Nayantara Jha – WeeTracker https://weetracker.com World's Emerging Economies Tracker Mon, 04 Mar 2024 11:06:51 +0000 en-US hourly 1 https://wordpress.org/?v=5.8.9 https://weetracker.com/wp-content/uploads/2021/07/fevicon.png Nayantara Jha – WeeTracker https://weetracker.com 32 32 The New Playbook Behind Private Equity’s Quiet Boom In Africa https://weetracker.com/2024/02/21/african-private-equity-boom/ Wed, 21 Feb 2024 07:04:10 +0000 https://weetracker.com/?p=74904 Private equity (PE) investment in Africa has seen a remarkable upswing in recent

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Private equity (PE) investment in Africa has seen a remarkable upswing in recent years. This surge can be attributed to strong economic growth, favourable demographic trends, and growing investor interest.

According to industry reports, private equity investments in Africa have been consistently increasing, with sectors such as technology, healthcare, consumer goods, and infrastructure attracting significant capital.

This increase in investment activity shows that investors have more confidence in Africa's long-term growth prospects and the continent's immense potential to offer attractive returns. This trend is expected to continue, which makes Africa an attractive destination for private equity investors who want to leverage the continent's growth potential.

The value of investments made by private capital firms in Africa remained strong despite economic uncertainty throughout the year, closing 2022 with private capital firms reporting investments worth USD 7.6 B. The number of full exits made by private investors hit a remarkable 82 deals in 2022, the largest number of exits ever recorded in a single year on the continent. 

Although Africa presents some promising opportunities for private equity investors, the industry is not without its challenges. Regulatory complexities, political instability, currency risks, and inadequate infrastructure can pose significant hurdles for those operating in the region. Additionally, finding quality deals, conducting thorough due diligence, and managing portfolio companies in diverse and often unfamiliar markets require specialized expertise and a deep understanding of local dynamics.

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African Ventures Raised USD 1.98 B in 397 Deals – WT Report https://weetracker.com/2024/01/25/africa-annual-startup-funding-report-2023/ Thu, 25 Jan 2024 11:30:00 +0000 https://weetracker.com/?p=74446 Snapshot In the year 2023, African startup funding had a relatively decent year

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Snapshot

In the year 2023, African startup funding had a relatively decent year with a healthy mix of acceleration, early-stage, growth-stage, and debt deals. As per the publicly disclosed data collated by WT, African startups raised USD 1.98 B in 397 deals. This amount is 47% less than the previous year’s (2022) total funding value of USD 3.63 billion and represents a decline of 27% in total number of deals.

Compared to the previous years (2021 and 2022) where the funding amount experienced a surge in activity due to spillovers and surplus in external funding, 2023 was a year of ‘correction’. It is important to note that the funding activity in 2023 is almost similar to that of 2019.

In 2019, African startup funding crossed the billion-dollar mark for the first time. In 2023, it almost reached the two billion dollar mark, which appears to be the consequence of organic funding activity. Although several companies shut down in 2023, very few did so due to lack of funding. These shutdowns dominated conversations throughout the year. It would appear that the pressure of Venture Capital expectations from this growing ecosystem puts it under much strain.

Sector, Country and Top Deals

Investors in the African fintech sector continue to believe in its potential. This trend is driven by the scalability and importance of fintech products, which are mostly digital. Furthermore, the fintech industry offers a higher likelihood of mergers and acquisitions, or exits, than any other sector. In 2023, fintech startups in Africa raised a total of USD 1.16 B (105 deals), which accounted for nearly 60% of the total funding received. However, this value represents a 30% decline from last year’s (2022) fintech funding (USD 1.65 B), which was a 30% decrease from the 2021 funding value of USD 2.31 B.

It’s worth noting that Kenya emerged as the top destination for venture capital investments in Africa in 2023. This was an unexpected turn of events, especially considering that almost half of the total funding value of USD 522 M (84 deals) came from a single deal by M-Kopa worth USD 250 M. Despite this, Kenya managed to surpass Egypt’s total funding value, which included USD 400 M from MNT-Halan, the largest deal of the year. Egypt secured the second position with a total funding value of USD 473 M.

Interestingly, in both 2019 and 2023, the majority of the total funding amount came from the mega deals, accounting for 83% and 65%, respectively.

About the report

Decoding Venture Capital in Africa – 2023” is our sixth Annual report on the African startup ecosystem. Through our platform, weetracker.com, we have been observing, discussing, and meticulously documenting the ecosystem. Our media platform forms the backbone of our insights into this robust ecosystem. The research report is based on the analysis of 397 publicly disclosed deals by startups, accelerators, prized competitions, and investors.

In our methodology, we do not consider deals that are privately shared with data collectors or aggregators, as the ultimate authenticity of the deals cannot be verified. We follow a conservative approach to assessment, and our numbers can be understood as the guaranteed minimum. Hence, we state our numbers as USD 1.98 B (+), which means the African startups have definitively raised no less than USD 1.98 B.

This report will provide information about top countries, sector-wise funding, most-active investors, fund launches, mergers and acquisitions, top deals, and many other data tables.

Our Annual Venture Capital Report is complimentary for our WT Premium Elite Members and at a 50% discount for WT Premium Annual Members. Guest readers and Freemium readers can access the report for USD 110 from the link below or subscribe to our Premium Elite Membership ($110/annum) and access the free copy of the report.

You can also check our previous reports here.

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What African B2C eCommerce Startups Should Learn from Copia https://weetracker.com/2023/11/21/what-african-b2c-ecommerce-startups-should-learn-from-copia/ Mon, 20 Nov 2023 23:27:00 +0000 https://weetracker.com/?p=71873 When discussing Africa, people often say, "Africa is not a country" and "Silicon

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When discussing Africa, people often say, "Africa is not a country" and "Silicon Valley models don't work here". However, very few startups actually consider these statements.

As e-commerce gained popularity around the world, African markets struggled to keep up due to a lack of proper postal addresses and other infrastructural deficits. While startups in other parts of the world became unicorns by aggregating products and enabling e-commerce on their platforms, the African market had to overcome the additional hurdle of online payments.

Jumia was a pioneer in the African consumer-facing e-commerce market when it entered in 2012, specifically in Nigeria, which is the most populous country in Africa. It is worth noting that Jumia entered the African e-commerce space with deep pockets. Even after a decade of operation in Africa, achieving profitability remains a challenge for the platform. However, this is not surprising as most e-commerce companies face a similar challenge. It takes time for any e-commerce startup to become profitable; this process may take longer in Africa due to the still-developing supporting systems.

A startup was launched in Kenya in 2013 with the goal of serving the lower-income group in the East African market. It was evident to them from the beginning that the 'Silicon Valley' model of e-commerce was not part of their strategy.

Copia was founded by Tracey Turner and Jonathan Lewis, who had exposure to all the key factors needed to build a mass business-to-consumer (B2C) e-commerce platform for Africa. They understood the market considerably since Tracey had worked in Kenya in the 90s. On the other hand, Jonathan had the idea of household product cataloguing for emerging markets. This gave birth to what we know today as Copia (meaning abundance in Latin).

Copia's agent model has always intrigued me since their Series B round. I have been following Copia's story regularly as this, in my opinion, is closest to being an African B2C e-commerce model. So, I met Tim Steel, who has been the CEO of Copia since 2017, to understand what Copia is doing differently.

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Meet Anthony Natif, The Founder Who Is Putting Uganda Back On the Startup Map https://weetracker.com/2023/08/04/meet-anthony-natif-the-founder-who-is-putting-uganda-back-on-the-startup-map/ Fri, 04 Aug 2023 06:22:59 +0000 https://weetracker.com/?p=71938 Over the past three years, the startup ecosystem in Uganda has seen an

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Over the past three years, the startup ecosystem in Uganda has seen an average of 11 investment deals and one startup acquisition per year. While some startups like SafeBoda, Ensiibuko, Asaak, Numida, and Tugende have gained recognition, the local venture capital and investor scene remain largely underdeveloped. Additionally, there are few initiatives to support startups in the country.

When I visited Kampala two months ago, I noticed that the ecosystem is not well represented in the African tech industry. Despite the difficulties that entrepreneurs face in creating solutions for this market, their contributions have not been acknowledged on a larger scale.

But among these challenges, there's the story of Anthony Natif, which serves as a good example of seizing the opportunity. Recently, Guardian Health Limited (GHL) was in the news for a successful acquisition by Kenya-based MyDawa. Operating through 19 stores at the time of acquisition, Guardian Health was valued at around USD 12 M at the time of exit, as per Natif.

Private equity firm Alta Samper bought 100% equity in GHL via its investee company MyDawa.

Back in 2012, while he was still a student at The University of Washington, Natif founded Guardian Health Limited. Some may argue that if one can afford to attend a foreign university, one can start a company too. However, I learned that Natif is the youngest of over 20 siblings, and his father was a schoolteacher. Throughout his student years, he was mostly advanced to the next class on scholarships.

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Cellulant: Meet The Real ‘OG’ of African Fintech https://weetracker.com/2023/07/20/meet-cellulant-real-og-of-african-fintech/ Thu, 20 Jul 2023 04:30:00 +0000 https://weetracker.com/?p=71002 In 2018, I was working on the Africa VC report for WT when

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In 2018, I was working on the Africa VC report for WT when the name Cellulant caught my eye. This fintech company from Kenya had raised an impressive USD 47.5 M in Series C funding, while most startups that year only secured an average of USD 50 K. During that time, accelerators and grants were the most vibrant sources of funding.

I have a clear recollection of this event, as there was much discussion following the release of our report regarding whether or not Cellulant could be classified as a startup. Interestingly, those who were active on Twitter at the time were advocating for MFS Africa to be recognized as a startup.

Cellulant was already established in 11 countries and valued at over USD 100 M at the time of closing that Series C round. This was the second-largest startup funding round for an African tech company at the time, with the exception of Jumia's. Co-founders Ken Njoroge and Bolaji Akinboro seemed to be making significant strides towards building a unicorn.

...

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African B2B e-Commerce Is Not Dead; It’s Just Getting Started – Deepankar Rustagi https://weetracker.com/2023/06/21/african-b2b-commerce-startups-getting-started/ Wed, 21 Jun 2023 03:09:35 +0000 https://weetracker.com/?p=70515 The principles of "Demand and Supply" that underpin a free market are also

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The principles of "Demand and Supply" that underpin a free market are also the driving forces behind any supply chain network. The business-to-business (B2B) supply chain is a vast sector with several essential components, including logistics, warehousing, last-mile deliveries, and inventory management.

There are several African B2B supply chain startups that are addressing various issues in each vertical. These startups are guided by the fundamental principles of demand and supply. With a significant portion of the retail sector being disorganized, there is immense potential for sustainable growth for B2B e-commerce startups.

B2B e-commerce startups in Africa serve as a connection between producers and retailers, enabling informal street vendors and small-business proprietors to replenish their supplies through mobile apps, WhatsApp, and text messages. These emerging companies offer discounted products and provide logistical support to merchants through their own delivery truck fleets or by engaging third-party businesses for order fulfilment.

Although African demand and supply are influenced by global markets, the consumption of daily essentials subsists even during difficult times like covid or war. This is evident from the functioning of the global supply chain during such challenging periods.

It's been a tough year for the startup scene, especially in Africa, as venture capital injection has slowed down. African startup funding has dropped by over 50 percent when compared to the same period last year, and it appears that the B2B e-commerce sector is among the worst hit.

What could be the real reason? Is it because it is a non-performing sector? Or because the sector demands higher tranches of investments, more than USD 10-20 M, to make a dent?

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Meet Anirudh A Damani: Gearing Up to Invest In 100 African Startups https://weetracker.com/2023/05/23/meet-anirudh-damani-invest-100-african-startups/ Tue, 23 May 2023 05:30:00 +0000 https://weetracker.com/?p=69787 Young, well-travelled and with a keen eye for numbers, Anirudh A Damani, Director

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Young, well-travelled and with a keen eye for numbers, Anirudh A Damani, Director of Artha India Ventures, is going all-in on Africa. Between 2022- 23, his firm has made investments in Kenya-based Badili and BuuPass, along with African business lender GoodLoans.

With four unicorns, eight soonicorns and 25+ exits in his Indian portfolio, Anirudh feels that similarities between the African and Indian startup ecosystems cannot be ignored. Having seen the stupendous funding cycles in the Indian startup ecosystem and tasting successful exists, Anirudh is now ready to bet on another rising ecosystem: Africa's thriving tech scene.

Anirudh dons a few hats. He is the Managing Partner of Artha Venture Fund with a USD 33 M stash that ploughs capital in its Indian portfolio. He is also recognised as the force behind Artha Select Fund, a USD 55 M growth-stage microVC fund for India. Anirudh's successful investment strategies can be traced back to his founding of Artha India Ventures, his family office investment arm. He ventured into various investments through this entity, including those in Africa and companies such as OYO, Tala, Purplle, and IconBuild (all unicorns).

Anirudh's journey with Venture Capital began in 2012 when he returned to India from the US. The Indian startup ecosystem was still in its nascent stages at the time; names like Flipkart, Freecharge and PayTM were still introducing themselves to Indian consumers.

In the following year, through the family office, Anirudh was one of the first investors in the lodging booking company called OYO, which became a USD 10 B company in 2018. Anirudh says he secured a sizeable exit from OYO with over 150x returns.

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Pan African Neobank Fin acquires SA Based Thuthukani Home Loans https://weetracker.com/2023/03/21/pan-african-neobank-fin-acquires-sa-based-thuthukani-home-loans/ Tue, 21 Mar 2023 06:00:00 +0000 https://weetracker.com/?p=68965 Credit-led neobank Fin ( formerly Finclusion group) has acquired SA-based Thuthukani Housing Finance

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Credit-led neobank Fin ( formerly Finclusion group) has acquired SA-based Thuthukani Housing Finance (Pty) Ltd. to complete its financing product offerings for its customers.

With this acquisition, Thuthukani’s incremental housing finance offering gets renamed to Fin Home  Loans and integrated into Fin’s South African portfolio. Fin Home Loans’ aim will remain to give middle to lower-income Fin customers access to affordable finance.

Early last year, Fin raised USD 20 M in debt and equity from marquis investors, with a major portion as debt from local currency funds in Eswatini and South Africa. In 2021, the neobank, in partnership with Lendable, reportedly raised USD 20 M in debt for enterprise development. During the same year, Fin acquired the South African payroll software firm HelloHR.

A close look at Fin’s portfolio suggests that the neobank is quite clear with its product offering and customer acquisition strategy. Since its launch in 2018, Fin has used lending as the approach to onboard users. So far, the neobank has covered quite a wide range of credit products and insurance. This latest addition of Fin home loans to its portfolio of products gives them an opportunity for big-ticket lending.

Interestingly, another credit-led African neobank, Fairmoney, acquired Payforce, a merchant payment platform, last week. In 2021, Fairmoney raised its Series B of USD 42 M, led by Tiger Global. The focus markets of the company are Nigeria and India, two heavily populated markets with sufficient requirements for credit.

Fin focuses on some very fast-moving credit markets in Africa, namely South Africa, Kenya and Tanzania. These markets are not new for credit or microfinance offerings. Companies like Branch, Tala and Safaricom’s Fluliza are quite active in microfinancing in East Africa. To be able to compete with other heavily funded products, Fin has carved out a sustainable strategy.

Co-CEO and Co-Founder of Fin Tonderai Mutesva said, “Our partnership focus sets Fin apart from other finance providers. We believe partnering with local suppliers, employers, and service providers is the most efficient way to engage with communities and offer our products to those needing them. By leaning on local knowledge, trust, and relationships, we can better and more easily serve customers and enhance our partners’ reputations while building our own.”

The said strategy reflects in their choice of product offerings. Fin’s portfolio consists of the following:

Fin Payroll Loans for employers for wage streaming and credit solutions to their employees,

Fin Online Loans credit for individuals with online applications,

Fin Medical Loans for financing the gap for procedures that are not covered by medical aid and financial help with medical aid shortfalls,

Fin Coverproviding cover for funerals, commuting, credit life and more, underwritten by GuardRisk,

Fin Pay – instant payments and credit at check-out,

The Fin Home Loans developmental housing product now complements this range of products in South Africa.

It has been made very clear by the African fintech startups in the past 2 years that credit and loans are the way to VC funding. Last year, for instance, credit and lending startups raised over USD 600 M in funding out of USD 1.6 B raised by fintechs in Africa.

Co- CEO & Co-Founder, Fin – Tonderai Mutseva

Two factors that will make Fin a robust full-stack neobank are payment products and bigger markets. Compared to its peers, which are mostly Nigeria focussed companies, Fin seems to be missing the largest African market. However, it should be noted that Fin raised strategic funding last year from Cairo Angel Syndicate Fund, which can be the doorway to Africa’s other competitive fintech market – Egypt.

On the future plans of entering bigger markets, Mutesva said, “Fin is building a neobanking platform for Africa. As such, our long-term ambition is to serve all key markets across the continent. We are currently focused on our two regions of operations, Southern & Eastern Africa, where we are leading with our varied product offerings. We are open to geographic expansion in the near future, wherever opportunities present themselves.”

Likewise, to compete with other neobanks concerning product offerings, the company said, “Fin does have plans to roll out newer products in the coming time.”

In an exclusive byte to WT, Tonderai mentioned, “We have a product, Fin Pay, that we are rolling out in Q2 2023, which will essentially act like a credit card on top of mobile money or for online shopping. The product is designed to give interest-free credit for some time and allows people to gather rewards from their shopping experiences. This is the first of a diverse set of products we will be rolling out soon to provide a comprehensive neobanking experience for our customers.”

  

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