Cartona gets $4.5M pre-Series A to connect retailers with suppliers in Egypt

Year-old startup Capiter announced last week that it raised a $33 million Series A to digitize Egypt’s traditional offline retail market.

It’s looking to take a large pie in the budding e-commerce and retail play, where multiple startups are pulling their weight including Cartona, also a year-old startup out of Egypt.

Today, Cartona is announcing that it has raised a $4.5 million pre-Series A funding round to connect retailers and manufacturers via an application.

The company confirmed that Dubai-based venture capital firm Global Ventures led the round, with Pan-African firm Kepple Africa, T5 Capital and angel investors also participating.

Cairo-based Cartona, founded in August 2020, focuses on solving the supply-chain and operational challenges of players in the fast-moving consumer goods (FMCG) industry by helping buyers access products from sellers on a single platform.

Buyers, in this case, are retailers, while sellers are FMCG companies, distributors and wholesalers.

The problem retailers in Egypt and most of Africa face mainly revolves around limited access to suppliers. There are also issues around transparency in market prices, which are dependent on traditional logistical capabilities.

For suppliers, the lack of data and inability to make data-backed decisions to improve margins and aid growth add up to unoptimized warehouses. 

“The trade market is completely inefficient and it’s not good for the supplier nor the manufacturers, and it’s definitely not good for retailers,” CEO Mahmoud Talaat told TechCrunch in an interview. “So we came up with the idea of Cartona, which is basically a fully light-asset model that connects manufacturers and wholesalers to retailers.”

Talaat founded the company alongside Mahmoud Abdel-Fattah. Before Cartona, Abdel-Fattah founded Speakol, a MENA-focused adtech platform serving 60 million monthly users, while Talaat was the chief commercial officer of agriculture company Lamar Egypt.

Cartona works as an asset-light marketplace. On the platform, grocery retailers can get orders from a curated network of sellers. The company says this way, it can provide visibility through real-time price comparisons and clarity on delivery times.

Also, FMCGs and suppliers can optimize their go-to-market execution through the use of data and analytics. Cartona tops it off by providing embedded finance and access to credit to retailers and suppliers.

Cartona makes money through all these processes. It takes a commission on orders made, charges suppliers for running advertising to merchants (since they compete for the latter’s attention), and provides market insights on buyer behavior, price competition and market share.

“It is time to capitalize on technology beyond warehouses and trucks. Data and technology will transform traditional retail to a digitally native one, which in return will drastically improve the supply chain efficiency,” Abdel-Fattah said about how the company sells information to retailers and suppliers.

Cartona has over 30,000 merchants on its platform. Together, they have processed more than 400,000 orders with an annualized gross merchandise value of EGP 1 billion (~$64 million). Cartona also works with more than 1,000 distributors, wholesalers and 100 FMCG companies, offering consumers more than 10,000 products, including dry, fresh and frozen food.

The company’s business and revenue model is similar to other companies in this space, but the main difference lies in whether they own assets or not.

Taking a look at the players in Egypt, for instance, MaxAB operates its warehouses and fleets; Capiter uses a hybrid model in which it rents these assets and owns inventory when dealing with high-turnover products. But Cartona solely manages an asset-light model.

The CEO tells me that he thinks this model works best for all the stakeholders involved in the retail market. He argues that not owning assets and leasing the ones on the ground shows that the company is trying to improve the operations of existing suppliers and merchants instead of displacing them.

I believe that the infrastructure already exists. We already have many warehouses, many small and medium-sized entrepreneurs, and wholesalers and distributors and companies that have a lot of assets. If you want to fix the problem, we think one should enable the people who are strategically located in small streets all over Egypt and have the infrastructure but don’t have the technology needed to optimize their warehouses and carts.”

The current margins for suppliers with warehouses are slim, and Cartona provides the technology — an inventory and ordering system — to provide efficiency in its supply chain.

The general partner at lead investor Global Ventures, Basil Moftah, said in a statement that Cartona’s technology and not owning inventory proved critical in the firm’s decision to back the company.

“The trade market is one of the most sophisticated, yet [it is] characterized by multiple critical inefficiencies across the value chain,” he said.Cartona’s asset-light approach tackles those inefficiencies by optimizing the trade process in unique ways and does so with minimal capital spent.”

Proceeds of the investment focus on improving this technology, Talaat said. In addition, Cartona is expanding its team and operations beyond two cities in Egypt — Cairo and Alexandria — to other parts.

A longer-term plan might include horizontal and vertical product expansion into pharmaceuticals, electronics and fashion.

African genomics startup 54gene raises $25M to expand precision medicine capabilities

Less than 3% of genetic material used in global pharmaceutical research is from Africa. The staggering gap is quite surprising because Africans and people of African descent are reported to be more genetically diverse than any other population.

Since launching in 2019, African genomics startup 54gene has been at the forefront of bridging this divide in the global genomics market. Today, the company has secured $25 million in Series B funding to bolster its efforts.

This round comes a year after the company, founded by Dr Abasi Ene-Obong, raised $15 million in Series A and two years after closing a $4.5 million seed round.

In total, 54gene has raised more than $45 million since its inception.

With the world’s analyzed genomes coming mostly from anywhere that isn’t Africa, the continent remains a valuable source of new genetic information for health and drug discovery research.

This is where 54gene’s work is relevant. The company conducts and leverages this research to ensure Africans are recipients of upcoming drug and medical discoveries.

Last year when we covered the company last year, CEO Ene-Obong disclosed that for 54gene to conduct this research, it recruits voluntary participants who donate genetic samples via swab or blood tests.

It still very much works this way. However, instead of depending on third-party health centres like hospitals and sending the samples abroad for analysis, 54gene launched its own genetics sequencing and microarray lab in Lagos last September. The company did this in partnership with U.S.-based biotech company Illumina.

Speaking with TechCrunch, Ene-Obong says in addition to the genotyping capabilities offered, the lab also provides whole-genome sequencing (WGS) and whole-exome sequencing (WES).

Not to bore you with the jargon but here’s why this is important. Genotyping tends to show only 0.02% of an individual’s DNA; however, WGS can show almost 100% of the same person’s DNA.

For WES, although it represents only 1.5% of the human genome, it shows approximately 85% of known disease-related variants.

With these three in place, the company can advance genomics research and expand its ability to help scientists and researchers in Africa.

Unlike fintech and other fast-moving sectors like e-commerce, innovation in healthtech takes some time to take shape finally. 54gene is one of the few startups in the sector and even in Africa to have moved from seed stage to Series B in under two years.

It’s this sort of frightening speed that makes one wonder what the company is doing right. So I ask the CEO whether the company is indeed seeing significant progress in advancing African genomics; he answers in the affirmative.

“Though the arc of conducting early research through drug approval can be long in biotech, we have taken the approach to building the backbone that is needed for short-term successes to long-term gains that provide better healthcare delivery and treatment outcomes from diseases,” he added.

In addition to setting its first lab, the CEO says the company increasing its biobanking capacity by 5x and is counts that as a major success.

During its last raise, 54gene had a biobank capacity for 60,000 samples. If Ene-Obong comments are anything to go by, the two-year-old company currently has a biobank with over 300,000 samples, close to its longer-term aim to manage up to 500,000.

Another one is the recruitment and training of talent to generate and process data needed to produce insights for the company’s drug discovery efforts.

Nigeria has a dearth of experienced clinicians and with the remaining few leaving in droves, it is not hard to see why it is a win for the company. Knowing this, 54gene plans to use part of the new funding to recruit and train more professionals

Other use of funding will expand its capabilities in sequencing, target identification and validation, and precision medicine clinical trials. Also of great importance is its expansion across the African continent.

To aid this expansion, 54gene will have to carry out partnerships. A recent one occurred between the company and the Tanzania Human Genetics Organization and Ene-Obong says 54gene is in varying stages of conversations with more partners. However, he was tight-lipped on who they might be.

“We are excited about our Africa-first approach which will see us expand to countries within East and West Africa in the coming year,” he added.

54gene made some hires to this end: Michelle Ephraim, Colm O’Dushlaine, Peter Fekkes, Teresia Bost, Jude Uzonwanne — all of who have decades of experience working with companies like Leica Biosystems, Regeneron Genetic Center, Novartis, Celgene, and the Bill and Melinda Gates Foundation

Pan-African venture capital firm Cathay AfricInvest Innovation Fund led this round. Lead investor from the company’s Series A funding, Adjuvant Capital invested once again with participation from other VCs including KdT Ventures, Plexo Capital, Endeavor Capital, and Ingressive Capital.

Nigerian agritech startup Releaf secures $4.2M to scale its food processing technology

The distance between their farms and the nearest processor is key for smallholder farmers who need to process their crops. And though Nigeria’s food processing systems have a keen resemblance to the West with respect to big factories and huge economies of scale in high-demand cities, farmers still suffer from poor logistics networks.

With distance and logistics problems, farmers’ crops can go bad and when factories buy them, it affects their processing yields and price. Farmers, witnessing post-harvest loss, also get paid less and miss the opportunity to invest in their crops production.

Nigerian agritech startup Releaf is solving this by building proprietary hardware and software solutions to make these farmers and food factories more efficient and profitable. Today, the company is announcing that it has raised $2.7 million in seed and grants towards this effort.

Pan-African focused venture capital firms Samurai Incubate Africa, Future Africa and Consonance Investment Managers led the round. Individual investors like Stephen Pagliuca, the chairman of Bain Capital and Justin Kan of Twitch also participated.

In addition to the seed round, the agritech startup secured  $1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID.

Founded by Ikenna Nzewi and Uzoma Ayogu, Releaf focuses on value chains where smaller factories are set up near smallholder farmers. This allows them to get better processing yields and fewer logistics costs; in the end, the farmer has more money to work with.

When the pair started the company in 2017, the idea behind Relead was not concrete yet as the team, based in the U.S., had not figured out product-market fit.

First, it planned to increase productivity in Nigeria’s agricultural sector using software. Even after graduating from Y Combinator’s summer batch that year, Releaf toyed around with ideas around trade finance and a marketplace for buyers and sellers of agricultural products.

The team would get a clearer picture of what it wanted to build when the founders moved back to Nigeria. The Americans of Nigerian descent toured across 20 states and studied different value chains for crops spotting inefficiencies that could be solved by technology.

“We took a much more broad approach to what the solution would be, but we really wanted to decide on a specific crop to work in. And we found that opportunity in the oil palm sector,” Nzewi said to TechCrunch in an interview.

The oil palm market in Nigeria is a $3 billion one with over 4 million smallholder farmers cultivating farms where those crops are planted.

These farmers drive 80% of the production of oil palm. But since the industry is quite fragmented, they have many challenges processing the oil palm because it’s a crop that requires serious processing power to extract vegetable oil from it.

Releaf

Image Credits: Releaf

Farmers typically go through this process by using rocks or inappropriate hardware — ineffective processes that lead to low-quality oil palm largely unfit as input for high-quality vegetable oil manufacturing.

Nzewi says the team saw an opportunity and set out to build a technology to help farmers crack oil palm nuts. The result was Kraken, a proprietary patent-pending machine.

So here’s how the company’s business model works. Releaf buys nuts from the farmers, then uses the Kraken to crack the nuts and crush the kernels into vegetable oil. Releaf then sells the vegetable oil to FMCG processors and local manufacturers, mainly in Nigeria’s south-southern region.

“Nigeria has about 60% more demand for vegetable oil than it does supply. And it can not be met due to supply shortfall with imports because the government banned the importation of vegetable oil. So there is a need to take these smallholders who are driving 80% of production and make them more efficient so that we can have a better balance of supply and demand for vegetable oil,” Nzewi said about the pain point Releaf is addressing.

But still, why does the company think it can break into a competitive Nigerian vegetable oil market with hardly differentiable products?

Nzewi explains that the answer lies in the quality of products. Typically vegetable oil is driven by a free fatty acid (FFA) metric that measures vegetable oil’s impurity. The CEO claims that while the industry standard is about 5% FFA, Releaf produces at 3.5%.

Despite having an edge in quality of production, Releaf products are sold on an industry standard. Nzewi says that might not be the case in the future as the company is looking to finally take advantage of its product quality and increase prices to improve its profit margins.

According to the company, Kraken already processes 500 tonnes of palm nuts. Its software connects to over 2,000 smallholder farmers who have supplied over 10 million kilograms of quality palm kernel nuts to food factories.

Regarding expansion, Nzewi noted that Releaf has more appetite for moving into new geographies instead of crop offerings. His argument is that processing oil palm and cultivation style is a straightforward method due to its similarities across West Africa.

But for crop expansion, the company may need to find crops that can be planted alongside oil palm and practice intercropping or work with crops like soybeans or groundnuts used in the vegetable oil industry.

Releaf

L-R: Uzoma Ayogu (CTO) and Ikenna Nzewi (CEO)

Releaf will use the seed investment to develop technology and deploy it to smallholder farmers, Nzewi tells me. Then the $1.5 million in grants will focus on providing working capital financing to these farmers. He adds that Releaf has run financing trials already this year where it has increased smallholder incomes by three to five times.

We think there’s a really great opportunity to bring both physical technology and financial services to these communities to make them more productive. And it’s kind of central to our thesis,” the CEO said. “We believe that our smart factories can serve as an economic pillar in these rural communities and make it easier for us to supply these communities with other services that they can find valuable like access to working capital, payment for education, and access to insurance services. So we see the food processing as like the first step it cements us in the value chain.”

Earlier this year, agritech startups like Gro Intelligence and Aerobotics raised huge sums of venture capital and showed the sector’s promise in Africa. However, venture capital has slowed down over the past few months and Releaf’s investment brings that spotlight back to the sector, albeit briefly.

Rena Yoneyama, the managing partner at Samurai Incubate Africa, said Releaf’s novel approach sets it aside from other agritech startups the venture capital firm has engaged with.

We believe the firm’s thesis on decentralizing food processing would have a strong match with Africa’s economic development landscape for the next few decades. Ikenna and Uzo are the perfect founders to disrupt this market in Nigeria and beyond. We are thrilled to back them as they innovate in providing both agro-processing and financial services to rural communities and farmers,” she added. 

Speaking on the investment as well, Iyin Aboyeji, general partner at co-lead investor Future Africa said, “…The team at Releaf is building the agro-allied industry of the future from the ground up, starting with palm oil which they have developed a novel technology to aggregate, deshell and process into critical ingredients like vegetable oil and glycerine. Future Africa is delighted to back Releaf to build the future of modern agriculture.”

Egyptian startup Capiter raises $33M to expand B2B e-commerce platform across MENA

Funding startups that help manufacturers and sellers distribute products and merchants access them on a single platform keeps increasing across Africa.

Today, Cairo-based B2B e-commerce startup Capiter continues that trend by raising a $33 million Series A round.

The investment was co-led by Quona Capital and MSA Capital. Other participating investors include Savola, Shorooq Partners, Foundation Ventures, Accion Venture Lab, and Derayah Ventures.

Capiter was launched in July 2020 by Mahmoud Nouh and Ahmed Nouh. Speaking with TechCrunch, CEO Mahmoud Nouh says Capiter solves problems around reach and insights for suppliers and manufacturers.

Many of the manufacturers in Egypt today do not have the right infrastructure of the supply chain in place to reach merchants. Nouh says that manufacturers can only reach 30% of merchants in the market, but with Capiter, that number goes up between 80% to 100%.

Also, a large portion of the manufacturers’ end trade happens via traditional channels where there is basically no transparency over data or market insights.

Using machine learning, Capiter says it helps these manufacturers gain critical insights into the markets they serve, the products they sell, and how they fair with competition.

Then for merchants, Capiter attends to three problems. The first is the inconvenience merchants have to deal with engaging several suppliers to find the right product. The second is transparency which involves some back and forth between merchants and manufacturers on pricing. The third is that merchants often have little or no access to working capital to get the right product and the right time.

With Capiter, merchants can order products from FMCGs and wholesalers while the company delivers them. Capiter also provides fair pricing and matching techniques that showcases a wide range of inventory for merchants.

Then it affords working capital to them to buy more products even when they are strapped with cash. Capiter partners with local banks in Egypt and the Central Bank to perform this.

Capiter has over 12 merchant types on its platform, including mom-and-pop stores, hotels, restaurants, cafes, electronic shops, supermarkets, grocery shops, and catering companies, each with its own customized solutions.

“We’re able to get the data from the products they buy. So we offer them the best solution on what they should sell, at what time and peak seasons, including when are the offerings happening. All of these are customized solutions that we offer,” said Mahmoud Nouh.

Capiter

The Capiter app

The company’s revenues are derived from little margins on the products bought from manufacturers and sold to merchants. Then on rebates for the suppliers and commission from the working capital provided to merchants. Capiter also makes money from providing market insights and data services to manufacturers and FMCGs.

Typically B2B e-commerce platforms operate either asset-light, inventory-heavy models. Nouh tells me that Capiter chose to use a hybrid model — making deliveries without owning any trucks to ensure scalability and owning inventory, especially for high turnover products helping the company with high availability and better pricing.

“This way has enabled us to scale the business in a very fast manner and at the same time, efficiently and reliably. Regarding warehouses and trucks, we don’t own them; we rent them. We deal with third-party logistics for transportation and we manage them.”

Over 50,000 merchants and 1,000 sellers use Capiter. According to CEO Nouh, the company has provided up to 6,000 SKUs. He also adds that the company is targeting an annualized revenue of $1 billion by next year.

“We’re on a very good trajectory for achieving this,” he added. “In terms of team members, we have a team of more than 1000 people at the moment, including in warehouses, delivery, etc. So we’ve seen good traction across all board,” he answered when asked about Capiter’s traction.

Quona Capital, the co-lead investor in this round, is known to have made some B2B e-commerce bets over the past years, for instance, Kenya’s Sokowatch. The investment in Capiter adds to the firm’s portfolio in that regard and a growing presence in the MENA region being its first check made in Egypt.

In a statement, Quona co-founder and managing partner Monica Brand Engel said, “Capiter’s embedded finance model, combined with its expertise and strong user engagement, can have a dramatic impact on the financial lives of SMEs, helping them optimize their income which helps communities to thrive.”

“SME supply chain inefficiencies are massive throughout the Middle East. We believe the key blocker is the lack of working capital in the system. Capiter has built an asset-light way to aggregate retailers and suppliers and facilitate credit into the system through a comprehensive multi-product offering such as commerce, credit financing, digital payments, bookkeeping and inventory management for SMEs, leveraging on the ecosystem built by the local banks and financial institutions.” adds Ben Harburg, partner at MSA Capital, a global VC that has invested in fintechs like Nubank and Klarna.

According to Ahmed Nouh, the company’s COO, Capiter will expand into new verticals like agriculture and pharmaceutical offerings.

The co-founder brings experience from the shipping and logistics space. Both he and Mahmoud are serial entrepreneurs. The latter’s journey is quite prominent, having worked in the mobility space as the co-founder and COO of Egyptian ride-hailing company SWVL. The company recently announced a potential SPAC deal valuing it at $1.5 billion and is one of the few African startups breeding a tech mafia. Ahmed Sabbah, another co-founder of the company, now runs early-stage fintech startup Telda.

Capiter has attracted a global team that brings together the expertise from companies like Careem and Flipkart needed to achieve the company’s targets, said Mahmoud.

He adds that the team, alongside the provision of financial services via partnerships with banks and its hybrid model, is how the company stands out in a competitive market, including the likes of Fatura, Bosta, and MaxAB.

Following this investment, the company plans to expand vertically (in terms of the buyer type) and geographically within the next year.

“We want to serve every single SME in the MENA region and expanding inside Egypt and globally.” He adds that Savola Group, one of its investors and the largest investor for FMCG products in the MENA region, will prove pivotal to this growth. Capiter also plans to diversify its financial services offerings to include payments. 

Nigerian one-click checkout platform OurPass raises $1M pre-seed, wants to build ‘Fast for Africa’

We like to buy things online ranging from e-commerce stores to subscription-based sites. However, no one enjoys the hassle when you have to always re-log into different sites and stores. I mean, shopping can be a whole lot more fun if a fast logging and checkout system existed across all your favorite online stores.

In the U.S., high-flying startup Fast already caters to this need. Although the company is building a global product, it is limited in Africa, and OurPass has taken an interest to build one for the market.

The Abuja-based startup, which describes itself as the “Fast for Africa”, has also closed a $1 million pre-seed round to scale across the country. The round was led by Tekedia Capital and angel investors from Fortune 500 companies, the company said. 

E-commerce checkout problem is one founder and CEO Samuel Eze is familiar with, but through a second-hand experience.

“I watched my mother struggle to shop online where I saw her set up multiple accounts on different platforms while going through a rigorous checkout process,” he told TechCrunch in an interview. “In many cases, she ended up dropping the card and moving on to a different online store. Seeing the same pattern happen with other friends and family, I had to dive into it and found that it was actually a major headache for consumers and online retailers.”

Nigeria’s e-commerce market is still heavily reliant on cash on delivery. In fact, as of 2019, 70% of Nigerians in a survey said they prefer cash on delivery options to making online payments.

But the narrative is slowly changing with the likes of Paystack and Flutterwave, making it easier for merchants to collect online payments.

Per Statista, 27% of online payments made on e-commerce sites are now carried out with cards, topping cash and bank transfers as the most common payment method.

Yet checkout still remains a major issue for merchants. Yearly, about 75% of shopping carts are abandoned due to how cumbersome the checkout experience can be with long forms and re-log ins.

Attempting to tackle this challenge, OurPass provides a mobile application that enables consumers to shop with one click. The first time consumers sign up on the OurPass platform, they enter their names, email and shipping addresses. OurPass then creates an identity for each customer, which is passed across every online store they shop.

“We built an identity layer across the web to enable consumer identity to be sent across to every single online store they go to check out from,” said Eze.

In essence, OurPass customers would not need to fill out any form anymore and do not have to deal with re-logging issues. But here’s the thing: they can only shop with merchants that have OurPass API linked to their platforms. And that’s a big ask. 

So why has OurPass decided to go this route of creating its own ecosystem of merchants and consumers? For instance, in Fast’s case, only the merchants need to install Fast Checkout, while users can access the service via an e-commerce or merchant’s website. But for OurPass, users need to download an application and shop with merchants using the platform.

Initially, OurPass allowed users to fill in their payment card details when completing their forms for the first time without the need to download an application. But after several instances of payment gateways flagging many cards used by OurPass consumers and failed card transactions, the company chose to adopt a wallet strategy and created an application for consumers.

“We did not want to defeat our USP of one-click checkout by allowing consumers to try to check out in one-click only for them to see their cards flagged as fraudulent,” Eze said. “Hence the reason why we had to build our system on a wallet system to enable that one-click checkout.”

That means consumers and merchants are assigned virtual account numbers to be used in a wallet. For consumers to check out from a store, they’ll need to fund their wallets, and once they check out, the money moves into the merchants’ wallets. Eze says this helps OurPass capture value end to end and offers instant settlement of payments which, according to him, was not the case with payment gateways.

OurPass has gathered a few merchants on its platform. Most of its clients are small businesses that use Storemia, an online storefront provider OurPass acquired recently. The company also plans to work with merchants on e-commerce platforms, including WooCommerce, Magento, Squarespace and Shopify in the future and social commerce platforms like WhatsApp, Facebook and Instagram.

Alongside its one-click checkout, OurPass also offers free delivery on all orders for customers. The company partnered with logistics companies like MAX.ng and Gokada to execute on this front.

The one-year-old company charges 0.8% per transaction, capped at N1,000 (~$20) for merchants and a commission of 5% on every product sold — Eze also hints at a plan for the company to introduce subscriptions.

Since beta launching in May this year, OurPass claims to have done $500,000 in transaction value and hopes continuous growth will see it become the go-to platform for consumer checkout in Nigeria by 2023.

Per use of funds, Eze says OurPass will develop its technology and grow its team to up to 200 people before the end of next year.

Egyptian fintech MNT-Halan lands $120M from Apis Partners, DisrupTech and others

Over 70% of Egypt’s young and fast-growing population of over 100 million is financially underserved despite mobile penetration exceeding 90%.

Traditional banks often overlook this segment because of their spending power or financial status and fintechs have seized the opportunity to cater to their needs. One of such fintechs is MNT-Halan and today, the company which describes itself as “Egypt’s leading fintech ecosystem,” is announcing that it has closed a $120 million investment.

The investors backing MNT-Halan include private equity firms Apis Growth Fund II, Development Partners International (DPI), and Lorax Capital Partners; VCs like Venture Partners, Endeavor Catalyst, and DisruptTech. They join the likes of GB Capital, DPI, Algebra Ventures, Wamda, Egypt Ventures, Shaka VC, Nowaisi Capital, Unidelta, Battery Road Digital Holdings that have backed the company in the past. 

In 2017, Mounir Nakhla and Ahmed Mohsen started Halan as a ride-hailing and delivery app offering two and three-wheeler services to customers in Egypt. Since then, it has provided other features like wallet, bill payment services, e-commerce with buy now, pay later (BNPL), micro and consumer loans in a bid to become a super app.

Then this year, Netherlands-based MNT Investments BV entered a share swap agreement with the Egyptian super app. The deal was made to accelerate the progress of Halan in payments and lending space, especially BNPL in Egypt and the MENA region. 

Before the merger, MNT acquired the shares of Raseedy, the first independent and interoperable digital wallet in Egypt licensed by its Central Bank to disburse, collect and transfer money digitally through mobile applications. Now, as MNT-Halan, it has also obtained the micro, consumer, and nano finance licenses to provide services to both businesses and consumers across Egypt.

The company has built a fintech ecosystem that connects consumers, merchants, and micro-enterprises via a digital platform and payment solutions.   

As a business and consumer lender, MNT-Halan offers BNPL services, nano loans, microfinance, SME lending, payroll lending, and light-vehicle finance.

In its digital payments ecosystem, it provides services around loan disbursement and collection, peer-to-peer transfers, payroll disbursement, remittances, and bill payments. 

Then in mobility, MNT-Halan provides courier, delivery, and ride-hailing services.  

MNT-Halan claims to be Egypt’s largest and fastest-growing lender to the unbanked. Serving over 4 million customers in Egypt, of which 1 million are monthly active users, MNT-Halan has disbursed over $1.7 billion worth of loans to 1.8 million borrowers since inception. The company also adds that it processes $100 million monthly, growing 20x over the past five years. 

The investment is a mixture of private equity and venture capital money which will help the company improve its technology and product, while scaling to tens of million of customers in the MENA region. 

“We are at the forefront of the digital revolution sweeping across Egypt, bringing together the unbanked population with our technology. We are on track to bring financial inclusion to tens of millions of Egyptians. As a  result, we will unleash this segment’s earnings potential and drive greater participation in the economy,” said CEO Nakhla.

Apis Growth Fund II is a London-based private equity fund makes quasi-equity investments in the financial sector and related market infrastructure — payment gateways, switches, and payment platforms — in Africa and Asia. MNT-Halan is the first landmark investment it is making in Egypt and the second on the continent after being part of TymeBank’s $109 million investment in February this year. 

The co-founders and managing partners Matteo Stefanel and Udayan Goyal, said this in a statement, “We are thrilled to be investing in MNT-Halan, which is our first investment in Egypt. Our belief is that they will be the leading player digitizing the unbanked and bringing financial services to millions of underserved customers in the country, and we look forward to partnering with them to extend their impressive growth trajectory. We believe Mounir Nakhla’s track record, combined with MNT-Halan’s tech team and operational expertise, provide the ideal opportunity to invest in Egypt’s fintech sector.” 

Prior to this news, Halan as an independent entity had raised $26.4 million according to Crunchbase. This investment of $120 million is one of the largest raised in Africa this year and continues to show the dominance of fintech on the continent.

Nigeria’s Prospa gets $3.8M pre-seed to offer small businesses banking and software services

In Nigeria, there are more than 40 million micro-businesses underserved in some form or another regarding banking services. Although some of these businesses have registered bank accounts, gaps exist in how banks use the data available to serve the needs of each business.

With banks, presenting a series of transactions as statements is all these businesses require. They care less about providing these businesses with insights and growth opportunities around their customers and products.

A fintech startup, Prospa wants to change that and has begun to tap into this market. In March, the company was one of the 10 African startups participating in Y Combinator’s winter batch. A few months past graduation, the startup, combining both worlds of banking and business management tools for micro and small businesses, has closed a $3.8 million pre-seed round.

Prospa was founded by Frederik Obasi, Chioma Ugo and Rodney Jackson-Cole. As a serial entrepreneur running businesses in tech and media, Obasi experienced how tough running operations and banking his business simultaneously was in Nigeria.

Banks only concerned themselves with providing some financial services so people like Obasi had to look for software or personnel to cater to other operations of the businesses.

For someone who runs a large business with a considerate influx of cash, it is easy to assign staff or use software to designate tasks. On the other hand, delegating tasks with personnel or software is not cheap for smaller businesses, hence why most struggle.

Sensing an opportunity, Obasi and his team launched Prospa under the premise that the company would cheaply solve the needs of these small business owners in banking and software.

“When I left my last business, I wanted to do something really big and something that I knew the problem inside out. That’s why I started Prospa,” Obasi told TechCrunch over a call. 

Prospa

Image Credits: Prospa

The founders built the product between June and September 2019 and went live in October. Since then, the company acquired customers in stealth even when they got into YC. Obasi explains that he wanted Prospa to have organic traction void of the growth driven by hype and media noise.

“We like to think a really long-term game. We really wanted to really test the hypotheses, build an actual business with revenue and understand what we were doing. Then the COVID period came and we started seeing enough traction,” he added.

When the company began to get some buzz, the typical description people had about Prospa was “a neobank for small businesses.” But CEO Obasi is quick to dispel that notion. Alongside providing banking services, Prospa offers invoicing tools, inventory management, employee and vendor management, an e-commerce store, and payroll features.

“Banking is just a little part of what we do. We know we’re put into the neobank category, but we see our product as 10% banking and 90% software. So the experience is very much different from what you’d get from a neobank and the use case for Prospa users is quite different,” he added.

Prospa focuses on freelancers and entrepreneurs, acting as the “operating system” for their businesses.

Registered businesses on the platform get access to an account number and other features Prospa provides. For unregistered businesses, Prospa takes them through a process of formalizing their business and providing bank accounts. However, in the larger scheme of things, this segment is more of an inroad into an upsell.

Talking on traction, Obasi says the company has tens of thousands of businesses and is growing 35% month-on-month. And from a non-banking perspective, Prospa has managed over 150,000 product catalogs while small businesses have sent out 360,000 invoices on the platform. 

Then, regarding pricing, it depends on the business’ turnover. For instance, a business with a turnover of ₦100,000 (~$200) is not expected to pay Prospa any subscription fee. But businesses with turnovers exceeding ₦100,000 pay fees between ₦3,000 (~$6) and ₦5,000 (~$10) monthly.

Prospa

Image Credits: Prospa

This past year, African VC has seen incredible numbers from all corners of the continent at all stages of investment. Prospa’s pre-seed investment, for instance, is the largest round of its kind in Nigeria and sub-Saharan Africa at the moment. In Africa, only Egyptian fintech Telda has raised a larger round.

Obasi believes the company’s understanding of the market and what it wants to achieve was the main reason it could command such a price which, according to him, was almost four times oversubscribed

The investors in the round include Global Founders Capital and Liquid 2 Ventures. Founders of global fintechs like Mercury’s Immad Akhund, Karim Atiyeh of Ramp, and executives from Teachable, Square, Facebook and Nubank also participated in the round.

Seeing the likes of Akhund and Atiyeh on Prospa’s cap table might suggest to some that Prospa was backed because the company is building a replica of those businesses in Nigeria. However, Obasi says while there are similarities, Prospa is not building a product for startups.

“There’s not a massive startup ecosystem in the U.S. where you can basically grow a billion-dollar company just serving YC companies. We don’t have that here. We’re really building for the backbone of the economy, which is small and micro-businesses. Speaking to and being able to build relationships with investors, one of the things clear is that we’re not an American copycat,” he said when asked if Prospa could be likened with Mercury.

Prospa plans to use its new capital to double down and expand with acquisition strategies to get more customers. In addition to that, the company plans to hire more talent, especially in product and engineering.

Glovo to double down African investment in the next 12 months but will it stay put?

Spanish on-demand delivery platform Glovo today announced plans to double its investment in Africa and expand its operations on the continent.

The Barcelona-based company has invested up to €25M ($30M) by bringing its food delivery service to six African countries — Morocco, Uganda, Kenya, Ghana, Côte d’Ivoire, and Nigeria.

Glovo is available in more than 40 cities with more than 300,000 users, 8,000 restaurants and 12,000 couriers in these countries. Earlier this year, it launched operations in Lagos, Nigeria and Accra, Ghana before expanding to Tema, another Ghanaian city last month.

Over the next 12 months, Glovo says it will invest an additional €50M ($60M) to drive expansion into more cities on the continent and move into new markets like Tunisia, where it plans to launch in Tunis next month.

According to a statement released by the company, the expansion will make Glovo’s services available to 6.5 million people. Co-founder Sacha Michaud believes these markets are currently underserved, and Glovo has found the right opportunity to work with local restaurants, bringing them online to reach new customers in a bid to “make everything, within all towns and cities, available to everyone.”

The attention on Africa follows a series of regional moves Glovo has pulled this year. After its mammoth $528 million Series F raise, it acquired several Delivery Hero’s businesses in Central and Eastern Europe for $208 million.

Now present in 23 countries, Africa represents 30% of the company’s geographical footprint. And the Spanish company plans to be live in 30 countries before the end of next year, a decision in part due to an IPO target in three years.

Glovo says it is a market leader in 80% of the countries where it has operations. The company’s grocery service arm has grown the fastest and revenue has been increasing significantly after a steady rise in orders. To meet the growing needs of customers, Glovo has had to invest heavily in dark stores and in July also launched virtual brands for restaurants.

It’s not clear if Glovo will extend these add-on services to Africa where it has its largest market in terms of population size: Nigeria. Yet, the West African nation does not come without its own fair share of troubles like poor logistics infrastructure and an unpredictable regulatory environment.

Despite that, a couple of food delivery platforms like Gokada and Jumia Food, a subsidiary of e-commerce giant Jumia have tried to scale, finding varying degrees of success doing so.

While Glovo will have to compete for market share with these players, the company says it is bullish because of its multi-category strategy. According to the company, grocery sales account for half of its business in some African markets.

That said, Glovo’s performance in emerging markets is questionable. Last year, the company pulled out of all the Latin American countries — Argentina, Ecuador, Peru, Panama, Costa Rica, Honduras, Guatemala, and the Dominican Republic. It sold operations in these markets to Delivery Hero for $272 million.

The company also exited the Middle East and North Africa (Egypt and Turkey) and Uruguay and Puerto Rico in January 2020.

Over the past couple of years, Glovo has said it wanted to achieve profitability in a short amount of time. The delivery space is a thin-margin business and it is thinner in emerging markets. This played a part in why Glovo exited both Middle East and Latin America. The market isn’t any different in Africa, and time will tell if the Spanish delivery will stay put, exit, or close shop.

Whatever the case, Glovo says it is “committed to continuing its policy to hire top local talent” on the continent and plans to double its number of staff and add an extra 200 employees before the end of next year.

“Our expansion in Nigeria, Ghana, and our upcoming launch in Tunisia is something we’ve been looking at for some time now, so it’s great to be able to make it official. There’s been an unprecedented spike in the on-demand delivery business in Africa and the expansion of our services to new countries and cities is both a reflection of that trend and a testament to our commitment to the continent. We’re looking forward to making food, groceries, pharmaceuticals and retail products available to our new users at the touch of a button,” William Benthall, Glovo’s general manager of sub-Saharan Africa, said in a statement.

Sequoia Heritage, Stripe and others invest $200M in African fintech Wave at $1.7B valuation

Francophone Africa has its first unicorn, and if you’ve been following tech on the continent, you will be very unsurprised to hear that it’s coming from the world of fintech.

Wave, a U.S. and Senegal-based mobile money provider, has raised $200 million in Series A round of funding. The investment is the largest-ever Series A round for the region, and it values Wave at $1.7 billion.

Four big-name backers jointly led the round — Sequoia Heritage, a private investment fund and a subsidiary of Sequoia; Founders Fund; payments upstart Stripe; and Ribbit Capital. Others in the round include existing investor Partech Africa and Sam Altman, the former CEO of Y Combinator and current CEO of OpenAI.

The mobile money market in sub-Saharan Africa is growing exponentially. This past year, up to $500 billion has moved through the accounts of 300 million active mobile money users in the region. But despite being one of the largest alternative financial infrastructures known globally, this represents only a fraction of the overall market. 

The International Monetary Fund says that as of 2017, only 43% of adults in sub-Saharan Africa were “banked” by way of a traditional bank or mobile money account. When it comes to growing that proportion, however, mobile money — based on simpler technology and with an easier onboarding process — wins out, and it is set to capture more market share faster than traditional banking in the region. And this has investors, especially foreign ones, excited and looking to get on board.

(Neobanking, based on mobile technology too, falls somewhere in the middle of the two).

From Sendwave to Wave

If you’re wondering why you haven’t heard of Wave, the reason might be because you don’t know it’s a spinoff from Africa-focused remittance provider Sendwave.

Drew Durbin and Lincoln Quirk founded Sendwave in 2014 to offer little or no fee remittances from North America and Europe to select African and Asian countries. The YC-backed company became a WorldRemit subsidiary last year when the global fintech paid up to $500 million in cash and stock for Sendwave.

Wave

L-R: Drew Durbin and Lincoln Quirk

But before that, the team stealthily worked on a mobile money product described as having no account fees and “instantly available and accepted everywhere.”

In 2018, the product was piloted as Wave in Senegal but it was still within the Sendwave ecosystem. When WorldRemit acquired Sendwave, Durbin and his team turned their focus to Wave.

“We saw an opportunity to make a bigger impact by trying to build a better, much more affordable mobile money service than the telcos are building throughout much of sub-Saharan Africa,” Durbin told TechCrunch in an interview. “We didn’t see any companies besides the telcos trying to solve that problem.”

Going up against incumbents

Telecom operators and banks have been the early entrants in the mobile money space, not least because they control much of the infrastructure in the process, from having mobile subscribers using handsets on their networks through to building the financial services to manage money and payments at the back end, and everything in between. 

Third-party providers, mostly fintechs, have tried to capture some market share from these incumbents. Wave, however, wants to disrupt it.

Durbin tells TechCrunch that unlike M-Pesa, the mobile payment provider led by Safaricom, and other products of telecom operators like Orange and Tigo, Wave is building a mobile money service that is “radically affordable.”

The Dakar-based platform is akin to PayPal (with mobile money accounts, not bank accounts) runs an agent network that uses their cash on hand to service Wave users. According to the company, users can make free deposits and withdrawals and charge a 1% fee whenever they send money.

Durbin says this is 70% cheaper than telecom-led mobile money and whenever there is a transfer problem, refunds are made instantly, unlike with incumbents where users might need to wait for some days.   

Wave’s technology also differs from telecom-led mobile money. Whereas the incumbents mostly focus on USSD (although there are provisions to use applications), Wave is solely app-based. For users without a smartphone, Wave also provides a free QR-card to transact with an agent.

By building its own infrastructure full-stack — agent network, agent and consumer applications, QR cards, business collections, and disbursements — Wave has been able to fuel its growth to several million monthly active users and billions of dollars in annual volume.

Wave

Image Credits: Wave

The two-year-old startup claims to be the largest mobile money player in Senegal and that over half of the country’s adults are active users. That pegs the number of users between 4 million and 5 million, and Wave wants to replicate this growth in Ivory Coast, the second market it officially expanded to last year.

This sort of growth pressure on telecom operators. That has indeed been the case for the leading telecom operator in both regions, Orange. In June, the telecom operator stopped users in Senegal from purchasing Orange airtime via Wave’s mobile application.

Per this report, Wave argued that Orange was applying anti-competitive tactics by restricting it from selling directly or via an approved wholesaler. Orange said it had made proposals “in line with those offered to its other providers” and that Wave wanted special treatment.

To reach a fair decision, both parties are working with the regulatory body in charge, Regulatory Authority for Telecommunications and Posts (RATP). And if the regulator isn’t capable of settling the issue, BCEAO, the regional bank of Francophone countries, is the next in line to resolve the dispute.

According to Wave’s CEO, the bank’s regulatory approach is one reason why Wave has been able to take on the telecom operators in the first place. But among all the West African countries where mobile money is prevalent, why start with Senegal, an emerging market?

“Senegal is a big enough market that we would have to work really hard to potentially win the market. But also a small enough market that if we were doing well, we could win the market quicker than if we were in a giant country. And so that combination of those two things made it seem like a good place to start,” Durbin remarked.

Following this fundraise, Wave will deepen its presence in Senegal and Ivory Coast and grow its already 800-strong team across product, engineering, and business. In addition, Wave will expand into other markets it feels are regulatory-friendly like Uganda.

I think there’s a pretty broad array of countries that have strong central banks and clear regulations are open to new players, or even want new players to come in and try to compete with the telcos. And so we have a lot of licenses that are in progress, and we’ll try to prioritize the countries where we’re able to get started sooner over the ones that it takes longer.”

A unicorn after two rounds

While some reports say Wave had raised $13.8 million prior to this, Durbin declined to comment on the figure when asked. However, he did mention that Partech, the French outfit with an African fund, invested in a seed round alongside other investors like Founders Fund and Stripe.

In addition to Sequoia and Sam Altman, the same crop of investors also participated in this monster Series A round.

In a market that has typically lacked innovation, Partech general partner Tidjane Deme says the investment will help Wave improve its service.

“Since 2018, we’ve supported Wave because we were convinced mobile money is still an unsolved problem in Africa,” he said in a statement. “Wave has great product design, stellar execution, and a strong financial trajectory. We are proud to see it become the first unicorn from Senegal.”

In May, Sequoia Capital invested in Egyptian fintech Telda, its first big deal on the continent. The Wave investment, meanwhile, is coming via subsidiary Sequoia Heritage and is the latter’s first investment in an Africa-focused startup. 

In a call with TechCrunch, Altman said that Wave ticked the boxes he considers before an investment — strong founders, an important problem in a large market, working product, and traction.

“I’ve known these founders for a long time, and I think they’re like off the charts good. I’ve been super impressed with their ability to figure out what users want and how to grow,” he said. “I think the company is solving the most important problem around money transfer in Africa and fixing the inefficient agent networks.”

The largest venture rounds for any venture in Africa remain OPay’s recent $400 million fundraise and Jumia’s equivalent in 2016. Both were Series C rounds. The next biggest rounds include Interswitch’s $200 million investment from Visa and Flutterwave’s $170 million Series C.

All these companies attained unicorn status following their respective rounds. The same goes for Wave but more spectacularly, considering the company bagged it in a Series A round, it’s transcending the region and is one of the largest A-rounds globally this year.

Wave joins OPay and Flutterwave as the newly minted unicorns in Africa this year — that is, startups valued above $1 billion — and the fourth African unicorn after Interswitch. Other billion-dollar companies include publicly traded Jumia and Egyptian fintech Fawry.

Funding rounds in Africa keep getting bigger and the continent has reached an inflection point. However, some skeptics have questioned the valuations of previous unicorns; Wave wouldn’t be an exception.

The argument would be around why Wave commands such a high valuation when for instance, two prominent telecom operators, Airtel and MTN, are looking to list their mobile money businesses between $2 to $6 billion despite being in the operations for several years across multiple African countries.

Yet like any investor optimistic about a portfolio company, Altman doesn’t believe Wave is overvalued. In fact, he thinks the company is undervalued.

“The opportunity in front of the company is massive. But plenty of times, I’ve gotten it wrong, so you never know. However, I have been fortunate to make a number of great investments and I feel Wave has as good of a shot as you can ask for,” he said. “Africa is going to be the fastest growing and most important market over the next coming decades for many companies. I think people are realizing how big the market opportunity is and how much value is going to be created and we’ll see a lot more things like this happen.”

Nigeria’s Autochek acquires Cheki Kenya and Uganda from ROAM Africa

Nigerian automotive tech company Autochek today is announcing the acquisition of Cheki Kenya and Uganda from Ringier One Africa Media (ROAM) for an undisclosed amount.

Per a statement, Autochek will finalize the deal in the coming weeks. With the acquisition, Autochek completes its expansion into East Africa and follows the first acquisition made almost a year ago when it acquired both Nigeria and Ghana businesses from Cheki.

In 2010, Cheki launched as an online car classified for dealers, importers, and private sellers in Nigeria. The startup, headquartered in Lagos, expanded operations to Kenya, Ghana, Tanzania, Uganda, Zambia, and Zimbabwe.

Cheki got acquired by ROAM in 2017 and joined a list of online marketplaces and classifieds in its network like Jobberman.

Per ROAM’s website, Cheki still has operations in Tanzania, Zambia, and Zimbabwe. However, these markets are quite inactive so it is safe to say Autochek has fully acquired all of Cheki’s main operations.

Cheki Kenya is an exciting market for both parties. The subsidiary has 700,000 users and lists over 12,000 vehicles monthly. It also claims to have grown 80% year-on-year in the last two years, making it a valuable asset for Autochek’s plan for regional expansion.  

“Cheki Kenya has always been sort of the crown jewel,” Autochek CEO Etop Ikpe said to TechCrunch. “At the time, when we completed the Nigeria and Ghana acquisition, it wasn’t a conscious effort to make this happen, but it’s great that it happened.”

Credit penetration in terms of vehicle financing is higher in Kenya than in Nigeria and Ghana. The East African country has a 27.5% penetration compared to the whole West African market at 5%. Therefore, it explains why Autochek is optimistic about the East African market. Before making the acquisition, the one-year-old company ran a stealthy pilot with some banks in Kenya — a similar strategy used in Ghana and Nigeria — to provide car owners with financing. So, the acquisition cements the company’s position in the market, Ikpe says. 

The sale of Cheki operations in all of its major markets, which happened within a year, might lead some to ask if the four entities did poorly and forced the classifieds giant to find a suitable buyer quickly.

But CEO Ikpe refuted any claims of a distress sale when asked. He stated that the acquisition happened in quick succession because both parties understood that the classifieds model (run by Cheki) needed to make way for the more modern transactional model (employed by Autochek and leading automotive players in Africa). Therefore, ROAM Africa saw it as a needed transition for Cheki.

Building off Ikpe’s past relationship with Ringier (one arm of ROAM before the merger), where he ran DealDey, a classifieds deal company Ringier eventually bought, it wasn’t a tough decision to sell the company to Autochek, Ikpe tells TechCrunch.

I think for them it’s really long term strategy and they believe in our business model. And there’s a lot of hope that we can do things in the future. It was also really about finding the right home for the business and their employees.”

From a statement, ROAM CEO Clemens Weitz said, “Across the world, we see a new evolution of digital automotive platforms, requiring deep specialization. Specifically in Africa, we believe that Autochek is the one player with the best team and expertise to truly create a game-changing consumer experience. For ROAM Africa, this deal is more than a very good transaction: It unleashes even more focus on our strategic playbook for our other businesses.”  

Autochek’s expansion to East Africa is coming at a time when automotive tech companies like Moove, Planet42, and FlexClub are receiving attention from investors as the need for flexible vehicle financing keeps growing across the continent.

The most important car financing market on the continent is arguably South Africa. Other automotive companies have some form of presence in the market and for Autochek, the plan is to expand there too, and understandably why.

South Africa is the crème de la crème market and has the highest car financing penetration on the continent. Yet despite the seeming competition, Ikpe believes opportunities exist for the company to provide services tailored to the market different from what other companies have.

“The beauty of our platform is that we can be diverse; for instance, we can have a retail or B2B approach. There’s a lot of dynamic ways we can work. So I think it’s natural that our goal is to typically be in every region. We’ve made our inroads into East and West, and we’ll continue to work as we want to be in North and South Africa,” he said.

Autochek says a funding round is in the works to execute on this front and might close before the end of the year.