of transactions come from small businesses selling on Facebook, Instagram and social media in general. Most of these businesses lack a strong delivery experience, and Ezzat left Lynks the following year to start Bosta.
Being in the parcel delivery industry, Bosta wants to help these companies to grow profitably. It also tries to simplify logistics and allow its customers to have full control over the delivery process.
“You can use Bosta to get anything to your doorstep. You buy in our local currency, and we buy everything, handle the shipping, customs, clearance and bring it to your doorstep,” the CEO added.
The company doesn’t own fleets of vehicles to carry out operations. Instead, it operates an Uber-like model where drivers sign up, are made contractors and make money when a delivery is completed.
Since 2017, the company has delivered more than 4 million packages to businesses, more than half since the pandemic outbreak last year. Bosta completes more than 300,000 deliveries per month, which is a 3.5x increase from when it raised its previous round, Ezzat stated. He also claims that more than 2,200 businesses use its platform daily and achieve a 95% delivery success rate.
Asides from small businesses, Bosta works with major e-commerce platforms like Souq (an Amazon company) and Jumia. Depending on the volume of goods transported, Bosta charges small businesses about 35-40 Egyptian pounds, while the big players are charged less, at 20-25 Egyptian pounds.
Speaking on the investment, Fawaz H Zu’bi said in a statement: “E-commerce has always had amazing potential in our region but was always being held back by something whether payments, logistics, market fragmentation, or customer adoption. We are excited to finally see companies like Bosta emerge to tackle some of these issues and help e-commerce realize its full promise and potential in a region that has now ‘turned on’ digitally.”
In the next two years, Bosta plans to deliver more than 15 million parcels in Egypt and serve over 20,000 businesses. The funds will be used for those causes, as well as expanding operations across Africa, MENA and the GCC.
“The investment is to dominate Egypt,” said Ezzat. “We want to make sure that we deliver the next day across Egypt, not just in Cairo, where we currently do. And to be a market leader when it comes to e-commerce on the continent and be profitable. This is the main target for us now and also to start operations in Saudi Arabia.”
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Andela begins global expansion in 37 countries months after going remote across Africa
More than a year after the pandemic began, remote work shows no signs of going away. While it has its cons, it remains top of mind for potential employees around the world before joining a new company.
But while most people in Africa still go to physical offices despite the pandemic, a few companies have nevertheless embraced this concept. Andela, a New York-based startup that helps tech companies build remote engineering teams from Africa, was one of the first to publicly announce it was going remote on the continent.
Today, it is doubling down on this effort by announcing the global expansion of its engineering talent. Over the past six months, the company has seen a 750% increase in applicants outside Africa. More than 30% of Andela’s inbound engineer applications also came from outside the continent in March alone. Half this number came from Latin America while Africa saw a 500% increase in applications as well.
When Andela launched in 2014, it built hubs in Nigeria, Kenya, Rwanda and Uganda to source, vet and train engineers to be part of remote teams for international companies. It also tested satellite models in Egypt and Ghana as substitutes to physical hubs.
The company would issue a call for applications, select a few (less than 1%), pay them a salary for the first six months and provide them with housing and food. It also helped developers improve their skills via training and mentorship. Over 100,000 engineers have taken part in the company’s learning network and community, and, as of 2019, Andela had more than 1,500 engineers on its payroll.
However, after noticing that this model wasn’t sustainable, it began to make changes.
In September 2019, it let go of 420 junior engineers across Kenya, Uganda and Nigeria. Nine months later, citing the pandemic, it laid off 135 employees while introducing salary cuts for senior staff. But despite the layoffs, the pandemic provided some form of clarity to how Andela wanted to operate — which was remote, judging by the success of the satellite models.
“In the very beginning, a developer had to be in Lagos to work with Andela. Then it became living in Nigeria. Then Kenya. Then Uganda, Rwanda,” CEO Jeremy Johnson told TechCrunch. “Before the pandemic, Andela was opening applications in country after country. The pandemic came and changed that as we opened up to the entire continent.”
Shutting down its existing physical campuses and going remote also helped the company focus on getting engineers with more experience to meet its clients’ requirements. That experiment, which the company conducted in less than a year, is also part of its mission to be a global company.
“That went so well and we thought ‘what if we accelerated it now that we’re remote and just enable applicants from anywhere?’ because it was always the plan to become a global company. That was clear, but the timing was the question. We did that and it’s been an amazing experiment,” Johnson added.
Now with its global expansion, its clients can tap into regional expertise to support international growth.
According to a statement released by the firm, it currently has engineers from 37 countries across Africa, Asia, Latin America, North America and Europe.
Johnson didn’t go into details about how many of these engineers are getting jobs from Andela or even its total developer count. He’s more interested in helping its clients solve the diversity issues that have plagued many Western corporations.
Andela is currently working with eight companies that have hired its engineers in Latin America and Africa. In addition to the diversity play, the CEO says that means Andela engineers get to prove themselves on a global playing field in a way the company has “always wanted to see.”
Andela serves more than 200 customers, including GitHub, ViacomCBS, Pluralsight, Seismic, Cloudflare, Coursera and InVision. GitHub is one company that seems to be benefitting from Andela’s new offerings. The company’s VP of Engineering, Dana Lawson, in a statement said, “As a business in the developer tool space, a lot of us are trying to enter those areas of the world (Southeast Asia, Latin America and Africa) where the emergent developers are coming so we can better understand their needs. Having a local presence there with amazing talent is super valuable to building a global product.”
Image Credits: Andela
In its quest to become a global company, going up against competition is unavoidable for the seven-year-old company. But since most of these companies are horizontal marketplaces (providing a wide range of expertise), whereas Andela is vertical, Johnson believes there’s enough market share to be acquired by the company.
“We are focused on building digital products, and because of that, we’re able to do more, essentially, for our customers… That’s where our focus is — [building long-term relationships] and around building great digital products,” the CEO said.
The company was founded by Jeremy Johnson, Christina Sass, Nadayar Enegesi, Ian Carnevale, Brice Nkengsa and Iyinoluwa Aboyeji. It has raised more than $180 million (up to Series D) from firms like Chan Zuckerberg Initiative, Generation Investment Management, Google Ventures and Spark Capital, at a valuation of about $700 million.
While announcing the layoffs last year, Andela said it was on an annual revenue run rate of $50 million. But when asked how this number has changed over the past year, Johnson said the company is “growing at a healthier pace as we’ve ever had.”
The future of remote work is global and Johnson believes Andela provides the vital link to talent wherever it is found. The company’s head of talent operations, Martin Chikilian, echoed similar sentiments regarding the expansion.
“We’ve seen exponential growth and interest from engineers from across Africa who want to work with some of the world’s most exciting technology-focused companies,” he said. “Growing our network of talent from Africa to include more markets is a unique proposition and we continue to match talent with opportunity beyond geographical boundaries.”
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Egypt’s customer engagement platform for F&B brands in MENA, Koinz, raises $4.8M seed
As the restaurant industry across different cities was massively hit by the pandemic-induced lockdowns last year, food aggregator platforms helped by driving online customers to them.
Koinz is one such startup in Egypt. Its value for food and beverages brands before, during and after the lockdowns has bagged the startup a $4.8 million seed round.
Founded in 2018 by Hussein Momtaz, Ahmed Said and Abdullah Al Khaldi, Koinz set out to solve two major problems in Egypt’s food aggregation industry.
The offline and online food and restaurant experience in the country are totally separate. Most food aggregators who deal with delivery tend to focus on the online customer, and there’s no sophisticated experience for the offline customer.
Next, the unit economics of the food aggregation industry is quite challenging. According to Momtaz, the startup’s CEO, the food aggregation industry usually takes about 25%-30% average commission from F&B players for business to start to make sense.
“This is not because they want to squeeze money from the hands of restaurants or brands,” Momtaz told TechCrunch. “But the cost of acquiring customers and retaining them for the food aggregator itself is very high; that’s why they need very high commissions from the brands or restaurants.”
This is where Koinz comes in. The company developed a mobile app for takeout and delivery orders that manages offline customer experiences while delivering an engagement platform to manage loyalty programs, customer feedback and analytics about the online and offline customer base.
Abdullah Al Khaldi (CRO), Hussein Momtaz (CEO), and Ahmed Said (CTO). Image Credits: Koinz
Online food experience for Koinz customers is like a treasure hunt, and Momtaz claims the company’s business model has cracked the industry’s unit economics. This, alongside providing brands with insights, differentiates the platform from other aggregators and makes its customer acquisition cost and retention cost 60% less than most of them.
Here’s how the platform works. When customers visit a brand using for the first time, they enter their phone numbers to instantly receive points for their order via text message. After various restaurant visits and making orders, they accumulate enough points. They’ll need to download the Koinz mobile application to redeem them, thereby converting these offline customers to online ones.
Furthermore, these offline customers can now discover new places to eat, read and leave reviews, and order delivery or takeout.
“None of the small or big brands in the region had something like this before. The offline customer is like a ghost. He walks into the brands, takes his orders and leaves without the brands knowing anything about him. Koinz is changing that,” the CEO remarked.
Building its platform this way, Koinz tries to be different from other online aggregators that erode restaurant owners’ profit margins while delivering limited customer access and interaction. How? By collecting real-time data and leveraging a digital rewarding system designed to drive customers to deepen their relationship with restaurants.
Image Credits: Koinz
Brands can configure their gifts lists and determine for which items customers can redeem their points. For instance, customers in an Egyptian restaurant called Buffalo Burger can exchange 68 points for a Diablo Fries Medium; or wait till they get to 160 points to get a Mozzarella Sticks Medium; or 236 points for a Double Diggler.
Similarly, every brand has its own configuration. A customer cannot get points in Buffalo Burger and redeem them at Hamburgini. Koinz charges subscriptions to the brands for its engagement and feedback platform and collects commission whenever an order is made via its platform, which varies across its markets.
Because of its original business model, Koinz had to iterate several times. Before using phone numbers to collect customers’ information, the company used QR codes and NFC tags. Momtaz says this was highly ineffective, and the move to phone numbers helped skyrocket its growth and value.
The six-man team back in 2018 is now 80, and the platform, which is basically powering the growth of restaurants in the Middle East, claims to have had up to 4 million consumers earn points on its platform. These consumers have redeemed almost 300,000 rewards, while almost 800,000 customers have left reviews.
Since launching in Egypt, Koinz has expanded to Saudi Arabia and the UAE. Like Egypt, these markets have similar dynamics and demographics. They have also witnessed one of the highest rates of new or increased users in online deliveries — restaurant products and groceries — during the pandemic.
Besides, consumers in the Middle East are outpacing the global appetite in food delivery, with 64% ordering in at least once a week compared to 40% made by global consumers. And with the fast-food industry in MENA estimated at nearly $31 billion in 2020 and expected to reach nearly $60 billion by 2025, there’s so much room for Koinz to grow in the region. Momtaz says the company is also considering a move to Sub-Saharan Africa in the near future despite them having distinct demographics.
Entrepreneur and investor Justin Mateen led this seed round. Since leaving Tinder in 2014, Mateen has been an active investor in early-stage companies. Koinz is his first investment in the MENA region. According to him, Koinz’s ability to allow food and beverages brands to understand their customers’ needs and simultaneously increase their profit margins was one of the reasons he invested in the Egyptian-based startup.
“The company’s unique business model will continue to scale as the food delivery space evolves. Hussein’s drive and excitement for what the team is building are what convinced me to lead a round in the Middle East for the first time,” Mateen added.
African-focused VC 4DX Ventures and strategic angel investors from Egypt, Turkey and Saudi Arabia participated as well.
Peter Orth, co-founder and managing director of the firm, said of the investment that with restaurants in the region suffering under the traditional aggregator model, especially during the pandemic, Koinz has quickly become a win-win for both consumers and restaurant owners across the Middle East.
As the three-year-old company plans to use the capital to hire more talent and fuel its expansion across the Middle East, Mateen and Orth will join its board of directors.
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Former Apple engineer and autocorrect creator builds his first app, a word game called Up Spell
Former Apple software engineer and designer Ken Kocienda, whose work included the original iPhone and the development of touchscreen autocorrect, has created his first iOS app, Up Spell. The fast-paced, fun word game challenges users to spell all the words you can in two minutes and uses a lexicon of words Kocienda built to allow for the inclusion of proper names. A portion of app revenues are also being donated to a local food bank, so you can help give back while relieving stress through gaming.
Kocienda says he had never before made a standalone iOS app.
When he worked at Apple, all the code he wrote was integrated into a bigger iOS release. So when Kocienda got the idea to develop a game, he looked to obvious sources of inspiration: his past experiences with typing, keyboards and autocorrect.
The game’s lexicon was built first with the New General Service List to serve as its foundation. This was followed by weeks of writing small programs to generate lists of candidate words — like, by adding an “S” to existing words to pluralize them, for example. And hours more were spent scanning lists to choose the words to include.
Kocienda says he also wanted the game to be fun, and personally found it frustrating that other word games wouldn’t allow proper names.
“Many games accept words like PHARAOH and PYRAMID, but not NILE or EGYPT. This doesn’t make sense to me. These are all words!,” he says.
So he built his own list that includes thousands of proper names, then added to it more slang and contractions to expand it even further. That means you can spell a word like S’MORES, which involves an apostrophe, for example.
Image Credits: Up Spell
While support for a variety of words, including proper names, is the key way the gameplay differentiates from rivals, the app’s business model is also one that’s becoming less common these days: it’s a one-time paid download.
The app is a $1.99 download that lets you pay once to play forever. Today, many games in this same space use a freemium model where the app download itself is free, but you’re then nagged with in-app hooks to buy coins or tokens to advance gameplay or unlock certain features.
Kocienda’s decision to forgo this model was intentional, he explains.
“I made Up Spell a two-minute game without much in the way of gameplay gimmicks,” says Kocienda. “You just spell words. 2020 has been a rough year for everyone, and sometimes taking out two minutes to think about nothing but spelling a few words is just the kind of right kind of stress reliever,” he adds. “I hope Up Spell brings people a little unexpected happiness to their 2020.”
Also of note, 25 cents per download is being donated to the San Francisco-Marin Food Bank, which works to get food to vulnerable people in Kocienda’s area.
If all goes well, Up Spell may be followed by other games with a similar model, like a sounds or color-matching games, for instance.
The new game is a one-time paid download on the App Store.
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Africa’s top mobile phone seller Transsion lists in Chinese IPO
Chinese mobile phone and device maker Transsion has listed in an IPO on Shanghai’s STAR Market, a Transsion spokesperson confirmed to TechCrunch.
Headquartered in Shenzhen, Transsion is a top seller of smartphones in Africa under its Tecno brand. The company has also started to support venture funding of African startups.
Transsion issued 80 million A shares at an opening price of 35.15 yuan (≈ $5.00) to raise 2.8 billion yuan (or ≈ $394 million).
A shares are the common shares issued by mainland Chinese companies and are normally available for purchases only by mainland citizens.
Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application is available on the Shanghai Stock Exchange’s website.
STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that went live in July with some 25 companies going public.
Transsion plans to spend 1.6 billion yuan (or $227 million) of its STAR Market raise on building more phone assembly hubs, and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said.
To support its African sales network, Transsion maintains a manufacturing facility in Ethiopia. The company recently announced plans to build an industrial park and R&D facility in India for manufacture of phones to Africa.
The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.
Listing on STAR Market puts Transsion on China’s new exchange — seen as an extension of Beijing’s ambition to become a hub for tech startups to raise public capital. Chinese regulators lowered profitability requirements for the STAR Market, which means pre-profit ventures can list.
Transsion’s IPO comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.
Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.
Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.
On a 2019 research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.
In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.
Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.
Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.
This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya and South Africa — thousands of ventures are building business models around mobile-based products and digital applications.
If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.
Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular as the Shenzhen company moves more definitely toward venture investing.
In August, Transsion-funded Future Hub teamed up with Kenya’s Wapi Capital to source and fund early-stage African fintech startups.
China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.
Transsion’s IPO is the second event this year — after Chinese owned Opera’s venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.
So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.
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What is Andela, the Africa tech talent accelerator?
As someone who covers Africa’s tech scene, I’m frequently asked about Andela . That’s not surprising, given the venture gets more global press (arguably) than any startup in Africa.
I’ve found many Silicon Valley investors have heard of Andela but aren’t exactly sure what it does.
In a bite, Andela is Series D stage startup―backed by $180 million in VC―that trains and connects African software developers to global companies for a fee.
The revenue-focused venture is often misread as a charity. In 2017, Andela CEO Jeremy Johnson described the organization as “a mission-driven for-profit company” ― a model for the concept “that you can actually build businesses that create real impact.”
I asked Johnson recently to clarify the objective behind Andela’s drive. “It’s the exact same mission as when we started, based around our founding principle… that brilliance and talent are distributed equally around the world, but opportunity is not,” he said.
“We’re about breaking down the walls that prevent brilliance and opportunity from connecting to each other.”
A major barrier for Africa’s software engineers, according to Johnson, is simply the fact that the continent has been totally off the network that companies look to for developer talent.
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Andrew Ng’s AI companies expand to Medellin, Colombia
After his tenure as chief scientist at Baidu, Andrew Ng, the founder of the Google Brain project and former CEO of Coursera, set up a number of different projects that all focus on making AI more approachable. These include the education startup Deeplearning.ai, the AI Fund startup studio for building AI companies and Landing.ai, which helps enterprises (and especially manufacturing companies) use AI. Today, Ng announced he has opened a second office for these projects in Medellin, Colombia.
At first, Medellin may seem like an odd choice. But today’s Medellin is very different from the one you may have seen on Narcos (and a lot safer). It’s home to a number of universities and, over the course of the last few years, it’s a hub for Colombia’s startup scene thanks to incubators like Ruta N and others.
Ng told me that he chose Medellin after looking at a wide range of cities in Europe, Asia and Latin America. Medellin, he believes, offers a strong talent pool, educational system and business ecosystem. It also helps that the Colombia government has made tech a focus in recent years.
“I see early signs of momentum for Colombia being a talent magnet both regionally and globally,” he told me. Indeed, the company was able to hire team members from Poland, Bangladesh, Egypt and Chile for its offices in Medellin, which now has just under 50 people. Over the course of the next two years, Ng plans to expand this team to between 150 and 200 employees.
It’s important, Ng argues, that we set up AI hubs outside of Silicon Valley and China, in part, because they’ll provide a different perspective. “We are able to share our AI ecosystem and Silicon Valley know-how with Medellín,” he writes in today’s announcement. “We’re equally thrilled for our Silicon Valley team to be learning from the Medellín community. Local knowledge and innovation shared with a global community is what will catapult the technology forward.”
The teams in Medellin will work on all of Ng’s projects, including four unannounced stealth portfolio companies that are looking into using AI in sectors like healthcare, education and customer support. In total, the teams in Medellin are working on about a dozen projects right now. And that’s very much Ng’s approach to AI — and for Landing.ai in particular: build lots of specialized components for various verticals that can then be generalized. “AI isn’t some piece of SaaS software that everybody can just swipe their credit card and use,” he said.
Andrew Ng will also join us for our first TechCrunch Sessions: Enterprise event in San Francisco on September 5 to talk about Landing.ai and the future of AI in general. You can find more information about the event (and buy tickets) here.
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Africa’s top mobile phone seller Transsion to list in Chinese IPO
Chinese mobile-phone and device maker Transsion will list in an IPO on Shanghai’s STAR Market, Transsion confirmed to TechCrunch.
The company — which has a robust Africa sales network — could raise up to 3 billion yuan (or $426 million).
“The company’s listing-related work is running smoothly. The registration application and issuance process is still underway, with the specific timetable yet to be confirmed by the CSRC and Shanghai Stock Exchange,” a spokesperson for Transsion’s Office of the Secretary to the Chairman told TechCrunch via email.
Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application available on the Shanghai Stock Exchange’s website.
STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that also went live in July with some 25 companies going public.
Headquartered in Shenzhen — where African e-commerce unicorn Jumia also has a logistics supply-chain facility — Transsion is a top-seller of smartphones in Africa under its Tecno brand.
The company has a manufacturing facility in Ethiopia and recently expanded its presence in India.
Transsion plans to spend the bulk of its STAR Market raise (1.6 billion yuan or $227 million) on building more phone assembly hubs and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said.
Transsion recently announced a larger commitment to capturing market share in India, including building an industrial park in the country for manufacture of phones to Africa.
The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April.
Listing on the STAR Market will put Transsion on the freshly minted exchange seen as an extension of Beijing’s ambition to become a hub for high-potential tech startups to raise public capital. Chinese regulators lowered profitability requirements for the exchange, which means pre-profit ventures can list.
Transsion’s IPO process comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.
Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.
Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.
On a recent research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.
In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.
Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.
Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.
This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya, and South Africa — thousands of ventures are building business models around mobile-based products and digital applications.
If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.
Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular if the Shenzhen company moves strongly toward venture investing.
China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.
Transsion’s IPO move is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.
So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.
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