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Kenya’s Ajua acquires WayaWaya to consolidate consumer experience play in African SMEs
Kenyan consumer experience platform for businesses in Africa, Ajua today announced that it has acquired WayaWaya, a Kenya-based AI and ML messaging and payments company.
WayaWaya’s customers and partners include the likes of I&M Bank, Interswitch and MTN. The company offers a range of services, from digital banking and payment services to financial services APIs and payment bots.
According to Ajua, the acquisition is primarily focused on WayaWaya’s payments bots system known as Janja. The platform, which has customers like Airtel, Ezee Money, Housing Finance Company of Kenya (HF Group), enables borderless banking and payments across apps and social media platforms. Teddy Ogallo, the entrepreneur who founded WayaWaya, joins Ajua as VP of Product APIs and Integrations.
Per Crunchbase, WayaWaya has just raised $75,000. Although the two companies did not disclose the financial details of the acquisition, Ajua is expected to have paid 10 times more than WayaWaya’s total raise.
Ajua, formerly mSurvey, was founded in 2012 by Kenfield Griffith. The company is solving a consumer data problem for African businesses to understand their business better and drive growth.
“There’s a lot of commerce happening on the continent and Ajua wants companies to move from transaction numbers to the customers behind such transaction,” Griffith told TechCrunch. “Imagine if we knew what drove consumer habits for businesses. I mean, that’s a huge exponential curve for African businesses.”
Teddy Ogallo (Founder, WayaWaya) & Kenfield Griffith (CEO, Ajua)
Nigeria’s SME market alone is valued at $220 billion annually. And while businesses, mostly big enterprises, can afford customer communication tools, a large segment of small businesses are being left out. Ajua’s play is to use data and analytics to connect companies with their customers in real time. “We’ve taken what makes enterprise customers successful, and we’re capturing it in a simple format so SMEs can have the same tools,” Griffith added.
Since most consumer behavior for these SMEs happens offline, Ajua gives businesses unique USSD codes to receive payments, get feedback and offer discounts to their customers. It is one of the products Ajua has launched over the years for customer feedback at the point of service to businesses that cumulatively have over 45 million customers.
The company’s partners and clients also include Coca-Cola, FBNQuest, GoodLife Pharmacy, Java House, Safaricom, Standard Chartered and Total.
As an intelligent messaging bot, Janja is used by individuals and businesses across WhatsApp, Facebook Messenger and Telegram to automate customer support and make cross-border payments. So, Janja’s integration into Ajua’s product stack will close much of the acquirer’s customer experience loop by automating responses and giving customers what they want, when they want it.
This acquisition comes a month after Ajua announced that it partnered with telecom operator MTN Nigeria to launch a customer management product for Nigerian businesses. The product called MTN EnGauge carries the same features present in Ajua but, in this case, is tailored solely for businesses using the MTN network. The roll-out is expected to generate more data for Ajua’s thousands of users. It will also be upgraded to incorporate Janja and other services.
In hindsight, it appears Ajua could have created a product like Janja in-house due to its vast experience in the consumer experience space. However, the company chose an acquisition and Griffith gave two reasons why — building a similar product would have taken a long time and Ogallo seemed to know Janja’s business and operations so well, it just made sense to get him on board.
“Teddy was going the same direction we’re going. We just thought to acquire WayaWaya instead and make a really good company out of both products attempting to solve the same problem. To me, it’s all about solving the problem together rather than going alone,” said the CEO.
On why he accepted the acquisition, Ogallo, who now has a new role, noted that Ajua’s ability to scale customer service and experience and also help businesses was one reason and earned admiration from him. “Seeing how WayaWaya’s technology can complement Ajua’s innovative products and services, and help scale and monetize businesses, is an exciting opportunity for us, and we are happy that our teams will be collaborating to build something unique for the continent,” he added.
This is a solid infrastructure play from Ajua coming from a founder who is a massive advocate of acquisition and consolidation. Griffith believes that the two are strategies for a speedier route to new markets and channels in Africa.
“I think there are lots of ways we can build the ecosystem. There are lots of young talent building stuff, and they don’t have access to capital to get to the next stage. The question is if they want to race to the finish line or take off time and get acquired. I think there’s a huge opportunity in Africa if you want to solve complex problems by acquisition.”
There has been an uptick in local acquisitions in Africa from startups within a single country and between two countries in the past three years. For the former, Nigerian recruitment platform Jobberman’s acquisition of NGCareers last year comes to mind. And there are pan-African instances like Lagos-based hub CcHub’s acquisition of iHub, its Nairobi counterpart; Ethiopian software provider Apposit sell-off to Nigerian fintech Paga; and Johannesburg-based fintech MFS Africa acquiring Uganda’s Beyonic.
The common theme among the acquisitions (and most African acquisitions) is their undisclosed sums. For Ajua, Griffith cited regulatory issues as one reason why the company is keeping the figure under wraps.
Since launching nine years ago, Ajua has raised a total of $3.5 million, according to Crunchbase. Given the nature of this acquisition and partnership with MTN, the company might set sights on another fundraise to scale aggressively into Nigeria (a market it entered in 2019) and other African countries.
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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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Nigeria’s Termii raises $1.4M seed led by Future Africa and Kepple Africa Ventures
Ideally, it is expected of every business to reach its customers effectively. However, that’s not the case, as limiting factors that hinder proper digital communication come into play at different growth stages. Termii, a Nigerian communications platform-as-a-service startup that solves this problem for African businesses, announced today that it has closed a $1.4 million seed round.
The round was co-led by African early-stage VC firm Future Africa and Japanese but Africa-focused VC Kepple Africa Ventures. Other investors include Acuity Ventures, Aidi Ventures, Assembly Capital, Kairos Angels, Nama Ventures, RallyCap Ventures and Remapped Ventures.
Angel investors like Ham Serunjogi, co-founder and CEO of Chipper Cash; Josh Jones, former co-founder and CTO, Dreamhost; and Tayo Oviosu, co-founder and CEO of Paga also participated.
Gbolade Emmanuel and Ayomide Awe launched Termii after Emmanuel’s experience as a digital marketer helped him recognize the need for businesses to have exceptional communication channels. The CEO consulted for these companies and leveraged emails to retain customers, but as he found out that this process was lethargic, he sought other channels as a replacement.
“That got me to start thinking about multichannel messaging. What it meant was that we needed to find how to allow companies to use WhatsApp, voice, SMS effectively,” he said to TechCrunch. “And we had to make the process simple because in the African market, you can’t do complex stuff. You have to be as simple as possible.”
In 2017, the company officially launched and subsequently secured investment from Lagos-based VC Microtraction. Emmanuel says the company found product-market fit two years later after collating enough data from companies in different industries to understand what they really wanted.
Termii found out that in addition to assisting businesses to retain customers, there was a clear need to verify, authenticate and engage them.
“Many of these businesses we started engaging said they required tools to effectively communicate and verify customers because they were losing money at those points. For us, we saw it was a bigger problem,” Emmanuel added.
After making some tweaks, the team began to see an increase in customer numbers, especially amongst fintech startups. Positioning itself in the fast-moving space, Termii created an API-based communication infrastructure that caters to more than 500 fintech startups across the continent. That’s not all. More than 1,000 businesses and developers are also using Termii’s API.
Some of these businesses include uLesson, Yassir, Helium Health, PiggyVest, Bankly, Paga and TeamApt.
Playing in a $3.6 billion B2C communications market estimated to grow 6% annually, Termii runs a B2B2C model. But how does it make money? While a subscription-based model would’ve made sense, the two years spent by the company trying to find PMF made them think otherwise.
So the company leverages a virtual wallet system tied to a bank account and customers can make payments to the platform using mobile money, bank transfer and credit cards. The startup charges these wallets on a per-message basis. It also does the same on every successful customer verification made toward customers’ contacts.
The Termii team. Image Credits: Termii
In early 2020, Termii started seeing immense progress and this coincided with their acceptance into Y Combinator. The growth continued throughout the year, growing its messaging transactions by 1,000% and experiencing a 400% increase in its ARR.
Spilling into this year, Emmanuel says the company’s revenue is growing 60% month-on-month as a result of the surge in online financial transactions, which to date makes up for 68% of the company’s total messaging transactions.
The seed investment that is coming a year after Termii graduated from YC will be used for expansion and launch more messaging offerings across Africa.
Emmanuel says the company has its sights set on North Africa with a physical presence in Algeria for the expansion. The reason lies behind the fact that in this quarter, Nigeria has accounted for 76% of the company’s messaging transactions, while Algeria currently accounts for 15%.
With this new fundraising, the company plans to tap into the wealth of experience from some of its new investors like Oviosu and Serunjogi, who have also taken local companies into expansion phases.
Termii’s round is also noteworthy because it strays away from the usual fintech, mobility, agritech and cleantech sectors that investors typically notice. In fact, there are only a handful of venture-backed communications platform-as-a-service companies on the continent. A notable example is Kenya’s Africa Talking. It might be a stretch to say we might see more funding activity from this segment, but one thing is apparent — investors are willing to place bets on less popular sectors.
Another highlight of Termii’s investment is that while foreign investors continue to dominate rounds in African tech startups, local and Africa-focused firms are beginning to step up by leading some, which is a good sign for the bubbling ecosystem.
This round is also a big step for Future Africa. According to publicly available information, the firm is leading a million-dollar round for the first time since officially launching last year. This achievement is a continuation of its work over the past three quarters, having invested in more than 10 African startups in the last three quarters and 30 startups in general.
Kepple Africa Ventures, the co-lead, is also an active investor and can be argued to be the most early-stage VC firm on the continent — in terms of the number of deals made. So far, the firm has invested in 79 companies across 11 countries.
Speaking on the investment for Kepple Africa, Satoshi Shinada, a partner at the firm, said, “Fragmented and unstable communication channels are one of the biggest challenges for the digitization of businesses in Africa. Emmanuel has proven that with his visionary goals and solid implementation of iterations on the ground, his team is unparalleled to build an innovative solution in this space.”
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Why COVID-19 could delay Interswitch, Africa’s next big IPO
The economic effects of COVID-19 could delay Africa’s next big IPO — that of Nigerian fintech unicorn Interswitch.
If so, it wouldn’t be the first time the Lagos-based payments company’s plans for going public were postponed; the tech world has been anticipating Interswitch’s stock market debut since 2016.
For the continent’s innovation ecosystem, there’s a lot riding on the digital finance company’s IPO. After e-commerce venture Jumia, it would become only the second listing of a VC-backed African tech company on a major exchange. And Interswitch’s stock market debut — when it occurs — could bring more investor attention and less controversy to the region’s startup scene.
What is Interswitch?
TechCrunch reached out to Interswitch on the window for listing, but the company declined to comment. The tech firm’s path from startup to IPO aspirant traces back to the vision of founder Mitchell Elegbe, a Nigerian electrical engineering graduate whose entire career has pretty much been Interswitch.
Africa’s tech scene is still fairly young, but it does have a timeline with several definitive points. An early one would be the success of mobile money in East Africa, with the launch of Safaricom’s M-Pesa in 2007. Another is the notable wave of VC-backed startups and founders that launched around 2010.
Interswitch CEO Mitchell Elegbe (Photo Credits: Interswitch)
With Interswtich, Elegbe pre-dated both by a number of years, founding his fintech company back in 2002 to connect Nigeria’s largely disconnected banking system. The firm became a pioneer of the infrastructure to digitize Nigeria’s economy.
Interswitch created the first electronic switch whereby Nigerian financial institutions could communicate and thereby operate ATMs and point of sales operations. The company now provides much of the rails for Nigeria’s online banking system.
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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
- Lime is launching electric scooters in Cape Town
- Pan-African e-tailer Jumia grows 3Q revenue, e-payments and losses
- Sim Shagaya’s uLesson African edtech startup raises $3.1M
- Samasource raises $14.8M for global AI data biz driven from Africa
- Chaka opens up global investing to Africa’s most populous nation
- Solar-based ISP startup Tizeti launches 4G LTE network in Nigeria
- Senegal’s NIMA Codes to launch address app in 15 African countries
African tech around the ‘net
- Kenyan e-commerce startup Copia nets $26m Series B funding
- Nigerian entrepreneur Temie Giwa-Tubosun wins Jack Ma’s African business hero award
- Kenyan public WiFi sensation BRCK launches In South Africa
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Bosun Tijani talks strategy as CEO of Africa’s new largest tech hub
With CcHub‘s acquisition of iHub in September, Nigerian Bosun Tijani is at the helm of (arguably) the largest tech network in Africa.
He is now CEO of both organizations, including their robust membership rosters, startup incubation programs, global partnerships and VC activities from Nigeria to Kenya .
One could conclude Tijani has become one of the most powerful figures in African tech with the CcHub/iHub merger. But that would be a little shortsighted.
The techie from Lagos still faces plenty of challenges and unknowns in integrating two innovation hubs that lie 3,818 flight kilometers apart. Several sources speaking on background over the last year have indicated iHub was experiencing financial difficulties.
Tijani offered TechCrunch some initial details last month on how the acquisition will fall together.
But more recently he shared greater detail on his strategy for operating the multi-country innovation network. A big test for Tijani will be aligning the organizations on a path to sustainability. The buzzword is usually code for generating consistent operating income beyond expenses.
The growth of innovation spaces, accelerators and incubators in Africa — which tally 618 per GSMA stats — is often lauded as an achievement for the continent’s tech ecosystem.
But debate on how these focal points for startup formation, training and IT activity fund themselves is ever-present.
Grant income has served as a dominant revenue source for Africa’s tech hubs — including iHub in its early days — though many have worked to diversify.
That includes CcHub, according to Tijani, who plans to continue the trend across the expanded CcHub/iHub organization.
“When people talk about sustainability, we’ve been in business for nine years,” he notes of CcHub Nigeria.
“We de-emphasized grant funding six years ago; most of our revenue is actually earned revenue.”
On income sources Tijani looks to foster across both organizations, he named consulting services (for corporates, governments and development agencies), events services and generating greater return on investment.
iHub has been active with startup seed investments and CcHub has a portfolio of companies through its Growth Capital Fund.
“Our size will become a major part of us being able to invest in startups, and the longer we stay invested the more we will start to see significant returns and exits,” said Tijani.
The CcHub/iHub nexus will also use its size to leverage more partnerships. Tijani and team have already mastered gaining collaborations with big African and global tech names, such as MainOne and Facebook.
Tijani will look to connect iHub to CcHub’s Google-sponsored Pitch Drive — which has done African startup tours of Asia and Europe — and potentially take the show to the U.S.
“We’re talking about it,” Tijani said, of a U.S. pitch trip. And this could lead to a permanent presence in San Francisco for the new CcHub/iHub entity.
“Beyond just a tour, we want to build strong presence in the Bay Area,” Tijani said, but didn’t offer more specifics on what that could mean.
So on the list of things to emerge from the CcHub-iHub acquisition, African tech planting a big flag in San Francisco is a future possibility.
A more immediate result of the union between the innovation spaces will be Bosun Tijani becoming a regular sight on flights between Lagos and Nairobi.
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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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VertoFX raises $2M for its African and EM currency trading platform
VertoFX, an Africa and emerging markets-focused currency trading and payment startup, has raised a $2.1 million seed round, led by Accelerated Digital Ventures.
The London-based company, with a subsidiary in Lagos, Nigeria, has created a platform that allows businesses and banks to exchange and make payments in exotic foreign currencies that don’t often convert or trade conveniently across businesses or banks.
For example, South Africa’s Rand is Africa’s most convertible and traded currency — with lower spreads and transaction costs — while currencies of countries such as Ethiopia or Egypt may be difficult or expensive to trade or transact B2B payments.
“That’s the reason we are utilizing technology to create a marketplace model and price discovery to create liquidity for these currencies,” VertoFX founder Ola Oyetayo told TechCrunch.
There are around 40 global currencies that are considered exotic or illiquid, most of them in frontier markets in Asia, Africa and the Middle-East, according to Oyetayo.
And there’s a revenue opportunity to creating a convenient online marketplace for trading and payments in these currencies.
“Our research says there’s about $400 billion being done by small and medium-scale businesses in Africa alone in transactional volume on an annual basis. If we take 1% of that as a commission or transaction fee, that’s a $4 billion addressable market, just in the continent,” said Oyetayo.
VertoFX was founded in 2017 by Oyetayo and Anthony Oduwole — both ex-global bankers born in Nigeria. The company was part of Y Combinator’s 2019 winter cohort and processed around $7 million in transaction volume last month, according to Oyetayo.
VertoFX is registered as a payment services provider with the U.K.’s Financial Conduct Authority. Current clients include several undisclosed banks and San Francisco-based payment venture Flutterwave.
VertoFX doesn’t release revenue figures, but confirmed it earns a commission, or spread, on each transaction processed on its platform. There are currently 19 currencies on the platform and the ability to settle in 120 countries, including China and the U.S.
VertoFX is also moving into offering market research — toward potential subscription services — on the currencies it trades, according to Oyetayo.
The startup will use the round for platform development, expanding the currencies and gaining licenses in new countries. “We’ll also use the round for hiring, primarily in compliance and regulator type roles,” said Oyetayo. VertoFX already has a developer team in India and is looking at local developer talent for its Africa offices.
ADV’s Ryan Proctor confirmed the VC firm’s lead on the investment round, which also included participation from YC and several local angel investors in Africa, Oyetayo told TechCrunch.
On the possibility of becoming acquired by a big bank, VertoFX isn’t so interested, according to Oyetayo.
“We both come from big banks and if we’d wanted to go down that route we’d have developed this more as a software as a service platform,” he said.
“We’re playing the long game here, and I don’t think acquisition is the end game,” he said.
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Diving deep into Africa’s blossoming tech scene
Jumia may be the first startup you’ve heard of from Africa. But the e-commerce venture that recently listed on the NYSE is definitely not the first or last word in African tech.
The continent has an expansive digital innovation scene, the components of which are intersecting rapidly across Africa’s 54 countries and 1.2 billion people.
When measured by monetary values, Africa’s tech ecosystem is tiny by Shenzen or Silicon Valley standards.
But when you look at volumes and year over year expansion in VC, startup formation, and tech hubs, it’s one of the fastest growing tech markets in the world. In 2017, the continent also saw the largest global increase in internet users—20 percent.
If you’re a VC or founder in London, Bangalore, or San Francisco, you’ll likely interact with some part of Africa’s tech landscape for the first time—or more—in the near future.
That’s why TechCrunch put together this Extra-Crunch deep-dive on Africa’s technology sector.
Tech Hubs
A foundation for African tech is the continent’s 442 active hubs, accelerators, and incubators (as tallied by GSMA). These spaces have become focal points for startup formation, digital skills building, events, and IT activity on the continent.
Prominent tech hubs in Africa include CcHub in Nigeria, Pan-African incubator MEST, and Kenya’s iHub, with over 200 resident members. More of these organizations are receiving funds from DFIs, such as the World Bank, and aid agencies, including France’s $76 million African tech fund.
Blue-chip companies such as Google and Microsoft are also providing money and support. In 2018 Facebook opened its own Hub_NG in Lagos with partner CcHub, to foster startups using AI and machine learning.
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Nigeria’s Gokada raises $5.3M round for its motorcycle ride-hail biz
In many large cities across Africa, motorcycle taxis are as common as yellow cabs in New York.
That includes Lagos, Nigeria, where ride-hail startup Gokada has raised a $5.3 million Series A round to grow its two-wheel transit business.
Gokada has trained and on-boarded more than 1,000 motorcycles and their pilots on its app that connects commuters to moto-taxis and the company’s signature green, DOT– approved helmets.
The startup has completed nearly 1 million rides since it was co-founded in 2018 by Fahim Saleh — a Bangladeshi entrepreneur who previously founded and exited Pathao, a motorcycle, bicycle and car transportation company.
For Gokada’s Series A, Rise Capital led the investment, joined by Adventure Capital, IC Global Partners and Illinois-based First MidWest Group. Coinciding with the round, Nigerian investor and Jobberman founder Ayodeji Adewunmi will join Gokada as co-CEO.
Gokada will use the financing to increase its fleet and ride volume, while developing a network to offer goods and services to its drivers. “We’re going to start a Gokada club in each of the cities with a restaurant where drivers can relax, and we’ll experiment with a Gokada Shop, where drivers can get things they need on a regular basis, such as plantains, yams and rice,” Saleh told TechCrunch.
The startup differs from other ride-hail ventures in that it doesn’t split fare revenue with drivers. Gokada charges drivers a flat-fee of 3,000 Nigerian Naira a day (around $8) to work on their platform. The company is looking to generate a larger share of its revenue from building a commercial network around its rider community.
“We don’t do anything with the fares. We want to create an Amazon Prime-type membership…and ecosystem around the driver where we’re going to provide them more and more services, such as motorcycle insurance, maintenance, personal life-insurance and micro-finance loans,” Saleh said.
“We’re trying to provide a network of great services for our drivers that makes them stick with us, and not necessarily see a reason to switch to other platforms,” said Saleh.
Competition among those platforms is heating up, as global players enter Africa’s motorcycle taxi market and local startups raise VC and expand to new countries.
Uber began offering a two-wheel transit option in East Africa in 2018, around the same time Bolt (previously Taxify) started motorcycle taxi service in Kenya.
Rwanda has motorbike taxi startups SafeMotos and Yegomoto. Uganda-based motorcycle ride-hail company SafeBoda expanded into Kenya in 2018 and this month raised a Series B round of an undisclosed amount, co-led by the venture arms of Germany’s Allianz and Indonesia’s Go-Jek.
SafeBoda will use the round to further expand in East Africa and Nigeria in the near future, the startup’s co-CEO Maxime Dieudonne confirmed to TechCrunch.
In Nigeria, Gokada faces a competitor in local startup MAX.ng, which offers mobile-based passenger and logistics delivery services.
Overall, Africa’s motorcycle taxi market is becoming a significant sub-sector in the continent’s e-transport startup landscape. Two-wheel transit startups are vying to digitize a share of Africa’s boda boda and okada markets (the name for motorcycle taxis in East and West Africa) — representing a collective revenue pool of $4 billion and expected to double to $9 billion by 2021, according to a TechSci study.
“There is a formalization of an informal sector play here…to make it safer and higher quality,” Gokada investor Nazar Yasin of Rise Capital told TechCrunch.
The appeal to passengers is the lower cost of motorbike transit compared to buses or cabs ($1.85 is Gokada’s average fare) and the ability of two-wheelers to cut through the heavy congestion in cities such as Lagos and Nairobi.
A notable facet of motorcycle ride-hail companies in Africa is better organizing a space with a reputation for being somewhat chaotic and downright dangerous (see Nigeria’s past bans on the sector entirely due to safety).
For Gokada that includes training courses and certification of riders, the ability to track trips and safety stats from the app, and quality control for motorcycles — something that’s been lacking in East and West Africa’s non-digital moto-taxi space.
The company’s rider program offers a way for drivers to buy, own and maintain their motorcycles as they earn. Gokada has entered into partnership with Indian motorcycle maker TVS Motors to create a custom version of the company’s TVS Apache motorcycles for Gokada drivers.
Gokada is also experimenting with adding sensors to its fleet to better track safety standards. “We’re looking at seat sensors and another GPS sensor to track things like ‘did this driver add more than one passenger on the bike’ and all that data will feed back into our servers,” Saleh said.
The company won’t enter any new countries in Africa in the near future. “We plan to expand all over Nigeria. We think it’s a large enough market for now,” said Saleh. Nigeria is Africa’s most populous nation (190 million) and largest economy.
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