Bulls n Bears Entrepreneurship Zone :: Venture capital investors making big bets on African fintech

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Technology has allowed African countries to accomplish several feats, such
as: leapfrog traditional banking; make healthcare more readily available;
and connect rural households with off-grid electricity solutions, to name a
few.

According to Africa Private Equity News, an industry information service,
international and local investors are increasingly backing tech-enabled
companies which are exploiting new opportunities or redefining existing
services. A substantial number of tech-related venture capital deals were
reported during September 2018.

In more advanced economies, fintech is often seen as a disruptor of the
traditional financial sector, but in African countries it is bridging gaps
that have not yet been addressed by the banking industry. In a study by
Disrupt Africa, it is noted that African fintech businesses pulled in almost
a third of the total funding raised by startups on the continent in 2017.
This trend is continuing, with a series of fintech investments announced
last month.

South African mobile financial services platform JUMO closed a US$52m
equity funding round led by Goldman Sachs, with participation from French
development-finance institution Proparco, Finnfund, Vostok Emerging Finance,
Gemcorp Capital and LeapFrog Investments. Furthermore, Yoco, a
point-of-sales payments provider, also based in South Africa, raised a
series-B round of $16m with Partech, a venture capital firm founded in
Silicon Valley, as the major investor. Other firms which took part in the
deal include Orange Digital Ventures, Dutch development bank FMO, and
existing series-A investors from the US: Quona Capital and Velocity Capital.

In West Africa, Nigeria-based mobile money company Paga pocketed $10m in
growth financing from a string of international firms, including the Global
Innovation Fund (GIF), Goodwell, Unreasonable Capital and Omidyar Network.
According to Paga CEO Tayo Oviosu, the investment will be used for expansion
to Ethiopia, Mexico and the Philippines. Another Nigerian fintech company,
Paystack, which provides payments tools to businesses in Africa, received
$8m series-A funding, led by US-based Stripe. The round also included
capital commitments from Visa, China’s Tencent and American seed accelerator
Y Combinator.

Beyond the financial industry, ventures providing technology-enabled
solutions in other sectors also attracted investment. The Meltwater
Entrepreneurial School of Technology (MEST), a training programme, seed fund
and tech incubator, got in on the action and invested $700,000 in seven
African startups. Some of the companies that received investment include:
Codeln, an end-to-end technical recruitment platform; and Truckr, a
logistics marketplace app for listing and booking third-party truck
services.

In the communications sector, Nigerian internet service provider Tizeti
raised $3m, led by Ghanaian 4DX Ventures and joined by investment holding
company Golden Palm Investments, Y Combinator Continuity, Lynett Capital,
Social Capital, Western Technology Investment, and Friále. Kendall Ananyi,
CEO of Tizeti, said the funds will go towards building out its current
service in Nigeria, in addition to facilitating expansion to Ghana.

In the agriculture sector, Egypt’s FreshSource, a business-to-business food
supply platform, secured an undisclosed amount of seed funding from
HIMangel, the Cairo-based angel fund. And in a tech-related acquisition,
Kenyan data collection startup Bamba Group has been bought out by the
UK-based Maximeyes Group, a business incubator, investor, and energy
solutions provider.—howwemadeitinafrica



 

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