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Africa Roundup: Trump’s Nigeria ban, Paga’s acquisition and raises — Fluterwave $35m, Sendy $20M

08:34 | 4 February

The first month of the new-year saw Africa enter the fray of U.S. politics. The Trump administration announced last week it would halt immigration from Nigeria — Africa’s most populous nation with the continent’s largest economy and leading tech sector.

The presidential proclamation stops short of a full travel ban on the country of 200 million, but suspends immigrant visas for Nigerians seeking citizenship and permanent resident status in U.S.

The latest regulations are said not to apply to non-immigrant, temporary visas for tourist, business, and medical visits.

The new policy follows the Trump’s 2017 travel ban on predominantly Muslim countries. The primary reason for the latest restrictions, according to the Department of Homeland Security, was that the countries did not “meet the Department’s stronger security standards.”

Nigeria’s population is roughly 45% Muslim and the country has faced problems with terrorism, largely related to Boko Haram in its northeastern territory.

Restricting immigration to the U.S. from Nigeria, in particular, could impact commercial tech relations between the two countries.

Nigeria is the U.S.’s second largest African trading partner and the U.S. is the largest foreign investor in Nigeria.

Increasingly, the nature of the business relationship between the two countries is shifting to tech. Nigeria is steadily becoming Africa’s capital for VC, startups, rising founders and the entry of Silicon Valley companies.

Recent reporting by VC firm Partech shows Nigeria has become the number one country in Africa for venture investment.

Much of that funding is coming from American sources. The U.S. is arguably Nigeria’s strongest partner on tech and Nigeria, Silicon Valley’s chosen gateway for entering Africa.

Examples include Visa’s 2019 investment in Nigerian fintech companies Flutterwave and Interswitch and Facebook and Google’s expansion in Nigeria.

On the ban’s impact, “U.S. companies will suffer and Nigerian companies will suffer,” Bosun Tijani, CEO of Lagos based incubator CcHub, told TechCrunch .

Nigerian entrepreneur Iyinoluwa Aboyeji, who co-founded two tech companies with operations in the U.S. and Lagos — Flutterwave and Andela — posted his thoughts on the latest restrictions

“Just had an interesting dinner convo about this visa ban with Nigerian tech professionals in the U.S. Sad …but silver lining is all the amazing and experienced Nigerian talent in US tech companies who will now head on home,”

.

Notable market moves in African tech last month included an acquisition, global expansion and a couple big raises.

Nigerian digital payments startup Paga acquired Apposit, a software development company based in Ethiopia, for an undisclosed amount.

The Lagos based venture also announced it would launch its payment products in Mexico this year and in Ethiopia imminently, CEO Tayo Oviosu told TechCrunch

The moves come a little over a year after Paga raised a $10 million Series B round and Oviosu announced the company’s intent to expand globally, while speaking at Disrupt San Francisco.

Paga will leverage Apposit — which is U.S. incorporated but operates in Addis Ababa — to support that expansion into East Africa and Latin America.

Paga has created a multi-channel network to transfer money, pay-bills, and buy things digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps.

With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers.  The company will direct its boosted capabilities and total workforce of 530 to support its expansion.

On the raise side, San Francisco and Lagos-based fintech startup Flutterwave (previously mentioned) raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

FIS also joined the round, led by US VC firms Greycroft and eVentures, with participation of Visa and African fund CRE Venture Capital .

The company will use the funding to expand capabilities to provide more solutions around the broader needs of its clients. Uber, Booking.com and Jumia are among the big names that use Flutterwave to process payments.

Last month, Africa’s logistics startup space gained another multi-million-dollar round with global backing.

Kenyan company Sendy — with an on-demand platform that connects clients to drivers and vehicles for goods delivery — raised a $20 million Series B led by Atlantica Ventures.

Toyota Tsusho Corporation, a trade and investment arm of Japanese automotive company Toyota, also joined the round.

Sendy’s raise came within six months of Nigerian trucking logistics startup Kobo360’s $20 million Series A backed by Goldman Sachs. In November, East African on-demand delivery venture Lori Systems hauled in $30 million supported by Chinese investors.

The company plans to use its raise for new developer hires, to improve the tech of its platform, and toward expansion in West Africa in 2020.

Sendy’s $20 million round also includes an R&D arrangement with Toyota Tsusho Corporation, to optimize trucks for the West African market, Sendy CEO Mesh Alloys told TechCrunch.

More Africa-related stories @TechCrunch

African tech around the ‘net

 


0

African fintech firm Flutterwave raises $35M, partners with Worldpay

14:00 | 21 January

San Francisco and Lagos-based fintech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.

The company will also expand capabilities to offer more services around its payment products.

More than payments

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.

That means Flutterwave will provide more solutions around the broader needs of its clients.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.

Flutterwave Cardi B Nigeria“We want to scale in all those markets and be the payment processor of choice,” GB said.

The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.

“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.

GB Flutterwave disrupt

Olugbenga Agboola, aka GB

“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.

That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.

Worldpay partnership

The new round makes Flutterwave the payment provider for Worldpay in Africa.

“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.

Therein lies the benefit of collaborating with Flutterwave.

FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech company announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Flutterwave and African fintech

Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.

As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.

While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.

Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.

The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.

A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to be relevant in Africa.

 


0

Soft Robotics raises $23 million from investors including industrial robot giant FANUC

21:29 | 20 January

Robotics startup company Soft Robotics has closed its Series B round of funding, raising $23 million led by Calibrate Ventures and Material Impact, and including participation from exiting investors including Honeywell, Yahama, Hyperplane and more. This round also brings in FANUC, the world’s largest maker of industrial robots and a recently announced strategic partner for Soft Robotics .

The company said in a press release announcing this latest round of funding that the round was oversubscribed, which suggests it isn’t looking to glut itself on capital investors, given that this $23 million follows a similarly sized $20 million round that closed in 2018 which it also referred to as “oversubscribed.” Prior to that, Soft Robotics had raised $5 million in a Series A round closed in 2015. It has plenty of large, global clients already, so it’s probably not hurting for revenue.

Soft Robotics is focused on developing robotic grippers that, as you might’ve guessed from the name, make use of soft material endpoints that can more easily grip a range of different objects without the kind of extremely specific and tolerance-allergic complex programming that’s required for most traditional industrial robotic claws.

With its 2018 funding raise, Soft Robotics said that it was expanding further into food and beverage, as well as doubling down on its presence in the retail and logistics industries. This round and its new partnership with FANUC (which involves a new integrated system that pairs its mGrip robotic gripper with a new Mini-P controller, all with simple integration to FANUC’s existing lineup of industrial robots) will give it strategic and functional access to what is the most influenentioal industrial robotics company in the world.

This round will specifically help Soft Robotics spend on growth, looking to increase its variability even further and work on expanding its food packaging and consumer goods applications, as well as diving into e-commerce and logistics – specifically to help automate and improve the returns process, a costly and ever-growing challenge as more retail moves online.

 


0

What we know (and don’t) about Goldman Sachs’ Africa VC investing

22:30 | 16 January

Goldman Sachs is investing in African tech companies. The venerable American investment bank and financial services firm has backed startups from Kenya to Nigeria and taken a significant stake in e-commerce venture Jumia, which listed on the NYSE in 2019.

Though Goldman declined to comment on its Africa VC activities for this article, the company has spoken to TechCrunch in the past about specific investments.

Goldman Sachs is one of the most enviable investment banking shops on Wall Street, generating $36 billion in net revenues in 2019, or roughly $1 million per employee. It’s the firm that always seems to come out on top, making money during the financial crisis while its competitors were hemorrhaging. For generations, MBAs from the world’s top business schools have clamored to work there, helping make it a professional incubator of sorts that has spun off alums into leadership positions in politics, VC and industry.

All that cache is why Goldman’s name popping up related to African tech got people’s attention, including mine, several years ago.

 


0

Felix Capital closes $300M fund to double down on DTC, break into fintech and make late-stage deals

12:49 | 15 January

To kick off 2020, one of Europe’s newer — and more successful — investment firms has closed a fresh, oversubscribed fund, one sign that VC in the region will continue to run strong in the year ahead after startups across Europe raised some $35 billion in 2019. Felix Capital, the London firm founded by Frederic Court that was one of the earlier firms to identify and invest in the trend of direct-to-consumer businesses, has raised $300 million, money that it plans to use to continue investing in creative and consumer startups and platform plays as well as begin to tap into a newer area, fintech — specifically startups that are focused on consumer finance. 

Felix up to now has focused mostly on earlier-stage investments — it now has $600 million under management and 32 companies in its portfolio in eight countries — based across both Europe and the US. Court said in an interview that a portion of this fund will now also go into later, growth rounds, both for companies that Felix has been backing for some time as well as newer faces.

As with the focus of the investments, the make-up of the fund itself has a strong European current: the majority of the LPs are European, Court noted. Although Asia is something it would like to tackle more in the future both as a market for its current portfolio and as an investment opportunity, he added, the firm has yet to invest into the region or substantially raise money from it.

Felix made its debut in 2015, founded by Court after a strong run at Advent Capital where he was involved in a number of big exits. While Court had been a strong player in enterprise software, Felix was a step-change for him into more of a primary focus on consumer startups focused on fashion, lifestyle and creative pursuits.

That has over the years included investing in companies like the breakout high-fashion marketplace Farfetch (which he started to back when still at Advent and is now public), Gwyneth Paltrow’s GOOP, the jewellery startup Mejuri, trend-watching HighSnobiety, and fitness startup Peloton (which has also IPO’d).

It’s not an altogether easygoing, vanilla list of cool stuff. Peloton and GOOP have had been mightily doused in

and sharky sentiments; and sometimes it even seems as if the brands themselves own and cultivate that image. As the saying goes, there’s no such thing as bad press, I guess.

Although it wasn’t something especially articulated in startup land at the time of Felix’s launch, what the firm was honing in on was a rising category of direct-to-consumer startups, essentially all in the area of e-commerce and building brands and businesses that were bypassing traditional retailers and retail channels to develop primary relationships with consumers through newer digital channels such as social media, messaging and email (alongside their own DTC websites). 

This is not all that the company has focused on, with investments into a range of platform businesses like corporate travel site TravelPerk, Amazon -backed food delivery juggernaut Deliveroo and Moonbug (a platform for children’s entertainment content), as well as increasingly later stage rounds (for example it was part of a $104 million round at TravelPerk; a $70 million round for marketplace-building service Mirakl; and $23 million for Mejuri.

Court’s track record prior to Felix, and the success of the current firm to date, are two likely reasons why this latest fund was oversubscribed, and why Court says it wants to further spread its wings into a wider range of areas and investment stages.

The interest in consumer finance is not such a large step away from these areas, when you consider that they are just the other side of the coin from e-commerce: saving money versus spending money.

“We see this as our prism of opportunity,” said Court. “Just as we had the intuition that there was a space for investors looking at [DTC]… we now think there is enough evidence that there is demand from consumers for new ways of dealing with money and personal finance.”

The firm has from the start operated with a board of advisors who also invest money through Felix while also holding down day jobs. They include the likes of executives from eBay, Facebook, and more. David Marcus –who Court backed when he built payments company Zong and eventually sold it to eBay before he went on to become a major mover and shaker at Facebook and is now has the possibly Sisyphean task of building Calibra — is on the list, but that has not translated into Felix dabbling in cryptocurrency.

“We are watching cryptocurrency, but if you take a Felix stance on the area, it’s only had one amazing brand so far, bitcoin,” said Court. “The rest, for a consumer, is very difficult to understand and access. It’s still really early, but I’ve got no doubt that there will be some things emerging, particularly around the idea of ‘invisible money.'”

 


0

Why D2C holding companies are here to stay

18:51 | 10 December

Alex Song Contributor
Alex is CEO and co-Founder of Innovation Department, a tech-empowered platform building the next generation of consumer brands. Previously, he worked at Goldman Sachs and Pershing Square Capital Management.

It wasn’t that long ago that digitally-native, vertically-integrated brands (DNVBs) were the talk of the startup world.

Venture capitalists and founders watched as Warby Parker, Casper, Glossier, Harry’s and Honest Company became the belles of the D2C ball, trotting their way towards unicorn valuations. Not long after, the “startup studio” was unmasked as the elusive unicorn breeding grounds (think Hims). Today, there’s yet another buzzword that’s all the rage and it goes by the name “D2C Holding Company.” And it’s not going away anytime soon.

What are DNVBs?

In 2017, DNVBs were a game-changer. Different than e-commerce, DNVBs sell products online directly to consumers and maintain control and transparency through each stage of the production and distribution process, all without the involvement of middlemen. This allows DNVBs to determine where and how their products are sold and to collect customer data that helps optimize their marketing strategies. 

DNVBs have exploded over the last decade, growing sales and venture capital funding at a rapid pace. These brands use digital engagement strategies to create stronger relationships with consumers, which — when implemented alongside captivating content — contribute heavily to brand success by increasing customer LTV and creating compounding unit economics.

The problem with DNVBs

In the last three years alone, more DNVBs have launched than in the entirety of the previous decade.

While this growth is encouraging, the problem is that these DNVBs are raising so much venture capital that in order to meet the return requirements of their investors, they need a significant purchase offer or IPO valuation. With more than 85 percent of acquisitions happening below $250 million in purchase price, strategic acquisitions offers that meet investor expectations are few and far between.

This ultimately creates a state of startup purgatory where DNVBs have no choice but to take a downround to find a lifeline — sorry, Honest Company — making it difficult to develop disciplined operational habits and achieve sustainable growth. With these challenges becoming more glaringly apparent in recent years, there came a need for a new approach to D2C at large. Enter the modern D2C holding company.

Make way for the D2C holding company model

Today’s version of the holding company model takes what companies like Procter & Gamble and Unilever did in the 1950s and modernizes it for the existing D2C market. Instead of taking a siloed approach, brands pool resources, operational costs and institutional knowledge to accelerate growth and achieve profitability at a faster rate. 

DNVB darlings Harry’s and Glossier are great examples of this. Harry’s diversification efforts have been centerstage as the company works to grow beyond men’s grooming to include personal care for men and women, household items and baby products. In May, Edgewell Personal Care, which owns brands like Schick, Banana Boat, and Wet Ones, acquired Harry’s for $1.37 billion. Glossier is also working to diversify its portfolio, with the launch of Glossier Play, a younger, more colorful sister brand to its original.

For DNVBs to successfully pivot to a holding company model, they will need to prioritize 1) diversification to satisfy customers’ short attention spans, 2) a data-first mindset to deliver the best possible customer experience, and 3) operational and capital efficiency to not only stay afloat, but thrive. 

An evolving landscape

The landscape for D2C holding companies is just starting to take shape, but here are some of the key players who have adopted this approach and are finding early success:

 


0

China Roundup: Y Combinator’s short-lived China dream

19:00 | 23 November

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. Last week, we looked at how Alibaba and Tencent fared in the last quarter; the talk in Silicon Valley and Beijing this week is on Y Combinator’s sudden retreat from China. We will also discuss the enduring food delivery war in the country later.

Brief adventure in the East

The storied Silicon Valley accelerator Y Combinator announced the closure of its China unit just a little over a year after it entered the country. In a vague statement posted on its official blog, the organization said the decision came amid a change in leadership. Sam Altman, its former president who hired legendary artificial intelligence scientist Lu Qi to initiate the China operation, recently left his high-profile role to join research outfit OpenAI. With that, YC has since refocused its energy to support “local and international startups from our headquarters in Silicon Valley.”

What was untold is the insurmountable challenge that multinationals face in their attempt to win in a wildly different market. Lu Qi, who wore management hats at Baidu and Microsoft before joining YC, was clearly aware of the obstacles when he said in an interview (in Chinese) in May that “multinational corporations in China have almost been wiped out. They almost never successfully land in China.” The prescription, he believes, is to build a local team that’s given full autonomy to make decisions around products, operations, and the business.

A former executive at an American company’s China branch, who asked to remain anonymous, argued that Lu Qi’s one-man effort can’t be enough to beat the curse of multinationals’ path in China. “All I can say is: Lu has taken a detour. Going independent is the best decision. When it comes to whether Chinese startups are suited for mentorship, or whether incubators bring value to China, these are separate questions.”

What’s curious is that YC China seemed to have been given a meaningful level of freedom before the split. “Thanks to Sam Altman and the U.S. team, who agreed with my view and supported with much preparation, YC China is not only able to enjoy key resources from YC U.S. but can also operate at a completely independent capacity,” Lu said in the May interview.

Moving on, the old YC China team will join Lu Qi to fund new companies under a newly minted program, MiraclePlus, announced YC China via a Wechat post (in Chinese). The initiative has set up its own fund, team, entity and operational team. The deep ties that Lu has fostered with YC will continue to benefit his new portfolio, which will receive “support” from the YC headquarters, though neither party elaborated on what that means.

Alibaba’s food delivery nemesis

The food delivery war in China is still dragging on two years after the major consolidation that left the market with two major players. Meituan, the local services company backed by Tencent, has managed to attain an expanding share against Alibaba-owned Ele.me. According to third-party data (in Chinese) provided by Trustdata, Meituan accounted for 65.1% of China’s overall food delivery orders during the second quarter, steadily rising from just under 60% a year ago. Ele.me, on the other hand, has lost nearly 10% of the market, slumping to 27.4% from 36% a year ago.

In terms of monetization, Meituan generated 15.6 billion yuan ($2.2 billion) in revenue from its food delivery segment in the quarter ended September 30. That dwarfs Ele.me, which racked up 6.8 billion yuan ($970 million) during the same period. Both are growing north of 30% year-over-year.

meituan dianping

Source: Meituan

This may not be all that surprising given Alibaba has arguably more imminent battles to fight. The e-commerce leader has been consumed by the rise of Pinduoduo, which has launched an assault on China’s low-tier cities with its ultra-cheap products and social-driven online shopping experience. Meituan, on the other hand, is fixated on beefing up its main turf of on-demand neighborhood services after divesting its costly bike-sharing endeavor. 

When both contestants have the capital to burn through — as they have demonstrated through heavily subsidizing customers and restaurants — the race comes down to which has greater control of user traffic. Meituan holds a competitive edge thanks to its merger with Dianping, a leading restaurant review app akin to Yelp, back in 2015. Dianping today operates as a standalone brand but its food app is deeply integrated with Meituan’s delivery services. For example, hundreds of millions of users are able to place Meituan-powered food delivery orders straight from Dianping.

Alibaba and Meituan used to be on more friendly terms just a few years ago. In 2011, the e-commerce giant participated in Meituan’s $50 million Series B financing. Before long, the two clashed over control of the company. Alibaba is known to impose a heavy hand on its portfolio companies by taking up majority stakes and reshuffling the company with new executives. That’s because Alibaba believes that “only when you operate can you generate synergies and really create exponential value,” said vice chairman Joe Tsai in an interview. Whereas if you just make a financial investment, you’re counting an internal rate of return. You’re not creating real value.”

Ele.me lived through that transformation. As of September, Alibaba has reportedly (in Chinese) completed replacing Ele.me’s management with its pool of appointed personnel. Ele.me’s founder Zhang Xuhao left the company with billions of yuan in cash and joined a venture capital firm (in Chinese).

Meituan’s founder Wang Xing had more unfettered pursuits. In a later financing round, he refused to accept Alibaba’s condition for portfolio companies to eschew Tencent investments, a strategy of the giant to hobble its archrival. That botched the partnership and Alibaba has since been gradually offloading its Meituan shares but still held onto small amounts, according to Wang in 2017, “to create trouble” for Meituan going forward.

 


0

Equity Dive: Poshmark’s origin story with co-founder & CEO Manish Chandra

17:00 | 22 November

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

We have something a bit different for you this week. Equity co-host Kate Clark recently sat down with Manish Chandra, the co-founder and chief executive officer of Poshmark, and one of his earliest investors, NFX managing partner James Currier.

If you haven’t heard of Poshmark, it’s an online platform for buying and selling clothes. Basically, it’s the thrift shop of the 21st century. We asked Chandra how he and co-founders Tracy Sun, Gautam Golwala and Chetan Pungaliya cooked up the idea for Poshmark, what bumps they faced along the way, how they raised venture capital and, of course, what details of their upcoming initial public offering he could share with us. Meanwhile, Currier dished about the company’s early days, when the Poshmark team worked hard on the floor of Currier’s office.

Unfortunately, neither Chandra or Currier were willing to share deets about Poshmark’s IPO, reportedly expected soon. But they both shared interesting insights into building a successful venture-backed company, battling competition and putting your best foot forward.

Glad you guys came back for another episode, we’ll see you soon.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

 


0

Samasource raises $14.8M for global AI data biz driven from Africa

16:27 | 20 November

AI training data provider Samasource has raised a $14.8 million Series A funding round led by Ridge Ventures.

The San Francisco headquartered company delivers Fortune 100 companies with the inputs they need for machine learning development in fields including autonomous transportation, e-commerce and robotics.

And it does so with a global work-force of data-specialists, a large number of whom are located in East Africa.

In addition to San Francisco, New York and the Hague, Samasource has offices and teams in Kenya and Uganda. The company has a global staff of 2900 and is the largest AI and data annotation employer in East Africa, according to CEO and founder Leila Janah.

As part of its Series A, Samasource opened an AI Development Center in Montreal, Canada and expanded its digital delivery center in Kampala, Uganda to serve its corporate client-base.

“Typically we’re working with very large companies for whom AI is a key part of their business strategy. So therefore they have to be really careful about…bias in the algorithms or bad data,” Janah explained on a call with TechCrunch.

Samasource works through a discovery phase with customers, to determine the problems their trying to solve, their sources of input data, and customizes an approach to providing what they need.

“In some cases we might refine elements of our software…then we go into deployment and…annotation work,” said Janah, referring to the company’s SamaHub training data platform.

Samasource clients include Google, Continental Tires, Walmart, and Ford. The company generates revenue primarily through its machine learning data annotation and validation services.

Samasource was originally founded by Janah as a non-profit in 2008. “I saw huge opportunity for tapping into the incredible depth of…talent in East Africa in the tech world,” she said of the firm’s origins.

She converted Samasource to for-profit status in 2019, making the previous non-profit organization a shareholder.

“As a CEO I need to make it clear to investors that this is an investible entity,” Jana said of the reason for Samasource becoming a private company.

Ridge Ventures Principal Ben Metcalfe confirmed the fund’s lead on Samasource’s $14.8 million Series A round and that he will take a board seat with the company. Other investors included, Social Impact Ventures, Bestseller Foundation, and Bluecrest Limited Capital.

Samasource’s founder believes that providing for-profit AI training data to global companies can be done while improving lives in East Africa.

“I strongly believe you can combine the highest quality of service with the core mission of altruism,” she said.

“A big part of our values is offering living wages and creating dignified technology work for people. We hire people from low-income backgrounds and offer them training in AI and machine learning. And our teams achieve above the industry standard.”

It’s not unusual for Samasource to hear comparisons to Andela, the well-funded tech talent accelerator that trains and connects African developers to global companies.

“We are very different in that our whole model is about delivering high-quality training data. I would call Samasource an AI company and Andela a software training company,” she said.

Janah does see some parallels, however, in both companies’ recognizing and building tech-talent in Africa, along with a number of blue-chip entrants.

“I think it’s telling that Facebook, IBM and Google have all opened tech hubs in Africa, some of them AI or machine-learning focused,” she said.

Some Samasource professionals are also taking their skills on to other endeavors in Africa’s innovation ecosystem.

“A lot of our alums go on to do entrepreneurial things [and] start businesses and I think you’re going to see a lot more of that as we grown,” said Janah.

For now she will be the one hiring and training new tech workers in East Africa.

As part of its Series A, Samasource increased employees in Kampala to 90 people and plans to grow that by 150 percent in 2020, its CEO said.

 


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Opera’s Africa fintech startup OPay gains $120M from Chinese investors

09:05 | 18 November

Africa focused fintech startup OPay has raised a $120 million Series B round backed by Chinese investors.

Located in Lagos and founded by consumer internet company Opera, OPay will use the funds to scale in Nigeria and expand its payments product to Kenya, Ghana and South Africa — Opera’s CFO Frode Jacobsen confirmed to TechCrunch.

Series B investors included Meituan-Dianping, GaoRong, Source Code Capital, Softbank Asia, BAI, Redpoint, IDG Capital, Sequoia China and GSR Ventures.

OPay’s $120 million round comes after the startup raised $50 million in June.

It also follows Visa’s $200 million investment in Nigerian fintech company Interswitch and a $40 million raise by Lagos based payments startup PalmPay — led by China’s Transsion.

There are a couple quick takeaways. Nigeria has become the epicenter for fintech VC and expansion in Africa. And Chinese investors have made an unmistakable pivot to African tech.

Opera’s activity on the continent represents both trends. The Norway based, Chinese (majority) owned company founded OPay in 2018 on the popularity of its internet search engine.

Opera’s web-browser has ranked No. 2 in usage in Africa, after Chrome, the last four years.

The company has built a hefty suite of internet-based commercial products in Nigeria around OPay’s financial utility. These include motorcycle ride-hail app ORide, OFood delivery service, and OLeads SME marketing and advertising vertical.

“Opay will facilitate the people in Nigeria, Ghana, South Africa, Kenya and other African countries with the best fintech ecosystem. We see ourselves as a key contributor to…helping local businesses…thrive from…digital business models,” Opera CEO and OPay Chairman Yahui Zhou, said in a statement.

Opera CFO Frode Jacobsen shed additional light on how OPay will deploy the $120 million across Opera’s Africa network. OPay looks to capture volume around bill payments and airtime purchases, but not necessarily as priority.  “That’s not something you do ever day. We want to focus our services on things that have high-frequency usage,” said Jacobsen.

Those include transportation services, food services, and other types of daily activities, he explained. Jacobsen also noted OPay will use the $120 million to enter more countries in Africa than those disclosed.

Since its Series A raise, OPay in Nigeria has scaled to 140,000 active agents and $10 million in daily transaction volume, according to company stats.

Beyond standing out as another huge funding round, OPay’s $120 million VC raise has significance for Africa’s tech ecosystem on multiple levels.

It marks 2019 as the year Chinese investors went all in on the continent’s startup scene. OPay, PalmPay, and East African trucking logistics company Lori Systems have raised a combined $240 million from 15 different Chinese actors in a span of months.

OPay’s funding and expansion plans are also harbinger for fierce, cross-border fintech competition in Africa’s digital finance space. Parallel events to watch for include Interswitch’s imminent IPO, e-commerce venture Jumia’s shift to digital finance, and WhatsApp’s pending entry in African payments.

The continent’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population — which makes fintech Africa’s most promising digital sector. But it’s becoming a notably crowded sector where startup attrition and failure will certainly come into play.

And not to be overlooked is how OPay’s capital raise moves Opera toward becoming a multi-service commercial internet platform in Africa.

This places OPay and its Opera-supported suite of products on a competitive footing with other ride-hail, food delivery and payments startups across the continent. That means inevitable competition between Opera and Africa’s largest multi-service internet company, Jumia.

 

 

 

 

 

 


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