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Nigeria’s Rensource raises $20M to power African markets by solar
Nigerian startup Rensource Energy has raised a $20 million Series A round co-led by CRE Venture Capital and the Omidyar network.
The renewable energy company builds and operates solar-powered micro-utilities that provide electricity to commercial community structures, such as open-air trading bazaars.
Launched in 2016, the startup has shifted its operating strategy. “We’ve pivoted away from a residential focus…and we’re building much larger systems to become essentially the utility for these large urban markets we have a lot of in Nigeria,” Rensource co-founder Ademola Adesina told TechCrunch.
The company has a partnership with German manufacturer BOS AG, with whom it designs specialized panels for it use case. Rensource also has developer teams in Nigeria and Europe for its software-related programs.
In addition to becoming a micro-energy provider to Nigeria’s robust SME classes, the startup aims to offer them B2B services. With the $20 million round, Rensource is launching its Spaces Offline to Online platform for supply-chain services, including business-analytics and working capital options.
“It’s a mini-ERP tool. We’re trying to bring a universe of people who are banked, but…still offline — their products are offline, they don’t track anything, and there’s no data behind their business — online,” said Adesina.
The benefit Rensource seeks to deliver to Nigeria’s SMEs — at a profit for itself — is to lower overhead costs through better business practices and free them from the bane of generators.
Across marketplaces in West Africa, noisy, fuel-guzzling and pollution-producing generators are like an unwelcome, yet necessary business partner.
Lack of affordable and reliable electricity in Nigeria creates a massive real and opportunity cost to Africa’s largest economy.
For perspective, the West African country is roughly the size of Texas, with a 200 million population larger than Russia, and generates less gigawatt hours of electricity annually than the U.S. state of Connecticut.
Nigerian businesses (and citizens) adjust for these power deficiencies by spending on diesel fuel and generators.
The IMF’s 2019 Nigeria report quoted economic losses of $29 billion in Nigeria due to unreliable electricity supply. On global Doing Business rankings, Nigeria ranked 169 out of 190 countries in the category of “Getting Electricity.”
This difficulty and cost weighs particularly heavy on Nigeria (and the continent’s) SMEs, which often operate in Africa’s informal economy — projected to be one of the largest off-the grid commercial spaces in the world.
Rensource’s micro-utility model deploys power clusters — made up of solar-panels, batteries and a power management system — adjacent to markets and commercial hubs. The energy application isn’t totally clean, as the startup still uses its own diesel backup system.
Rensourse has used this model to become an off-grid energy provider in six states in Nigeria, and powers the Sabon Gari market — one of the country’s largest, located in northern Kano State.
The company plans to expand to 100 markets within Nigeria and to additional African countries within 24 months, according to Adesina.
Rensource generates revenue from charging merchants daily, weekly or monthly fees. “In 2017, we did a few hundred thousand dollars in revenue. Last year we did about $7 million in revenue, and this year we’ll do better than that,” Adesina said.
The company doesn’t release official financials, but generated a small profit last year, according to Adesina. He named deploying more of its micro-utilities to new markets and diversifying services as the path to long-term profitability.
Rensource differentiates itself from many home-kit solar energy startups in Africa, such as M-Kopa, by becoming a renewable energy utility at scale.
The startup’s CEO sees the model as a classic leapfrog tech business, effectively bypassing Nigeria’s deficient electricity grid and providing a less capital intensive alternative to large (and often complicated) energy infrastructure projects.
Rensource is also following a trend by some Nigeria-based startups, such as trucking-logistics company Kobo360 and motorcycle ride-hail company Gokada, to shape a suite of additional services around the needs of core clients.
In Rensource’s case, those clients are SMEs and traders in the informal economy. “This informality of theirs is what we see as an opportunity in building this new business line and bringing these [merchants] into the online world,” said Adesina.
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Africa’s ride-hail markets are hot spots for startups and VC
When it comes to VC, vehicles, and startups, Africa’s ride-hail markets are becoming a multi-wheeled and global affair.
The big players such as Uber and Bolt are competing in Kampala and Nairobi—where in addition to car-service—they offer rickshaw taxis. On-demand motorcycle startups are multiplying and piloting EVs with funds from international partners. And many ride-hail companies in Africa are adapting unique product solutions to local transit needs.
In this analysis, I take a look at the leading startups in the mobility space and how the future of transportation on the continent will increasingly come from new entrants.
Africa’s in the midst of digital innovation boom
Africa’s in the midst of digital innovation boom, the components of which are intersecting rapidly across its 54 countries and 1.2 billion people.
Smartphone penetration is improving and in 2017, the continent saw the largest global increase in internet users—20 percent.
By Partech data, the continent surpassed the $1 billion VC mark in 2018. And greater connectivity and venture funding are fueling thousands of startups in every imaginable sector, including digital-transit.
While reliable markets stats for the size and potential of Africa’s ride-hail markets are sparse, there are some indicators of the sector’s potential.
Car ownership and cars per capita in Africa is among the lowest in the world. Parallel to that, any eyes and ears survey of the continent’s big cities reveals that shared transport by buses, cars, or motorcycles is big business that’s already ingrained in consumer culture. Millions of people daily pay fares to pack onto East and West Africa’s Mutatu and Danfo minibuses and Okada and Boda Boda motorbike taxis.
As Africa continues to urbanize, converts to smartphones, and discretionary consumer spending continues to rise—it all adds up to suggest strong potential for conversion to on-demand mobility services.
Unsurprisingly, the most active markets for ride-hail startups and investment in Africa align with the continent’s top spots for VC and tech activity: primarily Nigeria, Kenya, and South Africa.
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Nigerian logistics startup Kobo360 raises $6M, expands in Africa
Jake Bright
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Jake Bright is a writer and author in New York City. He is co-author of The Next Africa.
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Nigerian trucking logistics startup Kobo360 has raised $6 million to upgrade its platform and expand operations to Ghana, Togo and Cote D’Ivoire.
The company — with an Uber -like app that connects truckers and companies with freight needs — gained the equity financing in an IFC-led investment. The funding saw participation from others, including TLcom Capital and Y Combinator.
With the investment, Kobo360 aims to become more than a trucking transit app.
“We started off as an app, but our goal is to build a global logistics operating system. We’re no longer an app, we’re a platform,” founder Obi Ozor told TechCrunch.
In addition to connecting truckers, producers and distributors, the company is building that platform to offer supply chain management tools for enterprise customers.
“Large enterprises are asking us for very specific features related to movement, tracking and sales of their goods. We either integrate other services, like SAP, into Kobo or we build those solutions into our platform directly,” said Ozor.
Kobo360 will start by developing its API and opening it up to large enterprise customers.
“We want clients to be able to use our Kobo dashboard for everything; moving goods, tracking, sales and accounting…and tackling their challenges,” said Ozor.
Kobo360 will also build more physical presence throughout Nigeria to service its business. “We’ll open 100 hubs before the end of 2019…to be able to help operations collect proof of delivery, to monitor trucks on the roads and have closer access to truck owners for vehicle inspection and training,” said Ozor.
Kobo360 will add more warehousing capabilities, “to support our reverse logistics business” — one of the ways the company brings prices down by matching trucks with return freight after they drop their loads, rather than returning empty, according to Ozor.
Kobo360 will also use its $6 million investment to expand programs and services for its drivers, something Ozor sees as a strategic priority.
“The day you neglect your drivers you are not going to have a company, only issues. If Uber were more driver-focused it would be a trillion-dollar company today,” he said.
The startup offers drivers training and group programs on insurance, discounted petrol and vehicle financing (KoboWin). Drivers on the Kobo360 app earn on average of approximately $5,000 per month, according to Ozor.
Under KoboCare, Kobo360 has also created an HMO for drivers and an incentive-based program to pay for education. “We give school fee support, a 5,000 Naira bonus per trip for drivers toward educational expenses for their kids,” said Ozor.
Kobo360 will complete limited expansion into new markets Ghana, Togo and Cote D’Ivoire in 2019. “The expansion will be with existing customers, one in the port operations business, one in FMCG and another in agriculture,” said Ozor.
Ozor thinks the startup’s asset-free, digital platform and business model can outpace traditional long-haul 3PL providers in Nigeria by handling more volume at cheaper prices.
“Owning trucks is just too difficult to manage. The best scalable model is to aggregate trucks,” he told TechCrunch in a previous interview.
With the latest investment, IFC’s regional head for Africa Wale Ayeni and TLcom senior partner Omobola Johnson will join Kobo360’s board. “There’s a lot of inefficiencies in long-haul freight in Africa…and they’re building a platform that can help a lot of these issues,” said Ayeni of Kobo360’s appeal as an investment.
The company has served 900 businesses, aggregated a fleet of 8,000 drivers and moved 155 million kilograms, per company stats. Top clients include Honeywell, Olam, Unilever, Dangote and DHL.
MarketLine estimated the value of Nigeria’s transportation sector in 2016 at $6 billion, with 99.4 percent comprising road freight.
Logistics has become an active space in Africa’s tech sector, with startup entrepreneurs connecting digital to delivery models. In Nigeria, Jumia founder Tunde Kehinde departed and founded Africa Courier Express. Startup Max.ng is wrapping an app around motorcycles as an e-delivery platform. Nairobi-based Lori Systems has moved into digital coordination of trucking in East Africa. And U.S.-based Zipline — which launched drone delivery of commercial medical supplies in partnership with the government of Rwanda and support of UPS — is in “process of expanding to several other countries,” according to a spokesperson.
Kobo360 has plans for broader Africa expansion but would not name additional countries yet.
Ozor said the company is profitable, though the startup does not release financial results. Wale Ayeni also wouldn’t divulge revenue figures, but confirmed IFC’s did full “legal and financial due diligence on Kobo’s stats,” as part of the investment.
Ozor named Lori Systems as Kobo360’s closest African startup competitor.
On the biggest challenge to revenue generation, it’s all about service delivery and execution, according to Ozor.
“We already have volume and demand in the market. The biggest threat to revenues is if Kobo360’s platform doesn’t succeed in solving our client’s problems and bringing reliability to their needs,” he said.
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