Africa’s agtech wave gets $10 million richer as Twiga Foods raises more capital

Kenya’s Twiga Foods has raised $10 million from investors led by the International Finance Corporation to add processed food and fast moving consumer goods to its product line-up.

The startup has built a B2B platform to improve the supply chain from farmers to markets. Twiga Foods now aims to scale additional merchandise on its digital network that coordinates pricing, payment, quality control, and logistics across sellers and vendors.

CEO and co-founder Grant Brooke sees “a growth horizon…to build a B2B Amazon,” with produce as the base.

“If we can build a business around fresh fruit and vegetables, everything else after that is much simpler to add on,” he told TechCrunch.

“Fresh food and vegetables gives you clients that are ordering every two days, and now that’s paying for access to vendors and a proper way to be on every street,” said Brooke.

“It’s now much easier to lay things over that that would have been very expensive to get to end retailers.” In addition to the processed food FMCG it will add now, CEO Grant Brooke named household goods, such as light-bulbs that stock and sell in lower volumes than produce, as something the startup could include in the future.     

The $10 million IFC led investment—co-led by TLcom Capital—comes in the form of convertible notes, available later as equity, according to Wale Ayeni, regional head of IFC’s Africa VC practice. As part of the deal, Ayeni will join Twiga Foods’ board.

Of the decision to fund the startup, Ayeni indicated IFC likes what the company’s already done in “figuring out a way to service a mass market with a digital platform focused on food in a sector that’s not really been touched,” he said. Another factor was Twiga’s prospects to create additional revenue by improving B2B supply chain for FMCG and other consumer products.

Co-founded in Nairobi in 2014 by Brooke and Kenyan Peter Njonjo, Twiga Foods serves around 2000 outlets a day with produce through a network of 13,000 farmers and 6000 vendors. Parties can coordinate goods exchanges via mobile app using M-Pesa mobile money for payment.

The company has reduced typical post-harvest losses in Kenya from 30 percent to 4 percent for produce brought to market on the Twiga network, according to Brooke.

“That’s savings we can offer the outlets and better pricing we can offer the farmers,” he said.

Twiga Foods generates revenues from margins on the products it buys and sells. As an example, the company could buy bananas at around 19 Schillings ($.19) a kilo and sell at 34 ($.34) Schillings a kilo.

“Our margin is how efficient we are at moving products between those two elements” and the company purchases from farmers at roughly 10 percent higher than Kenya’s traditional produce middle-men, according to Brooke.

Agtech has become a prominent startup sector in Africa. A number of companies, such as Ghana’s Agrocenta and Nigeria’s Farmcrowdy, have raised VC for apps that coordinate payments, logistics, and working capital across the continent’s farmers and food markets.

In 2017 Twiga Foods raised a $10.3 million Series A round lead by Wamda Capital. Earlier this year the startup partnered with IBM Africa to introduce a blockchain enabled finance working capital platform to its network of vendors.

With the new investment and product expansion, Twiga Foods will explore offering additional financial services to its client network. The startup doesn’t divulge revenue information but “profitability is on the horizon for us,” said Brooke.

Twiga Foods will maintain its focus primarily on Kenya, but “we’re starting to research and dabble in Tanzania,” according to Brooke.

The startup doesn’t plan to move beyond B2B to direct online retail. “I don’t think B2C e-commerce is viable on the continent once you factor in job size and cost of acquisition versus lifetime value,” said Brooke. He also named the high cost of marketing: “In B2C e-commerce space you really have to be in the advertising space. Our clients are ordering every two days with no marketing budget,” said Brooke.

So for the time being, Twiga Foods aims to stick with improving the supply chain for products between Kenya’s buyers and sellers.

Nigerian data analytics company Terragon acquires Asian mobile ad firm Bizense

Nigerian consumer data analytics firm Terragon Group has acquired Asian mobile marketing company Bizense in a cash and stock deal.

Based in Singapore, with operations in India and Indonesia, Bizense specializes in “mobile ad platform[s] for Telco’s, large publishers, and [e-commerce] ad networks” under its proprietary Adatrix platform—according to its website and a release.

The price of the acquisition was not disclosed.

The company lists audience analytics, revenue optimization, and white label SSP services among its client offerings.

Headquartered in Lagos, Terragon’s software services give its clients — primarily telecommunications and financial services companies — data on Africa’s growing consumer markets.

Products allow users to drill down on multiple combinations of behavioral and demographic information and reach consumers through video and SMS  campaigns while connecting to online sales and payments systems.

Terragon clients include local firms, such as Honeywell, and global names including Unilever, DHL, and international agribusiness firm Olam.

The company’s founder and CEO Elo Umeh sees cross-cutting purposes for Terragon services in other markets.

“Most of the problems we seek to solve for our clients in Africa also exist in places like South East Asia and Latin America,” Umeh told TechCrunch.

The Bizense acquisition doesn’t lessen Terragon’s commitment to its home markets, according to Umeh.

“We are…super focused on Africa right now, building out propriety platforms powered by data and artificial intelligence to help Telco’s, SMEs, FMCGsand financial institutions …increase their customer base and drive more transaction volumes,” he said.

Terragon’s CEO would not divulge the acquisition value, saying only that it consisted of  “a combination of cash and stocks, with the actual amount not disclosed.”

In an interview with TechCrunch earlier this year, Umeh confirmed the company was looking into global expansion.

Tarragon already has a team of 100 employees across Nigeria, KenyaGhana and South Africa.

Umeh indicated the company is contemplating further expansion in Asia and the Latin America, where Terragon already has consumer data research and development teams.

With the Bizense acquisition Terragon plans to “build out platforms, tools and machine learning models to help businesses…acquire new customers and get existing customers to do more.”

Bizense founder and CEO Amit Khemchandani will be involved in this process. “We are excited about the next phase of this journey as we innovate for Africa and other emerging markets,” he said.

With the exception of South African media and investment giant Naspers, acquisitions of any kind—intra-continental or international—are a rarity for Sub-Saharan African startups and tech companies.

Terragon’s acquisition in Singapore, and other moves made by several other Nigerian startups this year, could change that. African financial technology companies like Mines and Paga announced their intent to expand in and outside Africa. They would join e-commerce site MallforAfrica, which went global in July in a partnership with DHL.

In venture capital, it’s still the age of the unicorn

This month marks the 5-year anniversary of Aileen Lee’s landmark article, “Welcome To The Unicorn Club”.

At the time, the piece defined a new breed of startup — the $1 billion privately held company. When Lee did her first count, there were 39 “unicorns”; an improbable, but not impossible number.. Today, the once-scarce unicorn has become a global herd with 376 companies on the roster and counting.

But the proliferation of unicorns begs raises certain questions. Is this new breed of unicorn artificially created? Could these magical companies see their valuations slip and fall out of the herd? Does this indicate an irrational exuberance where investors are engaging in wish fulfilment and creating magic where none actually existed?

List of “unicorn” companies worth more than $1 billion as of the third quarter of 2018

There’s a new “unicorn” born every four days

The first change has been to the geographic composition and private company requirement of the list. The original qualification for the unicorn study was “U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors.” The unicorn definition has changed and here is the popular and wiki page definition we all use today: “A unicorn is a privately held startup company with a current valuation of US$1 billion or more.”

Beyond the expansion of the definition of terms to include a slew of companies from all over the globe, there’s been a concurrent expansion in the number of startup technology companies to achieve unicorn status. There is a tenfold increase in annual unicorn production.

Indeed, while the unicorn is still rare but not as rare as before. Five years ago, roughly ten unicorns were being created a year, but we are approaching one hundred new unicorns a year in 2018.

As of November 8, we have seen eighty one newly minted unicorns this year, which means we have one new unicorn every four days.

There are unicorn-sized rounds every day

These unicorns are also finding their horns thanks to the newly popularized phenomena of mega rounds which raise $100 million or more. These deals are ten times more common now, than they were only five years ago.   

Back in 2013, there were only about four mega rounds a month, but now there are forty mega rounds a month based on Crunchbase data. In fact, starting from 2015, public market IPO has for the first time no longer been the major funding source for unicorn size companies.

Unicorns have been raising money from both traditional venture capital but also more from the non-traditional venture capital such as SoftBank, sovereign wealth funds, private equity funds, and mutual funds.

Investors are chasing the value creation opportunity.   Most people probably did not realize that Amazon, Microsoft, Cisco, and Oracle all debuted on public markets for less than a $1 billion market cap (in fact only Microsoft topped $500 million), but today they together are worth more than $2 trillion dollars  

It means tremendous value was created after those companies came to the public market.  Today, investors are realizing the future giant’s value creation has been moved to the “pre-IPO” unicorn stage and investors don’t want to miss out.

To put things in perspective, investors globally deployed $13 billion in almost 20,000 seed & angel deals, and SoftBank was able to deploy the same $13 billion amount in just 2 deals (Uber and WeWork).  The SoftBank type of non-traditional venture world literally redefined “pre-IPO” and created a new category for venture capital investment.

Unicorns are staying private longer

That means the current herd of unicorns are choosing to stay private longer. Thanks to the expansion of shareholders private companies can rack up under the JOBS Act of 2012; the massive amount of funding available in the private market; and the desire of founders to work with investors who understand their reluctance to be beholden to public markets.

Elon Musk was thinking about taking Tesla private because he was concerned about optimizing for quarterly earning reports and having to deal with the overhead, distractions, and shorts in the public market.  Even though it did not happen in the end, it reflects the mentality of many entrepreneurs of the unicorn club. That said, most unicorn CEOs know the public market is still the destiny, as the pressure from investors to go IPO will kick in sooner or later, and investors expect more governance and financial transparency in the longer run.

Unicorns are breeding outside of the U.S. too

Finally, the current herd of unicorns now have a strong global presence, with Chinese companies leading the charge along with US unicorns. A recent Crunchbase graph indicated about 40% of unicorns are from China,, 40% from US, and the rest from other parts of the world.

Back in 2013, the “unicorn” is primarily a concept for US companies only, and there were only 3 unicorn size startups in China (Xiaomi, DJI, Vancl) anyways.  Another change in the unicorn landscape is that, China contributed predominantly consumer-oriented unicorns, while the US unicorns have always maintained a good balance between enterprise-oriented and consumer-oriented companies.  One of the stunning indications that China has thriving consumer-oriented unicorns is that China leads US in mobile payment volume by hundredfold.

The fundamentals of entrepreneurship remain the same

Despite the dramatic change of the capital market, a lot of the insights in Lee’s 5-year old blog are still very relevant to early stage entrepreneurs today.

For example, in her study, most unicorns had co-founders rather than a single founder, and many of the co-founders had a history of working together in the past.

This type of pattern continues to hold true for unicorns in the U.S. and in China. For instance, the co-founders of Meituan (a $50 billion market cap company on its IPO day in September 2018) went to school together and had co-founded a company before

There have been other changes. In the past three months alone, four new US enterprise-oriented unicorns have emerged by selling directly to developers instead of to the traditional IT or business buyers; three China enterprise-oriented SaaS companies were able to raise mega rounds.  These numbers were unheard of five years ago and show some interesting hints for entrepreneurs curious about how to breed their own unicorn.

The new normal is reshaping venture capital 

Once in a while, we see eye-catching headlines like “bubble is larger than it was in 2000.”   The reality is companies funded by venture capital increased by more than 100,000 in the past five years too. So the unicorn is still as rare as one in one thousand in the venture backed community.

What’s changing behind the increasing number of unicorns is the new normal for both investors and entrepreneurs. Mega rounds are the new normal; staying private longer is the new normal; and the global composition of the unicorn club is the new normal. 

Just look at the evidence in the venture industry itself. Sequoia Capital, the bellwether of venture capital, raised a whopping $8 billion global growth mega fund earlier this year under pressure from SoftBank and its $100 billion mega-fund. And Greylock Partners, known for its focus and success in leading early stage investment, recently led a unicorn round for the first time in its 53-year history.  

It’s proof that just as venture capitalists have created a new breed of startups, the new startups and their demands are reshaping venture capital to continue to support the the companies they’ve created.

Placing bets beyond the venture hubs of New York and Silicon Valley

If geographies were companies, Silicon Valley and New York would be the incumbents — successful today and possibly impregnable — and, like all incumbents, their outsized advantages obscure significant vulnerabilities. Not least of these are high prices and entrenched thinking that can make adapting to new situations difficult.

A dozen venture capitalists spent three days in the South — Charlotte, Columbia, and Atlanta — to learn what it might take to begin investing in the region as an alternative. It was the sequel to a trip some of us took earlier this year to the heartland. And yet again, we saw places and met people with assets Silicon Valley can only dream about.

The cities we visited represent a new breed of challenger to the geographic dominance of venture capital’s leading centers, who — if they can cover the table stakes — bring advantages the Valley may struggle to capture.

First; diversity. It helps startups to bring people together with a range of life experiences, so places like Columbia, Charlotte, and Atlanta should be natural winners. Racial diversity, yes — anchored in part by the strong presence of historically black colleges and universities, of which we visited several — and also diversity of their economies.

In Atlanta (the second-largest majority-black metro in the country) in particular, there’s a wide range of corporate partners (read: customers for startups). Atlanta has the third-most Fortune 500 companies of any city, and you need to go down to #11 before you get any two in the same industry. (Think UPS, Coca-Cola, Delta, Home Depot, and so forth.)

Second; these places have a history of overcoming adversity. Many students we met were first-generation college kids, whose parents and grandparents learned to climb over the brick wall of racism and passed on that grit. The startups that thrive despite the rocky soil become less fragile, less precariously perched on the peak of this month’s hype cycle.

If a startup can make it in Orangeburg, SC, a manufacturing town with a median household income of $29k, it can make it anywhere. Many founders in Silicon Valley have had it so good they can no longer smell money. Startups, unlike many other kinds of projects (like learning to play music), simply require the right timing and dosage of adversity.

What will it take for these places to realize their potential?

Their engines are warm and running. We were floored by the consistently exceptional quality of the startups marshalled by Kathryn Finney at Atlanta’s digital undivided, and felt right at home with the founders who Collective Hustle’s Sam Smith gathered around a table in Charlotte.

A few drops of mentorship and capital will crystallize even more progress. We met students who devoured every word of the tech blogs we all read, and still craved someone with first-hand knowledge, to warn them away from dead ends or confirm their intuitions. Several of us said we’d be happy to videoconference in to classes, or come back again and visit.

We invited our hosts in the South to spend a few days with us in the bubble. We realize that providing mentorship at scale is another matter, and we’re thinking about how to do that. We did notice that big technology companies — Google, Microsoft, Bloomberg — have already done a good job of showing up for recruiting or startup-support programs.

While there are angel investors in every market, it’s clear that most rich people (understandably) need a basic understanding of that strange bird of startup investing. We heard story after story of angels who focus on safe bets (good luck!), ask for control over startups in modest five-figure investments, and fail to take advantage of the worthwhile standards from more developed ecosystems. Even the local angel groups, where they exist, tended to reinforce bad behavior as often as they shared good ones (as organized angel groups often do).

Government participates more actively in these ecosystems — starting with the hosts of our trip, Representatives Tim Ryan (OH), Ro Khanna (CA), and Jim Clyburn (SC). Creating an environment for startups is a completely different beast than traditional “smokestack chasing” economic development (where a city tries to lure big employers to bring a massive facility).

It’s more about identifying individual champions (one mayor struggled to tell us who the active investors were in their community), creating the living conditions that technology employees want (art, food, and fast, reliable internet among others), and protecting the green shoots that bust their way through the concrete. Governments can use the bully pulpit to draw attention to nascent victories at zero cost to taxpayers.

Investors from Silicon Valley or New York need to stop asking founders to relocate. So many founders had heard the tired “I’ll consider investing… if you move” story. This is borderline bad behavior — asking a founder to uproot their life because it’s more convenient for the investor. While investors might believe they’re making a recommendation in the company’s best interest (“it’s easier to succeed in a more established place”), founders have unfair home court advantages (knowing talent, customers, etc.).

What will we investors need to learn, if we’re to participate in the growth of these markets?

We need to watch the assumptions our words reveal. People who live in coastal cities talk like a duck. We’ll benefit from reading the room when words like “SaaS” or “LP” need explanation. Getting “ramen profitable” may assume a founder has family with whom they can live — one founder told us that “it feels like you need $500k in funding to even try to do that.”

Often the first step is something other than a direct investment. Investors might participate in a few local events, or encourage a portfolio company to open a second office (as one did from our last trip to South Bend), or build relationships through mentoring and coaching. Direct investments can start small — we had founders asking for investment rounds in the tens of thousands of dollars, i.e., with one fewer zero than the smallest rounds in bubbleland.

We’ll need to embrace the communities that hold these places together: Churches are especially important outside the coasts. More than one founder told us about the role The Creator plays in their startup’s creation. Baptist, AME, and Methodist churches have long undergirded economic development in these cities. Startups harness those trusted networks to find teammates and customers. Investors who see the importance of churches will find deals. (Silicon Valley’s atheist streak makes this a new muscle for us out-of-towners.)

Every place has its own shape. Charlotte, despite being near Research Triangle, gets relatively little flow of talent from Raleigh-Durham. The economic boom there also, ironically, can make it harder for a startup to compete for talent and attention. In Orangeburg, we saw a strong startup that planned to move to Baltimore — and none of us could fault those founders for choosing to go to a more active startup place. Several others in Columbia banded together to occupy SOCO, in a new real estate development, planting seeds.

Atlanta almost has it all right now — talent, experienced angels, role model founders who actively mentor rookies, and quality of life (the BeltLine felt like what the High Line wishes it were). Atlanta has that most-important and elusive startup quality: momentum. (Fund LPs may actually have some of the best opportunities there, because just a couple of slightly bigger local venture funds would smooth the transition between different stages in a company’s life. More investors might get to bet on a Mailchimp before it prides itself on not needing them.)

In our country, where everyone is supposed to have a real chance at extraordinary opportunity, one question hung over our trip: is geography… destiny? Can a kid at Benedict College in Columbia create one of the world’s defining startups? Fast forward the clock, and we believe we may see that. Our goal is to participate and support it. Some of the places we visited — with their combination of diversity and overcoming adversity — are irresistible bets on the future of startups in America, maybe even on the future of America.

Additional credit to Karin Klein, Bloomberg Beta; Shiyan Koh, Hustle Fund; and Scott Shane, Comeback Capital. 

Mexican venture firm ALL VP has a $73 million first close on its latest fund

Buoyed by international attention from U.S. and Chinese investors and technology companies, new financing keeps flowing into the coffers of Latin American venture capital firms.

One day after the Brazilian-based pan-Latin American announced the close of its $150 million latest fund comes word from our sources that ALL VP, the Mexico City-based, early stage technology investor, has held a first close of $73 million for its latest investment vehicle.

The firm launched its first $6 million investment vehicle in 2012, according to CrunchBase, just as Mexico’s former President Enrique Peña Nieto was coming to power with a pro-business platform. One which emphasized technology development as part of its strategy for encouraging economic growth.

ALL VP founding partner Fernando Lelo de Larrea said he could not speak about ongoing fundraising plans.

And while the broader economy has stumbled somewhat since Nieto took office, high technology businesses in Mexico are surging. In the first half of 2018, 82 Mexican startup companies raised $154 million in funding, according to data from the Latin American Venture Capital Association. It makes the nation the second most active market by number of deals — with a number of those deals occurring in later stage transactions.

In this, Mexico is something of a mirror for technology businesses across Latin America. While Brazilian startup companies have captured 73% of venture investment into Latin America — raising nearly $1.4 billion in financing — Peru, Chile, Colombia and Argentina are all showing significant growth. Indeed, some $188 million was invested into 23 startups in Colombia in the first half of the year. 

Overall, the region pulled in $780 million in financing in the first six months of 2018, besting the total amount of capital raised in all of 2016.

It’s against this backdrop of surging startup growth that funds like ALL VP are raising new cash.

Indeed, at $73 million the first close for the firm’s latest fund more than doubles the size of ALL VP’s capital under management.

ALL VP management team

But limited partners can also point to a burgeoning track record of success for the Mexican firm. ALL VP was one of the early investors in Cornershop — a delivery company acquired by Walmart for $225 million earlier this year. Cornershop had previously raised just $31.5 million and the bulk of that was a $21 million round from the Silicon Valley-based venture capital firm, Accel.

International acquirers are making serious moves in the Latin American market, with Walmart only one example of the types of companies that are shopping for technology startups in the region. The starting gun for Latin American startups stellar year was actually the DiDi acquisition of the ride-hailing company 99 for $1 billion back in January.

That, in turn, is drawing the attention of early stage investors. In fact, it’s venture capital firms from the U.S. and international investors like Naspers (from South Africa) and Chinese technology giants that are fueling the sky-high valuations of some of the region’s most successful startups.

Loggi, a logistics company raised $100 million from SoftBank in October, while the delivery service, Rappi, raked in $200 million in August, in a round led by Andreessen Horowitz and Sequoia Capital.

In a market so frothy, it’s no wonder that investment firms are bulking up and raising increasingly large funds. The risk is that the market could overheat and that, with a lot of capital going to a few marquee names, should those companies fail to deliver, the rising tide of capital that’s come in to the region could just as easily come back out.

 

Monashees raises $150 million for its eighth Brazilian fund

As technology investment and exits continue to rise across Brazil, early stage venture capital firm monashees today announced that it has closed on $150 million for its eighth investment fund.

Commitments came from Temasek, the sovereign wealth fund affiliated with the Singaporean government, China’s financial technology company, CreditEase; Instagram co-founder Mike Krieger, the University of Minnesota endowment; and fund-of-funds investor Horsley Bridge Partners.

S-Cubed Capital, the family office of former Sequoia Capital partner, Mark Stevens, and fifteen high net worth Brazilian families and investment groups also invested in the firm’s latest fund.

As one of the largest venture capital firms in Latin America with over $430 million in capital under management, monashees has been involved in some of the most successful investments to come from the region. Altogether, monashees portfolio companies have gone on to raise roughly $2 billion from global investors after raising money from the Sao Paulo-based venture capital firm.

“We are excited to further advance our partnership with the monashees team,” said Du Chai, Managing Director at Horsley Bridge Partners . “Over the course of our partnership, we have continued to be impressed by monashees’ strong team, platform and their ability to attract the region’s leading entrepreneurs.”

In the past year, investment in Latin American startup companies has exploded.  The ride-hailing service 99 was acquired for $1 billion and Rappi, a delivery service, managed to raise $200 million at a $1 billion valuation. Another delivery service, Loggi, caught the attention of SoftBank, which invested $100 million into the Brazilian company.

Public markets are also rewarding Latin American startups with continued investment and high valuations. Stone Pagamentos, a provider of payment hardware technology, raised $1.1 billion in its public offering on the Nasdaq with an initial market capitalization of $6.6 billion.

“monashees brings a truly unique set of skills to the table, with a disciplined investment strategy, as well as the unmatched local expertise and knowledge that leads the team to identify and invest in the region’s best founders,” said Stuart Mason, Chief Investment Officer at the University of Minnesota . “The recent billion-dollar acquisition of 99 by DiDi is not only a milestone for the local ecosystem, but validation of this sentiment and suggests that there’s no liquidity hurdle for great companies in Latin America. We are excited to partner with monashees as it continues to find and nurture the best opportunities going forward.”

 

Africa Roundup: Local VC funds surge, Naspers ramps up and fintech diversifies

Africa’s VC landscape is becoming more African with an increasing number of investment funds headquartered on the continent and run by locals, according to Crunchbase data summarized in this TechCrunch feature.

Drawing on its database and primary source research, Crunchbase identified 51 “viable” Africa-focused VC funds globally—defining viable as formally established entities with 7-10 investments or more in African startups, from seed to series stage.

Of the 51 funds investing in African startups, 22 (or 43 percent) were headquartered in Africa and managed by Africans.

Of the 22 African managed and located funds, 9 (or 41 percent) were formed since 2016 and 9 are Nigerian.

Four of the 9 Nigeria located funds were formed within the last year: Microtraction, Neon Ventures, Beta.Ventures, and CcHub’s Growth Capital fund.

The Nigerian funds with the most investments were EchoVC (20) and Ventures Platform (27).

Notably active funds in the group of 51 included Singularity Investments (18 African startup investments) Ghana’s Golden Palm Investments (17) and Musha Ventures (36).

The Crunchbase study also tracked more Africans in top positions at outside funds and  the rise of homegrown corporate venture arms.

One of those entities with a corporate venture arm, Naspers, announced a massive $100 million fund named Naspers Foundry to support South African tech startups. This is part of a $300 million (1.4 billion Rand) commitment by the South African media and investment company to support South Africa’s tech sector overall. Naspers Foundry will launch in 2019.

The initiatives lend more weight to Naspers’ venture activities in Africa as the company has received greater attention for investments off the continent (namely Europe, India and China), as covered in this TechCrunch story.

“Naspers Foundry will help talented and ambitious South African technology entrepreneurs to develop and grow their businesses,” said a company release.

“Technology innovation is transforming the world,” said Naspers chief executive Bob van Dijk. “The Naspers Foundry aims to both encourage and back South African entrepreneurs to create businesses which ensure South Africa benefits from this technology innovation.”

After the $100 million earmarked for the Foundry, Naspers will invest ≈ $200 million over the next three years to “the development of its existing technology businesses, including OLX,  Takealot, and Mr D Food…” according to a release.

In context, the scale of this announcement is fairly massive for Africa. According to recently summarized Crunchbase data, the $100 million Naspers Foundry commitment dwarfs any known African corporate venture activity by roughly 95x.

The $300 million commitment to South Africa’s tech ecosystem signals a strong commitment by Naspers to its home market. Naspers wasn’t ready to comment on if or when it could extend this commitment outside of South Africa (TechCrunch did inquire).

If Naspers does increase its startup and ecosystem funding to wider Africa— given its size compared to others—that would be a primo development for the continent’s tech sector.

If mobile money was the first phase in the development of digital finance in Africa, the next phase is non-payment financial apps in agtech, insurance, mobile-lending, and investech, according to a report by Village Capital covered here at TechCrunch.

In “Beyond Payments: The Next Generation of Fintech Startups in Sub-Saharan Africa,” the venture capital firm and their reporting partner, PayPal, identify 12 companies it determined were “building solutions in fintech subsectors outside of payments.”

Village Capital’s work gives a snapshot of these four sub-sectors — agricultural finance, insurtech, alternative credit scoring and savings and wealth — including players, opportunities and challenges, recent raises and early-stage startups to watch.

The report highlights recent raises by savings startup PiggybankNG and Nigerian agtech firm FarmCrowdy. Village Capital sees the biggest opportunities for insurtech startups in five countries: South Africa, Morocco, Egypt, Kenya and Nigeria.

In alternative credit scoring and lending it sees blockchain as a driver of innovation in reducing “both transaction costs and intermediation costs, helping entrepreneurs bypass expensive verification systems and third parties.”

The Founders Factory expanded its corporate-backed accelerator to Africa, opening an office in Johannesburg with the support of some global and local partners.

This is Founders Factory’s first international expansion and the goal is “to scale 100 startups across Sub-Saharan Africa in five years,” according the accelerator’s communications head, Amy Grimshaw.

Founders Fund co-founder Roo Rogers will lead the new Africa office. Standard Bank is the first backer, investing “several million funds over five years,” according to Grimshaw.

The Johannesburg accelerator will grow existing businesses through a bespoke six-month program, while an incubator will build completely new businesses focused on addressing key issues on the continent.

Founder Funds will hire over 40 full-time specialists locally, covering all aspects needed to scale its startups including product development, UX/UI, engineering, investment, business development and, growth marketing. This TechCrunch feature has more from Founders Fund management on the outlook for the new South Africa accelerator.

More Africa Related Stories @TechCrunch

How a Ugandan prince and a crypto startup are planning an African revolution

Marieme Diop and Shikoh Gitau to speak at Startup Battlefield Africa

Flutterwave and Ventures Platform CEOs will join us at Startup Battlefield Africa

African Tech Around the Net

A lot is happening at Flutterwave right now—[E departs] 

Amazon Web Services to open data centres in Cape Town in 2020

Vodacom Business expands its fixed connectivity network in Africa

SA’s Sun Exchange raises $500k from Alphabit

IBM, AfriLabs partner to expand digital skills across 123 hubs in 34 countries

Victor Asemota to lead VC firm Alta Global Ventures’s business in Africa

Bank, local hub launch $1-million fund for Somali startups

Bots Distorted the 2016 Election. Will the Midterms Be a Sequel?

The fact that Russian-linked bots penetrated social media to influence the 2016 U.S. presidential election has been well documented and the details of the deception are still trickling out.

In fact, on Oct. 17 Twitter disclosed that foreign interference dating back to 2016 involved 4,611 accounts — most affiliated with the Internet Research Agency, a Russian troll farm. There were more than 10 million suspicious tweets and more than 2 million GIFs, videos and Periscope broadcasts.

In this season of another landmark election — a recent poll showed that about 62 percent of Americans believe the 2018 midterm elections are the most important midterms in their lifetime – it is natural to wonder if the public and private sectors have learned any lessons from the 2016 fiasco. And about what is being done to better protect against this malfeasance by nation-state actors.

There is good news and bad news here. Let’s start with the bad.

Two years after the 2016 election, social media still sometimes looks like a reality show called “Propagandists Gone Wild.” Hardly a major geopolitical event takes place in the world without automated bots generating or amplifying content that exaggerates the prevalence of a particular point of view.

In mid-October, Twitter suspended hundreds of accounts that simultaneously tweeted and retweeted pro-Saudi Arabia talking points about the disappearance of journalist Jamal Khashoggi.

On Oct. 22, the Wall Street Journal reported that Russian bots helped inflame the controversy over NFL players kneeling during the national anthem. Researchers from Clemson University told the newspaper that 491 accounts affiliated with the Internet Research Agency posted more 12,000 tweets on the issue, with activity peaking soon after a Sept. 22, 2017 speech by President Trump in which he said team owners should fire players for taking a knee during the anthem.

The problem hasn’t persisted only in the United States. Two years after bots were blamed for helping sway the 2016 Brexit vote in Britain, Twitter bots supporting the anti-immigration Sweden Democrats increased significantly this spring and summer in the leadup to that country’s elections.

These and other examples of continuing misinformation-by-bot are troubling, but it’s not all doom and gloom.  I see positive developments too.

Photo courtesy of Shutterstock/Nemanja Cosovic

First, awareness must be the first step in solving any problem, and cognizance of bot meddling has soared in the last two years amid all the disturbing headlines.

About two-thirds of Americans have heard of social media bots, and the vast majority of those people are worried bots are being used maliciously, according to a Pew Research Center survey of 4,500 U.S. adults conducted this summer. (It’s concerning, however, that much fewer of the respondents said they’re confident that can actually recognize when accounts are fake.)

Second, lawmakers are starting to take action. When California Gov. Jerry Brown on Sept. 28 signed legislation making it illegal as of July 1, 2019 to use bots – to try to influence voter opinion or for any other purpose — without divulging the source’s artificial nature, it followed anti-ticketing-bot laws nationally and in New York State as the first bot-fighting statutes in the United States.

While I support the increase in awareness and focused interest by legislators, I do feel the California law has some holes. The measure is difficult to enforce because it’s often very hard to identify who is behind a bot network, the law’s penalties aren’t clear, and an individual state is inherently limited it what it can do to attack a national and global issue. However, the law is a good start and shows that governments are starting to take the problem seriously.

Third, the social media platforms — which have faced congressional scrutiny over their failure to address bot activity in 2016 – have become more aggressive in pinpointing and eliminating bad bots.

It’s important to remember that while they have some responsibility, Twitter and Facebook are victims here too, taken for a ride by bad actors who have hijacked these commercial platforms for their own political and ideological agendas.

While it can be argued that Twitter and Facebook should have done more sooner to differentiate the human from the non-human fakes in its user rolls, it bears remembering that bots are a newly acknowledged cybersecurity challenge. The traditional paradigm of a security breach has been a hacker exploiting a software vulnerability. Bots don’t do that – they attack online business processes and thus are difficult to detect though customary vulnerability scanning methods.

I thought there was admirable transparency in Twitter’s Oct. 17 blog accompanying its release of information about the extent of misinformation operations since 2016. “It is clear that information operations and coordinated inauthentic behavior will not cease,” the company said. “These types of tactics have been around for far longer than Twitter has existed — they will adapt and change as the geopolitical terrain evolves worldwide and as new technologies emerge.”

Which leads to the fourth reason I’m optimistic: technological advances.

In the earlier days of the internet, in the late ‘90s and early 00’s, networks were extremely susceptible to worms, viruses and other attacks because protective technology was in its early stages of development. Intrusions still happen, obviously, but security technology has grown much more sophisticated and many attacks occur due to human error rather than failure of the defense systems themselves.

Bot detection and mitigation technology keeps improving, and I think we’ll get to a state where it becomes as automatic and effective as email spam filters are today. Security capabilities that too often are siloed within networks will integrate more and more into holistic platforms better able to detect and ward off bot threats.

So while we should still worry about bots in 2018, and the world continues to wrap its arms around the problem, we’re seeing significant action that should bode well for the future.

The health of democracy and companies’ ability to conduct business online may depend on it.

Bots Distorted the 2016 Election. Will the Midterms Be a Sequel?

The fact that Russian-linked bots penetrated social media to influence the 2016 U.S. presidential election has been well documented and the details of the deception are still trickling out.

In fact, on Oct. 17 Twitter disclosed that foreign interference dating back to 2016 involved 4,611 accounts — most affiliated with the Internet Research Agency, a Russian troll farm. There were more than 10 million suspicious tweets and more than 2 million GIFs, videos and Periscope broadcasts.

In this season of another landmark election — a recent poll showed that about 62 percent of Americans believe the 2018 midterm elections are the most important midterms in their lifetime – it is natural to wonder if the public and private sectors have learned any lessons from the 2016 fiasco. And about what is being done to better protect against this malfeasance by nation-state actors.

There is good news and bad news here. Let’s start with the bad.

Two years after the 2016 election, social media still sometimes looks like a reality show called “Propagandists Gone Wild.” Hardly a major geopolitical event takes place in the world without automated bots generating or amplifying content that exaggerates the prevalence of a particular point of view.

In mid-October, Twitter suspended hundreds of accounts that simultaneously tweeted and retweeted pro-Saudi Arabia talking points about the disappearance of journalist Jamal Khashoggi.

On Oct. 22, the Wall Street Journal reported that Russian bots helped inflame the controversy over NFL players kneeling during the national anthem. Researchers from Clemson University told the newspaper that 491 accounts affiliated with the Internet Research Agency posted more 12,000 tweets on the issue, with activity peaking soon after a Sept. 22, 2017 speech by President Trump in which he said team owners should fire players for taking a knee during the anthem.

The problem hasn’t persisted only in the United States. Two years after bots were blamed for helping sway the 2016 Brexit vote in Britain, Twitter bots supporting the anti-immigration Sweden Democrats increased significantly this spring and summer in the leadup to that country’s elections.

These and other examples of continuing misinformation-by-bot are troubling, but it’s not all doom and gloom.  I see positive developments too.

Photo courtesy of Shutterstock/Nemanja Cosovic

First, awareness must be the first step in solving any problem, and cognizance of bot meddling has soared in the last two years amid all the disturbing headlines.

About two-thirds of Americans have heard of social media bots, and the vast majority of those people are worried bots are being used maliciously, according to a Pew Research Center survey of 4,500 U.S. adults conducted this summer. (It’s concerning, however, that much fewer of the respondents said they’re confident that can actually recognize when accounts are fake.)

Second, lawmakers are starting to take action. When California Gov. Jerry Brown on Sept. 28 signed legislation making it illegal as of July 1, 2019 to use bots – to try to influence voter opinion or for any other purpose — without divulging the source’s artificial nature, it followed anti-ticketing-bot laws nationally and in New York State as the first bot-fighting statutes in the United States.

While I support the increase in awareness and focused interest by legislators, I do feel the California law has some holes. The measure is difficult to enforce because it’s often very hard to identify who is behind a bot network, the law’s penalties aren’t clear, and an individual state is inherently limited it what it can do to attack a national and global issue. However, the law is a good start and shows that governments are starting to take the problem seriously.

Third, the social media platforms — which have faced congressional scrutiny over their failure to address bot activity in 2016 – have become more aggressive in pinpointing and eliminating bad bots.

It’s important to remember that while they have some responsibility, Twitter and Facebook are victims here too, taken for a ride by bad actors who have hijacked these commercial platforms for their own political and ideological agendas.

While it can be argued that Twitter and Facebook should have done more sooner to differentiate the human from the non-human fakes in its user rolls, it bears remembering that bots are a newly acknowledged cybersecurity challenge. The traditional paradigm of a security breach has been a hacker exploiting a software vulnerability. Bots don’t do that – they attack online business processes and thus are difficult to detect though customary vulnerability scanning methods.

I thought there was admirable transparency in Twitter’s Oct. 17 blog accompanying its release of information about the extent of misinformation operations since 2016. “It is clear that information operations and coordinated inauthentic behavior will not cease,” the company said. “These types of tactics have been around for far longer than Twitter has existed — they will adapt and change as the geopolitical terrain evolves worldwide and as new technologies emerge.”

Which leads to the fourth reason I’m optimistic: technological advances.

In the earlier days of the internet, in the late ‘90s and early 00’s, networks were extremely susceptible to worms, viruses and other attacks because protective technology was in its early stages of development. Intrusions still happen, obviously, but security technology has grown much more sophisticated and many attacks occur due to human error rather than failure of the defense systems themselves.

Bot detection and mitigation technology keeps improving, and I think we’ll get to a state where it becomes as automatic and effective as email spam filters are today. Security capabilities that too often are siloed within networks will integrate more and more into holistic platforms better able to detect and ward off bot threats.

So while we should still worry about bots in 2018, and the world continues to wrap its arms around the problem, we’re seeing significant action that should bode well for the future.

The health of democracy and companies’ ability to conduct business online may depend on it.

Make people valuable again

There is a disconnection between the pace and progress of the technical achievements made by innovators and entrepreneurs and the ways in which those technologies have added to human happiness.

We have increased our technological powers many times and still we are not happier; we do not have more time for the things we find meaningful.

We could use our powers for making each other — and thereby ourselves — more valuable, but instead we are fearing to lose our jobs to machines and be considered worthless by the economy.  The link between better technology and better lives overall has become so confusing that many people no longer reflect upon its existence.

We are co-founders of i4j — Innovation for Jobs, an eclectic community of thought leaders that has been exchanging ideas since 2012 about how innovation can disrupt unemployment and create better jobs. We believe we have found an approach for doing so that we lay forth in our new book, “The people centered economy – the new ecosystem for work.” The book presents a system of ideas, ranging from helicopter perspective down to details of scenarios. It puts theory in perspective with a number of relevant real-life case examples written by i4j members, founders of major companies, such as LinkedIn, startup CEOs, investors, foundation directors and social entrepreneurs.

The problem today, we suggest, is that our innovation economy is not primarily about making people more valuable; it is instead about reducing costs.

The main danger is easy to summarize: when workers are seen as a cost (which is now the case), cost-saving, efficient technologies will compete to lower their cost and thereby their value. The “better” the innovation, the lower their value. People are struggling to stay valuable in a changing world, and innovation is not helping them, except for the chosen few. The need to be valued and to be in demand are part of our human nature. Innovation can, and should, make people more valuable.

The economy is about people who need, want, and value each other. When we need each other more, the economy can grow. When we need each other less, it shrinks. We need innovation that makes people need each other more.

The purpose of innovation should be a sustainable economy, where we work with people we like, are valued by people we do not know and provide for the people we love

If innovation does this, we will prosper.

The present “task-centered “economy that sees people as cost is plagued by many symptoms of its lethal illness. We present several in the book, here is one of them.

The rise of the working middle class boosted by Roosevelt’s “New Deal” has been all but wiped out. People like blaming their political opponents for these kinds of things but the wealth gap has been growing steadily, since 1980, under Republicans and Democrats alike. No, this is beyond politics.

The root cause for all this is the very essence of our task-centered economy: placing tasks, products and other things at the center of the value proposition instead of people. It seems very natural to see it this way, because, after all,  you want your house painted and there are painters who want to paint it – how can it work any other way? Yet, wanting things done better and cheaper, combined with innovation that makes that happen, is the cause of the troubles.

Companies will cut labor costs, as automation and offshoring lets them. When people earn less they will have less money to spend. The companies adapt to their shrinking purses by innovating still cheaper products and services and cutting labor costs even more. It is a spiral pointing downward toward a point zero where people earn and spend zero.

At the heart of this problem is the old saying, “A dollar saved is a dollar earned.” This maxim rings true to you and me in daily life, and it applies to companies. But paradoxically, in the economy, the opposite is true: a dollar saved is actually a dollar lost.

One person’s earning is always other people’s spending and if everyone spends less, people earn – on average – less.  Economies run on the spending and re-spending of the same money. Velocity counts. Economic growth is killed by companies that are competing solely for profits. We are not saying it’s wrong to save and not be wasteful, it’s good and necessary, but that is not earning. Saying that saving and earning are the same introduces the paradox and is a recipe for a failed economy.

It might not be possible to solve the growth-profit paradox in a task-centered economy, because it is inherent in the mindset. This mindset always looks at work and asks what is the most cost-efficient way of doing it. What keeps the economy from collapsing is the inherent limits of automating work. Workers have remained a necessary, if undesired, cost. But what will be the outcome if artificial intelligence allows almost all work to be automated? Now the task-centered mindset creates an implosion. With a task-centered mindset, innovation is set to kill economies.

Is the AI and machine learning revolution that seem to threaten our jobs different from previous industrial revolutions? The times are different but you may be shocked by the similarity in the patterns of change. Read the following excerpt of original text from the Communist Manifesto, where Bourgeoisie is replaced with Internet Entrepreneurs, Proletariat with On-Demand Workers, Civilization with Digital Economy, and Revolution with Disruption.

“Internet entrepreneurship cannot exist without constant disruption of markets, bringing uninterrupted disturbance of all social conditions. Internet entrepreneurship has created the modern working class — the on-demand workers, who must sell themselves in bits and pieces. They have become a commodity, exposed to the whims of the market. Their work has lost all individual character, and all charm. It is only the most simple and most easily acquired work that is required of them. The on-demand worker’s production cost is limited almost entirely to his living costs. But the price of a commodity is in the long run equal to its production cost. Therefore, the more the individual character disappears from his work, the wage decreases in proportion. The lower middle class will gradually become on-demand workers, partly because their specialized skills are rendered worthless by new methods of production.”

The accuracy of this message from the grave is nothing less than spooky. The analogy is clear, as is the message it sends: Internet entrepreneurship is the new bourgeoisie.

Universal Basic Income (UBI) can provide basic security, but it can’t replace work. People will always need to be able to depend on strangers — even adversaries. The day people no longer need to work, why should they want to depend on people they don’t know or don’t like? Utopian ideas about UBI don’t provide an answer. Meaningful paid work does and is the glue that holds societies together. The utopian UBI discussion is just another symptom of lost bearings. We start debating which jobs can’t be done by machines, whether machines can become exactly like people, whether machines should pay taxes, and so on. These are all interesting philosophical questions, but discussing them will hardly solve the practical problem: innovation is disrupting society. We need practical solutions. The first requirement is to be able to see them.

A key reason behind the confusion is that lack of perspective; reality needs a new lens. We can’t explain what we see because the good old ideas that once made things understandable are now making the world unintelligible instead. This happens often in history — for example, people in the middle ages had long thought that the earth was the center of the universe, but as scientists traced their movements in the sky, the more complex and incomprehensible their orbits became. But simply by switching perspective, placing the sun at the center, complicated orbits were transformed into nearly-circular ellipses of great simplicity. This was the “Copernican Revolution”.

We suggest that doing a similar switch: that moving people to the center can be equally constructive. A “people-centered economy” view could enable us to simplify the innovation economy and engineer it better just as the “Copernican revolution” did for physics and astronomy. The economy is all about people, after all, so it seems only natural to place us at the center. And it does indeed make the economy look simpler, as shown in the figure.

Our present task-centered view splits people in two: a worker-persona who earns money on a labor market, and a consumer persona who spends the money on a consumer market: a disconnected reality in which we are living double lives! It might seem like the time- tested and obvious view, but it is actually complex, disconnected, and wrong.

Switch to the people-centered lens and we are whole again. The labor and consumer markets are replaced by a single market where people are offered two kinds of services, one for earning money and another for spending it. It is a less confusing picture. By definition, organizations serve us, not the other way around. They are the ecosystem in which we are embedded, which helps us create and exchange value between each other.

Just by switching to a people-centered lens, things fall more neatly into place around us:  

A people centered economy has a simple and handy definition of the economy: People create and exchange value, served by organizations.

Seen through the people-centered lens, the thorny question of the future of work is rephrased: “Is AI-innovation being applied more to earning or to spending?” The simple answer is “spending” and the straightforward conclusion is that we need more innovation that helps people earn. Through the people-centered lens an obvious “rule number one” of a sustainable innovation economy becomes clear to see:

We need as much innovation that helps us earn as there is innovation that helps us spend.

Today, we are surrounded by excellent innovation for spending, but there is very little good innovation for earning and none for earning a livelihood.  

We need startups that compete to innovate a really good earning-service, perhaps something like this:

“Dear Customer, we offer to help you earn a better living in more meaningful ways.
We will use AI to tailor a job to your unique skills, talents, and passions.
We will match you in teams with people you like working with.
You can choose between kinds of meaningful work.
You will earn more than you do today.  
We will charge a commission.
Do you want our service?”

The good news is that the world’s labor market is ready to be disrupted by innovative new ways to satisfy the customers’ needs and wants to earn a good livelihood.

And the market opportunity for this is huge! Here is an estimate: According to Gallup’s chairman Jim Clifton, of some five billion people in the world who are of working age, three billion want to work and earn income. Most of them want a full-time job with steady pay, but only 1.3 billion have one. Out of these 1.3 billion people with jobs, only 200 million are “engaged” in what they do for a living — i.e., they enjoy what they do and look forward to each working day. These lucky few, however, are outnumbered 2:1 by those who are disengaged, expressing displeasure and even undermining the work of others. The remainder of the population are simply disengaged from what they are doing, dragging their feet through the work day.

This is the sad state of the global workforce that creates roughly a hundred trillion dollars’ worth of products and services every year. Humanity is running at a fraction of its capacity. Imagine using modern information technology to tailor jobs to every one of the three billion people wanting to work — work that is well matched with their unique skills, talents, and passions; work in which they are assigned to valuable tasks and partnered with people they like to work with. In such a world, the average world citizen would be able to generate several times the per-person value created today. How much more value would they create than the unhappy, mismatched workforce of today?

A doubling of value creation is surely low, but even that figure adds $100 trillion in value to the world economy. If the job providers charged the same commission as Uber does, 25 percent, on the incomes people earned through their services, this would generate revenues of $50 trillion from commissions alone, plus additional revenues from add-on services, such as liability insurance and health benefits.

At this size, tailoring better ways for people to earn their livelihood would be the single largest market in the world. Even at only one percent commission, hardly noticeable for the earners, the potential market size is two trillion dollars. We think this should be an attractive opportunity for entrepreneurs, investors and governments to explore.

“Tailoring jobs” is a virgin market waiting to happen, because previously we did not have the technology for it. But now, since only a year or two, we have good enough tools. Increasing smartphone penetration and new capacities like cloud computing and big data analytics could, in principle, tailor rewarding jobs for every person on earth. Even if this is unrealistic today, it is still a huge potential market, even if it is applied to only a fraction of the world population looking for a good job. It will be wrong to assume that the workers must belong the well-educated elite, because they are already well served with good job offers. Quite the opposite, The big market for AI-tailored jobs is the vast majority of excluded, un- and underemployed people who are lacking the opportunity to live up to their abilities.

A simple innovation that helps many millions of these people can be a much better business than something advanced that helps the already well-served. It is similar to how, before the first industrial revolution, the most successful manufacturers sold expensive things to rich people.

With the introduction of mass production this changed in an, at the time, surprising and unforeseeable way, when selling cheap things to the masses became the new highway to success. Back then, the people running the old economies could hardly imagine how selling crafted goods to people with thin wallets could be better business than selling them to kings.

Today, as we are introducing mass-personalized goods and services, many business leaders will have great difficulties imagining how creating special jobs for people with little income can be better business than tailoring jobs for the engineers that companies compete for.  

We are at the beginning of a revolution in strength finding, education, matchmaking, HR, and new opportunities in a long-tail labor market.

The i4j community includes entrepreneurs and investors who are interested in exploring this opportunity and we are welcoming more to join. An ecosystem of critical mass can open the doors to a people-centered economy and we intend to help it happen.