Tuesday, June 18, 2024

African startups scored $187 million in funding in May

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Victoria from Techpoint here,

Here”s what I’ve got for you today:

  • African startups scored $187 million in funding in May
  • Pitfalls to avoid when expanding a startup
  • Wasoko and MaxAB’s merger to proceed despite delays
  • Adia Sowho steps down as MTN Nigeria CMO

African startups scored $187 million in funding in May

In May, African startups hit the jackpot, scoring a whopping $187 million in funding, a jaw-dropping 149% jump from April’s $75 million.

Per a report by ‘Africa: The Big Deal,’ a firm that tracks startup deals on the continent, 64 companies snagged at least $100,000, with 17 startups bagging over $1 million, showing how investors are warming up to African startups.

Breaking it down, 4% came from grants, 31% from equity, and 65% from debt, showcasing the various investment strategies in play. 

Notable deals included Kenyan fintech M-KOPA pulling in $51 million and electric vehicle maker Spiro scoring $50 million, proving that diverse sectors are attracting big bucks. 

Though the total funding for the year is still shy of previous periods at $729 million, May’s surge hints at the resilience and potential of African startups, drawing global investors’ attention.

Diving into the numbers, the report compared ventures raising at least $1 million in previous years. While 2024 saw a slight dip compared to 2023 and 2021, with 90 ventures in January to May, the data suggests consistent interest and investment in African startups. 

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Shifting focus, Nigeria’s startup scene had a chill month in May, with just two major deals totalling less than $7 million announced. This quieter activity sheds light on the funding differences across regions and sectors within Africa’s dynamic startup landscape.

Pitfalls to avoid when expanding a startup

Beryl TV Cost-presentation-startups-1024x682 African startups scored $187 million in funding in May Techs

Expansion into Africa is a hot topic for venture-backed startups. It offers plenty of perks like tapping into new markets for higher revenues and hedging against economic and political instability. 

However, expanding is not for every business, and those who do so must do it correctly.

Chimgozirim chatted with three startup leaders at Paystack, Jetstream, and Lapaire who’ve been through the expansion process. They shared insights on the best timing for expansion, common pitfalls to avoid, and strategies to stay competitive. 

One key takeaway? Your expansion should align with your startup’s mission. Nefe Etomi from Paystack emphasises the importance of knowing why you’re expanding. That “why” will guide you through any challenges.

Jerome Lapaire, whose eyewear startup spans six countries, suggests that expansion is often driven by market saturation or the need to gain a first-mover advantage. 

Expanding internationally also showcases a startup’s scalability. If you can succeed in multiple countries with different regulations, languages, and currencies, it proves your business model is robust.

However, geographic expansion is not without challenges. It incurs additional operational costs, such as hiring new employees or relocating existing ones and localising products and communications. These factors necessitate that businesses carefully plan their expansion strategies.

To comprehend these ideas more fully and discover when and how to expand, read Chimgozirim’s story here.  

Wasoko and MaxAB’s merger to proceed despite delays

Beryl TV Belal-El-Megharbel-CEO-MaxAB-and-Daniel-Yu-CEO-Wasoko-1024x682 African startups scored $187 million in funding in May Techs

Kenya-based Wasoko and Egypt-based MaxAB have hit a delay in their “merger of equals,” which has been in the works for seven months. The holdup is due to extended due diligence, ongoing restructuring, and some macroeconomic challenges.

Touted as the largest in African eCommerce, with a $240 million backing, reports show that the merger is proceeding as planned despite the delays. 

The deal includes a review of ownership stakes, initially set with Wasoko owning 55% and MaxAB 45% based on revenues at the end of 2023. However, the Egyptian pound’s devaluation might change things, and MaxAB is keen to close the deal due to its severely depleted runway.

Here’s some backstory: Both companies agreed to a preliminary merger in December 2023 to extend their trade within Africa and deploy new technologies.

Despite being key players with significant funding, the eCommerce companies announced plans in January 2024 to cut their workforce by roughly 10%. 

Wasoko shut down operations in Zanzibar, Tanzania, and halted activities in Uganda and Zambia in March, although it denied exiting Rwanda in April. 

Meanwhile, VNV Global, a Swedish investment firm, slashed its investment value in Wasoko by 48%, dropping its fair value to around $260 million.

Once the merger is complete, Wasoko CEO Daniel Yu will handle investor relations, human resources, and fundraising, while MaxAB CEO Belal El-Megharbel will oversee internal matters like technology and operations.

Adia Sowho steps down as MTN Nigeria CMO

Beryl TV Adia-Sowho African startups scored $187 million in funding in May Techs
Adia Sowho steps down as MTN Nigeria’s CMO

Adia Sowho has stepped down from her role as Chief Marketing Officer at MTN Nigeria after nearly three years. Taking over as acting Chief Marketing Officer is Ugonwa Nwoye, the current Chief Customer Relations Officer. 

During her time at MTN, Sowho helped the telco achieve over 20% year-over-year growth in its consumer business and record growth in its data business, which saw a 50% YoY increase. She also played a key role in launching 5G, a first for Nigerian telcos.

Before joining MTN in August 2021, Sowho had an impressive career at Etisalat Nigeria (now 9mobile), where she held various leadership roles including Head of Strategy and Business Development, Head of Digital Media, and Director of Digital Business. 

She also made significant contributions at Migo, where she managed instant lending operations and facilitated 10,000 loans daily, and at ThriveAgric as interim CEO.

Moreover, Sowho discussed how MTN analysed customer behaviour, consumption patterns, and preferences to better understand their needs. 

The telco transitioned from traditional analytics to prescriptive analytics, allowing it to proactively optimise strategies and anticipate customer demands. 

This digital transformation also improved data capture in high-traffic processes, providing deeper insights for more informed decision-making.

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Have a lovely Tuesday!

Victoria Fakiya for Techpoint Africa.

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