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Extra Crunch roundup: China’s new data privacy law, fractional farming, debt vs. equity
China’s first data privacy laws go into effect on November 1, 2021. Will your company be in compliance?
Modeled after the EU’s GDPR, the new regulations “[introduce] perhaps the most stringent set of requirements and protections for data privacy in the world,” writes Scott W. Pink, special counsel in O’Melveny’s Data Security & Privacy practice.
In a comprehensive overview, he explains its key requirements and compliance steps for U.S.-based firms that service Chinese consumers.
“American firms doing business in China or with companies inside China will need to immediately start assessing how this new law will impact their activities,” he advises.
Now that the world has embraced remote work, are visas as critical for startup founders who want to succeed in the United States?
On Tuesday, September 14, at 2 p.m PT/5 p.m. ET, Managing Editor Danny Crichton and immigration law attorney Sophie Alcorn will discuss the matter on Twitter Spaces.
Join @DannyCrichton on Tuesday, September, 14 at 2 p.m. PT/5 p.m. ET as he discusses if remote work will make H-1B visas redundant with @Sophie_Alcorn https://t.co/SCMUiqUj8J
— TechCrunch (@TechCrunch) September 10, 2021
They’ll take questions from the audience, so mark your calendar and follow @techcrunch on Twitter to get a reminder before the chat.
Thanks very much for reading Extra Crunch; I hope you have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Fintech is transforming the world’s oldest asset class: Farmland
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Whether or not he actually said it, “buy land, they ain’t making any more of it,” is one of Mark Twain’s best quotes on capitalism.
Past recessions and the ongoing pandemic have created real uncertainty about the future of commercial and residential real estate, but farmland is “historically stable,” says Artem Milinchuk, founder and CEO of FarmTogether.
Anatomy of a SPAC: Inside Better.com’s ambitious plans
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Online mortgage company Better.com isn’t waiting to complete its SPAC merger before making big moves: Ryan Lawler reported that it purchased Property Partners, a U.K.-based startup that offers fractional property ownership.
It’s the second company Better bought in recent months: In July, it snapped up digital mortgage brokerage Trussle.
“We aren’t so easily categorized,” said Better CEO Vishal Garg, who told Ryan that the company plans to soon expand into traditional financial services like auto loans and insurance.
Said CFO Kevin Ryan, “a lot of people have their niches in the way they’re attacking this, but we feel like we’re on a path to being full stack where everything’s embedded in the same flow.”
5 factors that can make or break a startup’s growth journey
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If you don’t have a good story to share, it doesn’t matter how big your marketing budget is.
“Paid marketing can be a useful tool in your toolkit to accelerate an already humming flywheel. Just don’t let it be the only one,” suggests Brian Rothenberg, a two-time founder who’s now a partner at Defy.
Drawing from his time as VP of growth for Eventbrite, he shares five critical factors for kick-starting, maintaining and measuring growth over the long term.
Debt versus equity: When do non-traditional funding strategies make sense?
Image Credits: Peter Dazeley (opens in a new window) / Getty Images
Many potential founders are well-versed in startup economics — and many are completely green.
When it comes to raising funds, understanding the relative benefits (and limitations) of debt and equity financing is required knowledge, however.
Founders who are less willing to dilute their control may be willing to use debt financing to fund their capital expenditures, “but it doesn’t make sense for everyone,” says six-time entrepreneur David Friend.
Investors are doubling down on Southeast Asia’s digital economy
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Last year, startups based in Southeast Asia raised more than $8.2 billion, a 4x increase from 2015.
In the first half of 2021, regional M&A has increased 83% to a record $124.8 billion.
It’s not just venture capitalists and Big Tech who are beefing up their presence in the region.
“Over 229 family offices have been registered in Singapore since 2020, with total assets under management of an estimated $20 billion,” writes Amit Anand, a founding partner of Jungle Ventures.
Edtech leans into the creator economy with cohort-based classes
Image Credits: Bryce Durbin / TechCrunch
Natasha Mascarenhas examined the parallels between edtech and the creator economy, both of which boomed amid the pandemic — and blurred amid the rise of cohort-based classes.
“Edtech and the creator economy certainly differ in the problems they try to solve: Finding a VR solution to make online STEM classes more realistic is a different nut to crack than streamlining all of a creator’s different monetization strategies into one platform. Still, the two sectors have found common ground in the past year.”
Meet retail’s new sustainability strategy: Personalization
Image Credits: Liyao Xie (opens in a new window) / Getty Images
Were the shoes, jacket and makeup that looked so good on Instagram (and in your shopping cart) disappointing when you put them on for the first time?
Due to buyer’s remorse, it’s not uncommon for apparel or beauty products to languish in the back of a drawer or end up as gifts, but there are also serious consequences.
“The beauty industry produces over 120 billion units of packaging every year, little of which is recycled. Globally, an estimated 92 million tons of textile waste ends up in landfills,” Sindhya Valloppillil, founder and CEO of Skin Dossier, notes in a guest column.
The answer to bringing sustainability to the industry, she says, is using tech to personalize the retail experience:
- AR virtual try-on with shade matching
- Advanced virtual fitting rooms with VR/AR for fashion
- Smart packaging with IoT and distributed ledger technology
Plentywaka founder Onyeka Akumah on African startups and global expansion
Image Credits: Bryce Durbin / TechCrunch
Twenty million people live in Lagos, Nigeria, and each day, 14 million of them use the city’s transit system.
Travelers rely on overcrowded public buses that navigate congested routes: What should be a 30-minute trip is often a three-hour journey, but Treepz CEO and co-founder Onyeka Akumah “has big plans to ameliorate the public transport infrastructure in Africa and beyond,” writes Rebecca Bellan.
“We wanted to give people a better way to commute with predictability, where they can know when the bus will get here, the certainty that they will have a seat in a vehicle, that it’s a decent vehicle and a safe one where you can bring your laptop,” said Akumah.
“Those are the things we said we wanted to change.”
Dear Sophie: When can I apply for my US work permit?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
My husband just accepted a job in Silicon Valley. His new employer will be sponsoring him for an E-3 visa.
I would like to continue working after we move to the United States. I understand I can get a work permit with the E-3 visa for spouses.
How soon can I apply for my U.S. work permit?
— Adaptive Aussie
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African fintech OPay valued at $2B in SoftBank Vision Fund 2-led $400M funding
Chinese-backed and Africa-focused fintech company OPay raised $400 million in new financing led by SoftBank Vision Fund 2, Bloomberg reported Monday, valuing the company at $2 billion.
The round, which marks the fund’s first investment in an African startup, drew participation from existing investors like Sequoia Capital China, Redpoint China, Source Code Capital and Softbank Ventures Asia. Other investors, including DragonBall Capital and 3W Capital, also took part in the new financing round.
This news comes three months after The Information reported that the company was in talks to raise “up to $400 million at a $1.5 billion valuation” from a group of Chinese investors. The new financing also comes two years after OPay announced two funding rounds in 2019 — $50 million in June and a $120 million Series B in November.
In an emailed statement, OPay CEO Yahui Zhou said OPay “wants to be the power that helps emerging markets reach a faster economic development.” The company, founded in 2018, had an exclusive presence in Nigeria before last year.
While the company started with providing customers with digital services in their everyday life, from mobility and logistics to e-commerce and fintech at cheap rates, those super app plans have been largely underwhelming.
Right now, it’s the company’s mobile money and payment arm that thrives the most. By simply allowing unbanked and underbanked users in Nigeria to send and receive money and pay bills through a network of thousands of agents, OPay has grown at an exponential rate.
The company plays in an extremely competitive fintech market. Nigeria is Africa’s most populous nation, and with a large share of its people underbanked and unbanked, fintech is the most promising digital sector in the country. The same can be said for the continent as a whole. Mobile money services have long catered to the needs of the underbanked. Per GSMA, Africa had more than 160 million active mobile money users generating over $495 billion in transaction value last year.
Parent company Opera reported that OPay’s monthly transactions grew 4.5x to over $2 billion in December last year. OPay also claims to process about 80% of bank transfers among mobile money operators in Nigeria and 20% of the country’s nonmerchant point of sales transactions. Last year, the company also said it acquired an international money transfer license with a WorldRemit partnership also in the works.
Per Bloomberg, the company’s monthly transaction volumes exceed $3 billion at the moment.
Last year, OPay expanded to Egypt, and according to the company, that’s an entry point to the Middle East market.
In a statement, Kentaro Matsui, a managing director at SoftBank Group Corp, said, “We believe our investment will help the company extend its offering to adjacent markets and replicate its successful business model in Egypt and other countries in the region.”
SoftBank joins a growing list of high-flying investors (Dragoneer, Sequoia and SVB Capital, among others) that have cut their first checks in African ventures this year. As the continent continues to show promise, fintech remains its poster child. This year up to half of the total investments raised have emerged from the sector; it contributed to more than 25% last year.
In addition, fintech has produced the most mega-rounds so far. TymeBank raised $109 million in February, Flutterwave bagged a $170 million round in March and Chipper Cash secured $100 million in May.
OPay’s fundraise is the largest of the lot in terms of size and value, making it the second African fintech unicorn after Flutterwave and the third African unicorn after e-commerce giant Jumia. The three make up the five billion-dollar tech companies on the continent, which include Interswitch and Fawry.
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Nigeria leads mobile app market growth in Africa as use of gaming apps surge 44% from Q1 2020
The pandemic’s effect on the global app market has not been hard to miss. In the first quarter and first half of this year, consumer spending in mobile apps hit new records at $32 billion and $64.9 billion, respectively.
In Africa, it can be tough to call out exact numbers on consumer spending because the continent gets hardly a mention in global app market reports. Yet, other metrics are worth looking at, and a new report from AppsFlyer in collaboration with Google has some important insights into how the African app market has fared since the pandemic broke out last year.
The report tracked mobile app activities across three of Africa’s largest app markets (Kenya, Nigeria and South Africa) between Q1 2020 and Q1 2021.
From the first half of 2020 to the first half of 2021, the African mobile app industry (which is predominantly Android) increased by 41% in overall installs. This was analyzed from 6,000 apps and 2 billion installs in the three markets. Nigeria registered the highest growth, with a 43% rise; South Africa’s market increased by 37% and Kenya increased 29%.
Lockdown numbers
On March 22, 2020, Rwanda imposed Africa’s first lockdown. Subsequently, other countries followed; (those in the report) Kenya (March 25), South Africa (March 27), and Nigeria (March 30).
As more people spent time at home from Q2 2020, app installs increased by 20% across the three countries. South Africans were the quickest to take to their phones as the lockdowns hit with installs increasing by 17% from the previous quarter.
On the other hand, Nigerians and Kenyans recorded a 2% and 9% increase, respectively. The report attributes the disparity to the varying levels of restrictions each country faced; South Africa experienced the strictest and most frequent.
Per the report, gaming apps showed strong performance between Q1 and Q2 2020. The segment experienced a 50% growth compared to an 8% increase in nongaming apps pulled. It followed a global trend where gaming apps surged to a record high in Q2 2020, at 14 billion downloads globally.
In-app purchasing revenue and almost year-on-year growth
According to AppsFlyer, the biggest trend it noticed was in in-app purchasing revenue. In Q3 2020, in-app purchasing revenue numbers grew with a staggering 136% increase compared to Q2 2020, and accounted for 33% of 2020’s total revenue, “highlighting just how much African consumers were spending within apps, from retail purchases to gaming upgrades.”
In-app purchasing revenue among South African consumers increased by 213%, while Nigeria and Kenyan consumers recorded 141% and 74% increases, respectively.
On the advertising front and on an almost year-on-year basis, in-app advertising revenue also increased significantly as Africans were glued to their smartphones more than ever. Per the report, in-app advertising revenue increased 167% between Q2 2020 to Q1 2021.
For gaming and non-gaming apps, which was highlighted between the first two quarters, they both increased by 44% and 40% respectively in Q1 2021 compared to Q2 2020.
Fintech and super apps
In the last five years, fintech has dominated VC investments in African startups. It’s a no brainer why there is so much affinity for the sector. Fintechs create so much value for Africa’s mobile-first population, with large sections of unbanked, underbanked and banked people. This value is why all but one of the continent’s billion-dollar startups are fintech.
African fintechs have grown by 89.4% between 2017 and 2021, according to a Disrupt Africa report. Now, there are more than 570 startups on the continent. Many fintechs are mobile-based, therefore reflecting the number of fintech apps Africans use each day. Consumers in South Africa and Nigeria saw year-on-year growth in finance app installs by 116% and 60%, respectively.
AppsFlyer says that like fintech apps, super apps are on the rise as well. These “all-in-one” apps offer users a range of functions such as banking, messaging, shopping and ride-hailing. The report says their rise, partly due to device limitations on the continent, owes much to the same conditions that have led to a surge in fintech apps: systemic underbanking.
“Super apps remove some of the barriers that these users face, as well as providing a level of customer insight and experience that traditional banks cannot,” the report said.
Daniel Junowicz, RVP EMEA & Strategic Projects for AppsFlyer, commenting on the trends highlighted in the report said, “…The mobile app space in Africa is thriving despite the turmoil of last year. Installs are growing, and consumers are spending more money than ever before, highlighting just how important mobile can be for businesses when it comes to driving revenue.”
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Facebook to target Nigerian learners with educational app Sabee, created by its R&D team
Last fall, Facebook announced it was opening an office in Lagos, Nigeria, which would provide the company with a hub in the region and the first office on the continent staffed with a team of engineers. We’ve now spotted one of the first products to emerge from this office: an education-focused mobile app called Sabee, which means “to know” in Nigerian Pidgin. The app aims to connect learners and educators in online communities to make educational opportunities more accessible.
The app was briefly published to Google Play by “NPE Team,” the internal R&D group at Facebook, which has typically focused on new social experiences in areas like dating, audio, music, video, messaging and more.
While the learnings from the NPE Team’s apps sometimes inform broader Facebook efforts, the group hasn’t yet produced an app that has graduated to become a standalone Facebook product. Many of its earlier apps have also shut down, including (somewhat sadly), the online zine creator Eg.g, video app Hobbi, calling app CatchUp, friend-finder Bump, podcast community app Venue, and several others.
Sabee, however, represents a new direction for the NPE Team, as it’s not about building yet another social experiment.
Instead, Sabee is tied to Facebook’s larger strategy of focusing more on serving the African continent, starting with Nigeria. This is a strategic move, informed by data that indicates a larger majority of the world’s population will be in urban centers by 2030, and much of that will be on the African continent and throughout the Middle East. By 2100, Africa’s population is expected to have tripled, with Nigeria becoming the second-most populated country in the world, behind China.
Image Credits: Facebook NPE Team
To address the need to connect these regions to the internet, Facebook teamed with telcos on 2Africa, a subsea cable project that aims to serve the over 1 billion people still offline in Africa and the Middle East. These aren’t altruistic investments, of course — Facebook knows its future growth will come from these demographics.
Facebook confirmed its plans for Sabee to TechCrunch after we discovered it, noting it was still a small test for the time being.
“There are 50 million learners, but only 2 million educators in Nigeria,” said Facebook Product Lead, Emeka Okafor. “With this small, early test, we’re hoping to understand how we can help educators build communities that make education available to everyone. We look forward to learning with our early testers, and deciding what to do from there.”
Image Credits: Facebook NPE Team
The disparity between learners and educators in Nigeria greatly impacts women and girls, which is another key focus for Sabee — and the NPE Team’s efforts in the region as a whole. The company also wants to explore how to better serve groups who are often left behind by technology. On this front, Sabee is working to create an experience that works with low connectivity, like 2G.
We understand the app is currently in early alpha testing with fewer than 100 testers who are under NDA agreements with Facebook. It’s not available for anyone else beyond that group at present, but the company hopes to scale Sabee to the next stage before the end of the year.
There is no way to sign up for a Sabee waitlist, and the app is no longer public on Google Play. It was available so briefly that it was never ranked on any charts, app store intelligence firm Sensor Tower confirmed to us.
We should note that “sabee” and “sabi/sabis” have other, less-polite meanings in different languages, per Urban Dictionary. But the team has no plans to change the name for now as it makes sense in the Nigerian market where the app is targeted.
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Dear Sophie: What is a diversity green card and how do I apply for one?
Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.
Dear Sophie,
I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.
I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?
— Technical in Tanzania
Dear Technical,
As a startup founder from Tanzania, you have several immigration options available to you, including the Diversity Immigrant Visa (green card) Program.
My law partner, Anita Koumriqian, and I recently discussed the Diversity Immigrant Visa Program (DV Program) on a podcast episode. Take a listen for how to apply and tips for applying. Each year, the U.S. Department of State, which oversees the DV Program, reserves 50,000 green cards for individuals born in countries that have low rates of immigration to the United States. The State Department publishes instructions each year, which includes the countries whose natives are eligible to register for the annual diversity lottery. Here is the latest version.
How does the diversity lottery work?
You must register online in the fall — usually from early October through early November — for the annual random lottery by completing the Electronic Diversity Visa Entry Form (DS-5501). There is no cost to register for the lottery, but be aware that you will be automatically disqualified if you register yourself more than once, and incomplete forms will not be accepted.
Once you complete the online registration form, you will get a confirmation number. Do not lose this number! It is the only way to access the online system that will tell you whether you were selected in the lottery and are eligible to submit a green card application. In May, registrants can log into the online system to find out whether they’ve been selected. No notification will be sent by email or snail mail; checking online by entering your confirmation code is the only way to find out. After you enter your confirmation code online, you will receive a diversity visa number, which you will use to determine when you can file your green card application.
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Equity Monday: Jeff’s going to space, and everyone wants a piece of Flipkart
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.
It’s WWDC week, so expect a deluge of Apple news to overtake your Twitter feed here and there over the next few days. But there’s a lot more going on, so let’s dig in:
- The Weekend: A supercharged, supercharged Model S Tesla car is not coming out. Instead, a merely supercharged version will come out. It’s still stupid fast and expensive. And Nigeria’s war with Twitter continued, with new efforts from the African nation to limit access to the social media service within its borders.
- This Morning: Flipkart is raising $3 billion at a roughly $40 billion valuation. The deal underscores not just how big the Indian tech scene is, but also how much investor interest there is in e-commerce bets more generally. And Jeff Bezos is going to space. Soon!
- Funding Rounds: Trulioo raised a $394 million Series D. The Canadian startup is now worth far more than $1 billion. And Chinese company Kanzhun is going public in the United States, which raised an eyebrow here amongst the Equity Morning Crew.
- Take The Damn Equity Survey: Take it! All the cools kids are taking it!
And that’s your start to the week. More to come from your friends here on Wednesday, and Friday. Chat soon!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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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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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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The Sun Exchange raises $3M for crypto-driven solar power in Africa
South Africa-based renewable energy startup Sun Exchange has raised $3 million to close its Series A funding round totaling $4 million.
The company operates a peer-to-peer, crypto-enabled business that allows individuals anywhere in the world to invest in solar infrastructure in Africa.
How’s that all work?
“You as an individual are selling electricity to a school in South Africa, via a solar panel you bought through the Sun Exchange,” explained Abe Cambridge, the startup’s founder and CEO.
“Our platform meters the electricity production of your solar panel. Arranges for the purchasing of that electricity with your chosen energy consumer, collects that money and then returns it to your Sun Exchange wallet.”
It costs roughly $5 a solar cell to get in and transactions occur in South African Rand or Bitcoin.
“The reason why we chose Bitcoin is we needed one universal payment system that enables micro transactions down to a millionth of a U.S. cent,” Cambridge told TechCrunch on a call.
He co-founded the Cape Town-headquartered startup in 2015 to advance renewable energy infrastructure in Africa. “I realized the opportunity for solar was enormous, not just for South Africa, but for the whole of the African continent,” said Cambridge.
“What was required was a new mechanism to get Africa solar powered.”
Sub-Saharan Africa has a population of roughly 1 billion people across a massive landmass and only about half of that population has access to electricity, according to the International Energy Agency.
Recently, Sun Exchange’s main market South Africa — which boasts some of the best infrastructure in the region — has suffered from blackouts and power outages.
Image Credits: Sun Exchange
Sun Exchange has members in 162 countries who have invested in solar power projects for schools, businesses and organizations throughout South Africa, according to company data.
The $3 million — which closed Sun Exchange’s $4 million Series A — came from the Africa Renewable Power Fund of London’s ARCH Emerging Markets Partners.
With the capital, the startup plans to enter new markets. “We’re going to expand into other Sub-Saharan African countries. We’ve got some clear opportunities on our roadmap,” Cambridge said, referencing Nigeria as one of the markets Sun Exchange has researched.
There are several well-funded solar energy startups operating in Africa’s top economic and tech hubs, such as Kenya and Nigeria. In East Africa, M-Kopa sells solar hardware kits to households on credit, then allows installment payments via mobile phone using M-Pesa mobile money. The venture is backed by $161 million from investors including Steve Case and Richard Branson.
In Nigeria, Rensource shifted from a residential hardware model to building solar-powered micro utilities for large markets and other commercial structures.
Sun Exchange operates as an asset free model and operates differently than companies that install or manufacture solar panels.
“We’re completely supplier agnostic. We are approached by solar installers who operate on the African continent. And then we partner with the best ones,” said Cambridge — who presented the startup’s model at TechCrunch Startup Battlefield in Berlin in 2017.
“We’re the marketplace that connects together the user of the solar panel to the owner of the solar panel to the installer of the solar panel.”
Abe Cambridge, Image Credits: TechCrunch
Sun Exchange generates revenues by earning margins on sales of solar panels and fees on purchases and kilowatt hours generated, according to Cambridge.
In addition to expanding in Africa, the startup looks to expand in the medium to long-term to Latin America and Southeast Asia.
“Those are also places that would really benefit from from solar energy, from the speed in which it could be deployed and the environmental improvements that going solar leads to,” said Cambridge.
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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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