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

Published December 2, 2019

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.

Nigeria’s Interswitch confirms $1B valuation after Visa investment

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.

Opera’s Africa fintech startup OPay gains $120M from Chinese investors

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

Sick of your ISP? Wander is rolling out in LA with a $25-per-month, wireless high-speed service

Published October 23, 2019

Harnessing new networking technologies that can turn any real estate developer into their own wireless internet service provider, Wander is launching a $25 per month high-speed networking service for the lucky citizens of Santa Monica, Calif.

The brainchild of a former Disney analyst, David Fields, and a former Intuit engineer, Dan Rahmel, Wander uses low-cost wireless hardware and proprietary software to bring last-mile wireless Internet to a customer’s home.

“The idea behind Wander was created around some deep frustration with the net neutrality repeal,” says Fields. “We could look at utilizing some of the existing wireless infrastructure and cover that last mile at a fraction of the cost… we have a strong perspective on the data demands of consumers.”

The problem, as Fields sees it, is that internet service providers are over-billing for capacity that most consumers don’t even use. As an August report from The Wall Street Journal revealed, high-speed internet just isn’t worth it.

Traditional internet service providers are marketing high-speed internet at 200 to 1K megabits per second, while average homes use less than 5 megabits per second during peak usage times, according to a report from the networking infrastructure technology provider, Cisco.

Even with streaming services, the average customer is going to use less than 15 megabits per second by 2022, according to some projections. Wander’s existing service will provide 50 megabits per second.

“We see an ability to come out in market and deliver to 99% of consumers something that is a package that more than covers their streaming needs, their connected home needs,” says Fields.

Using existing fiber infrastructure and low-cost wireless transmitters from companies like Ubiquiti, Wander is driving down costs and pitching real estate developers on a new way to make money.

The company already has signed deals with property managers and developers to gain access to 200 buildings across Santa Monica and Van Nuys, Calif. Those locations will be the first commercial testing grounds for Wander’s pitch.

Shutters and the Santa Monica Pier during 2006 TV Land Awards – Affiliate Dinner at Shutters on the Beach in Santa Monica, Calif., United States (Photo by Jason Merritt/FilmMagic for Nickelodeon Television)

“Think of the way we partner with them as a two-pronged approach. For the value of bringing the rooftop real estate to the Wander network, they get a share of the subscribers that are tapping into that rooftop real estate. They can have their property management teams acquire customers for us and that revenue share is incremental for them,” Fields says.

Basically, Wander owns and operates the network and gives real estate owners a share of the revenue coming in.

At launch, Wander will be able to cover about 20,000 homes in the Santa Monica area using the company’s point to multi-point networking services, which have a range of about half-a-mile.

Fields stresses that improving customer service is just as important as lowering prices at Wander. The company gives users access to a Wander dashboard that provides information about network performance and uptimes, and the average megabits per second that a home uses, as well as its peak consumption.

“That dashboard provides you with a look into the network as well,” says Fields.

The service costs $25 per month along with a $3 fee for the company’s proprietary, mesh-capable router (which is important because to ensure uptimes Wander built software that monitors and resolves performance issues on the fly, the company said).

The company raised a small, strategic round of financing from venture investors and strategic angel investors, including: Distributed Global, an infrastructure-focused investment firm, and individuals like Eric Bender, co-founder of Wilcon, fiber and data center business which sold to Crown Castle; and Michael Barker, founder and CEO of Barker Pacific Group, a real estate holding company. Other angels include Louis Beryl, founder and CEO of Earnest, and Jeff Morris Jr., former director of Product at Tinder.

“With 97% profit margins, it’s no secret that traditional ISPs overcharge and underdeliver,” said Bender, in a statement. “Wander’s unique and affordable model is bringing next-generation internet to an industry that has relied on dated technology, outrageous and unexpected fees and poor customer service. I’m excited to be supporting Wander as a pioneering internet provider that is equally focused on building a happy customer base.”

While Santa Monica, and greater Los Angeles are the company’s first markets, Wander intends to… well… wander to other parts of the country where its services can make the most sense.

“We want to use a data-driven approach to the next set of sub-markets that we’re going to go into,” says Fields. “Some of these places will be less interesting than the suburban to urban mix where 5G is not going to propagate, where they have one or at most two internet options today.”

To see if a home is among the lucky few that qualifies for Wander’s low-cost services now, check out wander.net/live. Subscribers who sign up within the next 30 days will get their first month free.

Starry launches pilot program with Boston Housing Authority to expand affordable internet access

Published August 9, 2018

Internet service provider Starry announced today the launch of its Starry Connect program with a pilot through Boston Housing Authority (BHA) to help provide free access to internet for residents living in one of the city’s public housing apartment complexes.

The Boston-based startup launched in 2016 with a plan to provide internet access through a spoke-and-wheel system of transmitters and access points. This point-to-multipoint system uses a phased array laser on top of a city building to send a 5G signal out that users can connect to via Starry Points that can be installed at a window or personal roof.

“Access to high-speed broadband is critical for education, communication, and personal and professional development, and yet today, many people still lack access to a basic, affordable, and reliable internet connection,” said Chet Kanojia, co-founder and CEO, in a statement. “That’s why we’re excited to partner with the Boston Housing Authority to devise creative solutions to help get more of their residents online and engaged with the critical services they need.”

With the program Starry launched today, residents of the public housing apartment building will be able to access free Wi-Fi in the building’s common area, hallways and new computer lab.

Virginia Lam Abrams, Starry senior vice president of communications and government relations, told TechCrunch that some residents may also be able to access the signal in their rooms, but the primary focus for this installation is to provide common area access for these primarily elderly and disabled residents.

Because Starry Connect’s pilot launch in the BHA building is part of the Boston public housing system, residents will receive free connection, but Starry also has plans to provide low-cost pricing options for residents living in affordable housing, as well.

The program has no set end date, says Abrams, but the company has plans to check in with residents in a few months to see where the program is succeeding and where it can be improved. Following this initial pilot launch, Abrams says that Starry has hopes to expand into other BHA communities, as well as public and affordable housing in other U.S. cities.

Since its launch, the startup has expanded into Los Angeles and Washington, D.C., and following a $100,000 million funding round it closed this July, has plans to scale and expand into more cities in the coming year, including Houston, Chicago, San Francisco and Portland, Ore.

Necto looks to help individuals get their own local ISP businesses off the ground

Published May 10, 2018

If you live in a city, you’re probably deciding between a handful of major broadband or wireless carriers — maybe something like Comcast or AT&T. But there’s a good chance that there are a bunch of local carriers that are looking to get off the ground, and Benjamin Huang wants to help make sure there are even more options/.

That’s the idea behind Necto, a startup looking to create a sort of ISP school to help people get started with their own internet service provider founded by Huang and Adam Montgomery. Typically that’s a pretty tall order, but Necto works with individuals to learn how to build a network, get the right equipment, and deploy it in order to get consumers access to a new internet service provider that’s an alternative to the larger carriers. There are already emerging providers like Sonic in San Francisco, which aims to offer quick internet for a cheaper price, but there’s a whole group of individuals waiting in the wings that are trying to build their own ISP and the associated business behind it, Huang said. Necto is launching out of Y Combinator’s winter 2018 class.

“Ultimately, we want to see so many ISPs that net neutrality isn’t an issue,” Montgomery said. “It’s cheaper than ever and easier to start an internet service provider. People didn’t know they could do this, and networking engineering is the highest cost. You have to have a lot of stuff to build out. We remove that and bundle it as an ISP starter kit service. We give guidance to the operators, these are the customers you have, this is the equipment you need buy, here’s how to construct them. It’s more like constructing Ikea furniture. The hard part we remove which is automatically configuring these routers.”

Necto started off as its own attempt at an internet service provider, but Huang and Montgomery found that trying to get wholesale fiber was a high barrier to entry. The pair started looking into wholesale wireless, and Huang said that technology is getting to the point where it’s just as fast as typical broadband and an option for resale. The challenge then is getting the equipment into the hands of individuals that want to ramp up their own ISP and showing them how to get started. Then, they’re off to the races and work to build a business around that, including customer service and other facets of it.

Necto essentially charges for the guidance of how to start an ISP, including a class that individuals go through in order to get one off the ground. Then the company continues to ship software to ensure that it’s not as difficult to keep the equipment up and running, as well as provide ongoing support for those individuals. The equipment is all off the shelf, Huang said, in order to lower the barrier to entry for these providers.

The challenge here, however, will be ensuring that not only individuals know they can get an ISP off the ground, but getting their — and consumers’ — attention in the first place. Necto hopes to take a hyper-local strategy, Montgomery said, like traveling to farmers’ markets and working with local operators to ensure they can track down the right people that are looking to build a business around ISPs. There are still going to be plenty of challenges as it continues to work with wholesale wireless providers in order to get these businesses off the ground.

Google Fiber’s latest innovation is a landline

Published March 29, 2016

fiber Google Fiber may be the holy grail of Internet service for many, but many people still rely on landlines for everyday communication purposes or emergency use. In order to allow its subscribers to sever connections with the old local ISPs and telecoms completely, Google will soon offer home phone service for Fiber subscribers. Read More