Entrepreneurship Zone: 27 January 2025 : African venture capital investor reveals five sectors poised for growth

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Entrepreneurship Zone: 27 January 2025 :  African venture capital investor
reveals five sectors poised for growth

 


 

 


 <https://www.firstcapitalbank.co.zw/> 

 


 

 


 

 



Mikael Hajjar

Interview with Mikael Hajjar
CO-FOUNDER, P1 VENTURES

Lives in: Dakar, Senegal

  _____  

While global venture capital funding, as measured by Pitchbook, is down 48%
in the first half of 2023 compared to the previous year, Mikael Hajjar,
co-founder of Africa-focused venture capital firm P1 Ventures argues that
now is the time to invest. He believes in investing before the hype, or when
the markets are down.

P1 Ventures has backed 29 start-ups since 2020, the year co-founders Mikael
Hajjar and Hisham Halbouny established the company. They both used to run
businesses and later became venture capitalists. Halbouny has experience in
healthcare and consumer finance, while Hajjar has a background in clean tech
and climate solutions. Recently, P1 Ventures announced the US$25 million
first close of its second fund.

The company prides itself on its contrarian investment philosophy – invest
when, where and in companies that other investors won’t necessarily
consider. In a recent interview with Jeanette Clark, Hajjar highlighted five
sectors where the firm sees opportunities.


1. Where crypto and fintech converge


The last two years haven’t been great for crypto. Hailed by many
commentators as a long “crypto winter”, the trouble that set in during 2022
with the collapse of cryptocurrencies Luna and TerraUSD, culminated in the
closing of the FTX exchange in November of last year.

Despite the reigning scepticism, Hajjar is bullish about the investment his
firm has made in Nairobi-based Kotani Pay. The company provides a solution
for people who want to convert crypto to fiat currencies and vice versa. It
operates in Kenya, Ghana and South Africa and supports eight
cryptocurrencies.

Ideal for the African context, Kotani’s technology allows users to off-ramp
from crypto via USSD, so no internet or smartphones are required, says
Hajjar. This makes the technology accessible to a wider range of users.
Kotani also offers fast remittance across borders (minutes instead of hours
or days). This solves a pain point for many Africans who are working and
living in other countries and need to send money back home. It also comes at
a lower cost, at only 2% per US$200. The World Bank puts the average cost
for a remittance to Africa at 8.5%.

It is at this interface of crypto and Web3 fintech that Hajjar and P1
Ventures see potential. “We are firm believers that crypto infrastructure
and blockchain … [offer] tremendous opportunity for the continent. Africa
has been the home of some of the early fintech innovations like M-Pesa … and
we believe that Web3 offers new, disruptive leapfrog opportunities for
financial inclusion.”

Web3, according to McKinsey and Company, is the concept of a decentralised
internet built on blockchains. Essentially, it is an extension of
cryptocurrency, using blockchain in new ways.


2. Making healthcare affordable


Africa makes up approximately 18% of the world population and over 20% of
the total global disease burden. But when it comes to the number of doctors,
says Hajjar, the continent only has 2% of all the doctors in the world. For
P1 Ventures, this imbalance equals opportunity.

A company in the P1 Ventures fold that is working to capture this
opportunity, is Reliance Health. It started in 2015 as Kangpe, a
telemedicine company pushing its promise of “a doctor in your pocket”. The
CEO, Femi Kuti, is a medical doctor who wanted to make healthcare accessible
and affordable in Nigeria.

Reliance Health has evolved into an integrated healthcare enterprise,
providing micro-insurance for medical coverage, round-the-clock telemedicine
support, and medical services via its chain of private clinics in Lagos,
Port Harcourt, and Abuja. The firm recently extended its reach to Egypt,
establishing a presence in Cairo.

On the insurance front, the company zeroes in on corporate clients,
providing packages that allow employers to secure health insurance for their
staff at rates starting at US$50 annually. Notable sign-ups include
e-commerce giant Jumia and financial services platform OPay.

“It is a very powerful model that has been scaling nicely and is now
expanding across the continent,” says Hajjar.


3. AI-driven business intelligence


P1 Ventures believes that AI is the next leapfrog opportunity for the
continent. It is therefore looking for companies that are building AI-driven
businesses specific to the African context.

Hajjar notes a considerable demand for data in Africa. Within this realm,
conversational AI might facilitate automated data collection via
intelligence crowdsourcing. Such tools, he suggests, could provide major
consumer brands, such as Coca-Cola or its African distributors, with
immediate insights into product availability on shelves, pricing, and
logistical bottlenecks.

One of P1 Ventures’ recent investments, Lengo, based in Senegal, employs a
hybrid method of field agents and AI. It links informal retailers and
fast-moving consumer goods (FMCG) companies through its
software-as-a-service (SaaS) platform, offering real-time data on product
sales and insights into consumer behaviour. The company’s tagline
underscores its mission: “Stop guessing Africa”.

Lengo was founded last year by Max Smith, Roger Xavier Macia, and Ismaila
Seck. The company has already mapped over 30,000 informal
<https://www.howwemadeitinafrica.com/category/sectors/retail-sectors/>
retail shops in and around Dakar. Its field agents, known as Lengo Eagles,
roam the streets, enlisting shopkeepers who provide information by answering
chatbot questions and submitting photos of in-store stock. This data is then
analysed by the Lengo team using AI models, which include voice recognition
and image analysis, to produce real-time analytics on FMCG goods’ pricing
and market performance.

The company already provides this analysed data to FMCG companies such as
Unilever and GB Foods (a large FMCG distributor in Africa).


4. E-commerce customer retention in a tough economic climate


P1 Ventures led a round of funding in Gameball. The company is a customer
intelligence and marketing CRM platform, founded in 2020 by Egyptian
businessmen Ahmed Khairy, Ahmed El Assy and Omar Alfar.

“Essentially, they are enabling e-commerce marketplaces and consumer brands
to retain customers through gamification of loyalty. We all know in the
current environment with the liquidity crunch how important it is not to
grow at all costs, but [rather] to retain customers and sustainably increase
the basket or cart size of your existing customers,” says Hajjar. Gameball
can be integrated into Shopify platforms as a widget and is designed to help
a business grow its own community of brand ambassadors and devoted
customers, offering a variety of incentives, such as points, cashback,
rewards for referrals or shopping milestones, discounts, and credit.

Every feature is adaptable based on the preferences of the implementing
company, resulting in a tailored shopping journey that resembles gameplay.
Consumers accumulate points, progress through levels, receive awards for
reviews, and more.

Already, over 2,000 companies from 70 countries have incorporated Gameball
into their operations.


5. Creating online gaming communities


Growing up in Mauritania, Hajjar remembers how football provided a strong
social bond. “There is this team spirit that sport fosters and we see
something very similar happening [online] with football, thanks to consumer
apps like Eksab!.” Eksab! is an Egyptian company, offering an online arcade
for football fans to participate in fantasy football games and trivia
contest. It has more than 1.5 million registered users and players can win
cash and other prizes. A user buys coins to participate in any of the daily
listed fantasy football or tactical games, or in trivia competitions hosted
at specific times.

Beyond gaming, information dissemination is a core aspect of the platform.
Users frequent Eksab! to peruse content penned by the company’s team about
Egyptian players and football squads. This engagement spills over to social
media platforms: on Facebook, for instance, the Eksab! page boasts over
114,000 followers, and an accompanying group has 33,000 members forming a
vibrant community.

Before co-founding P1 Ventures, Hajjar was involved in angel investing. One
of the first companies he invested in was a Côte d’Ivoire-based fashion
e-commerce business that eventually failed.

“The primary lesson I learnt [then], and that we have also seen in the [P1
Ventures] portfolio is the main risk you are taking, is in the team: the
founding team. So that is where we spend an extensive amount of time,” he
explains. Before investing P1 Ventures gets references on the team and takes
time to understand how much they have already worked together, how
compatible they are, and if they will be able to power through the lows.

Another pivotal consideration is a startup’s capability to circumvent the
intrinsic risks associated with being confined to a specific African market
or currency. Ideally, software-as-a-service and AI tech enterprises that can
offer their products globally without logistical constraints are favoured.

*         —Howwemadeitinafrica

 

 


 


 


 

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