21 May

African fintech and agribusiness companies attract interest from investors

African private equity and venture capital deal-making in April were dominated by investments in technology companies, particularly fintech and business-to-business platforms, together with encouraging activity in the agribusiness & food sector. This according to data provided by Africa Private Equity News, an industry information service.

Fintech investments were mostly in mobile-enabled banking and financial services companies. These include: French development-finance institution Proparco’s US$3m backing of JUMO, which helps customers to access loans and savings products in East and West Africa; and a $70m round, led by US-based Trinity Ventures, into credit provider Branch International. Digital payments network MFS Africa also raised $4.5m in funding, led by LUN Partners Group, thereby becoming one of the first fintech players on the continent to receive funding from a China-based venture capital firm.

Business-to-business solutions remains an attractive theme, with TLcom Capital announcing two investments in the space – a $5m injection in Nigeria-based mobile marketing company Terragon, and a $3.5m series-A round for Kenyan consumer-feedback platform mSurvey, which plans to use the capital to scale and expand into more countries. Asoko Insight, a provider of data on African companies, attracted $3.6m in additional funding from its early shareholders and some new ones, while South Africa-based Giraffe – which enables businesses to recruit high volumes of medium-skilled staff – closed a second round of investment, supported by FirstRand’s Vumela Fund, with participation from Omidyar Network, the Brozin family’s Forever Young Capital and Catapult Trust.

The continent’s rapidly-growing food market could be worth more than $1tn annually by 2030 as imports are substituted with high-value locally-produced food, according to the Alliance for a Green Revolution in Africa. With 60% of the world’s unused arable land, Africa’s potential in the broader agribusiness sector is also enormous.

The sector continues to attract interest from private equity firms such as DOB Equity, which last month backed Rwanda-based grain trader Sarura Commodities. Furthermore, Agri-Vie and Norfund announced a $7m co-investment in Marginpar Flower Group Holdings, which has floriculture interests in Kenya and Ethiopia. In addition, South African-based The Beverage Company, in which Ethos Private Equity and Nedbank Private Equity owns a stake, signed an agreement to acquire 100% of SoftBev, the sole licensed bottler for Pepsi and its related brands in South Africa, from Bowler Metcalf and the original founders.

Read the full story at How We Made It in Africa

02 May

African fintech and agribusiness companies attract interest from investors

African private equity and venture capital deal-making in April were dominated by investments in technology companies, particularly fintech and business-to-business platforms, together with encouraging activity in the agribusiness & food sector.

Fintech investments were mostly in mobile-enabled banking and financial services companies. These include: French development-finance institution Proparco’s US$3m backing of JUMO, which helps customers to access loans and savings products in East and West Africa; and a $70m round, led by US-based Trinity Ventures, into credit provider Branch International. Digital payments network MFS Africa also raised $4.5m in funding, led by LUN Partners Group, thereby becoming one of the first fintech players on the continent to receive funding from a China-based venture capital firm.

Business-to-business solutions remains an attractive theme, with TLcom Capital announcing two investments in the space – a $5m injection in Nigeria-based mobile marketing company Terragon, and a $3.5m series-A round for Kenyan consumer-feedback platform mSurvey, which plans to use the capital to scale and expand into more countries. Asoko Insight, a provider of data on African companies, attracted $3.6m in additional funding from its early shareholders and some new ones, while South Africa-based Giraffe – which enables businesses to recruit high volumes of medium-skilled staff – closed a second round of investment, supported by FirstRand’s Vumela Fund, with participation from Omidyar Network, the Brozin family’s Forever Young Capital and Catapult Trust.

The continent’s rapidly-growing food market could be worth more than $1tn annually by 2030 as imports are substituted with high-value locally-produced food, according to the Alliance for a Green Revolution in Africa. With 60% of the world’s unused arable land, Africa’s potential in the broader agribusiness sector is also enormous.

The sector continues to attract interest from private equity firms such as DOB Equity, which last month backed Rwanda-based grain trader Sarura Commodities. Furthermore, Agri-Vie and Norfund announced a $7m co-investment in Marginpar Flower Group Holdings, which has floriculture interests in Kenya and Ethiopia. In addition, South African-based The Beverage Company, in which Ethos Private Equity and Nedbank Private Equity owns a stake, signed an agreement to acquire 100% of SoftBev, the sole licensed bottler for Pepsi and its related brands in South Africa, from Bowler Metcalf and the original founders.

Read more here: How We Made It in Africa

 

03 Oct

Fintech space – what you need to know from a legal perspective

The fast-growing fintech industry is best described as the use of technology in the financial sector to assist consumers and other parties involved in that space. Essentially, entrepreneurs use software and modern technology to “disrupt” the way that commerce is done in the financial sector.

A significant amount of fintech disruption has occurred in South Africa over the last few years, as devices such as smartphones have become increasingly accessible to the public. In fact, it has become such a fast-growing industry that UCT now offers a “fintech degree” which is a master’s in data science, specialising in financial technology. This is a significant sign that fintech is becoming increasingly important in the South African context.

Some successful South African start-ups in the fintech arena that are worth mentioning are SnapScan (a point-of-sale solution using cellular phones), Yoco (a point-of-sale solution using very simplified tech to allow credit/ debit card sales for vendors of any size) and Luno (a Bitcoin exchange and Bitcoin wallet service).

Due to the vast number of lucrative opportunities in the fintech industry, it has arguably become saturated with start-ups who are trying to enter it with similar or overlapping initiatives. The fintech gold rush is alive and well.

Another challenge within the fintech space is legal compliance. These initiatives are often regulated by legal principles that are not cognisant of the nuances of the latest developments in commerce. This means that the legislators are constantly playing catch-up and the pace is getting faster every day. This has resulted in the cost of legal advice being exceptionally expensive. Attorneys often have to liaise with regulatory bodies to get certainty as to where the regulatory framework around an initiative is heading, as the existing laws may be a few steps behind the latest developments.

Here are four tips for entrepreneurs or start-ups on how to overcome the legal challenges of entering the fintech market.

Read more: Entering the fintech space – what you need to know from a legal perspective

27 Sep

Mobile financial services in Africa: Winning the battle for the customer

Africa is the global leader in mobile money, which has become an important component of Africa’s financial services landscape.

Mobile network operators (MNOs) have dominated mobile money services in Africa for the past decade. More recently, fintechs have established a solid footing in the market, and a number of banks are beginning to compete aggressively for the mobile banking customer. While some banks have chosen to “go it alone”, others are forming partnerships in hopes of reaching the market faster. This article outlines five paths banks can take to retain ground in the battle for the mobile customer in Africa.

Africa is the global leader in mobile money

Mobile financial services (MFS) span the full spectrum of financial services, from payments and current accounts, to savings, loans, investments, and insurance. Mobile money, which enables customers to send, receive, and store money using their mobile phone, is a subset of MFS that is provided mainly by telco companies. The underlying funds are typically held by a bank in a dedicated stored value account or a linked current account.

Just over half of the 282 mobile money services operating worldwide are located in sub-Saharan Africa, according to the GSMA. In Africa today, there are 100 million active mobile money accounts (used by one in 10 African adults). This far exceeds customer adoption in South Asia, the second-biggest region for mobile money in terms of market share, with 40 million active mobile money accounts (used by 2.6% of adults)(Exhibit 1).
Exhibit 1
Mobile money now extends far beyond Safaricom’s initial M-Pesa offering, which enabled consumers and small businesses – many of which had little or no access to a bank – to send and receive money quickly and securely across great distances. Today, mobile financial services have expanded to include a broad array of financial services, including credit, insurance, and cross-border remittances, and M-Pesa now accounts for less than a quarter of MFS users in Africa.

Read more: Mobile financial services in Africa: Winning the battle for the customer

 

19 Sep

African fintech startups are becoming even more attractive for investors

If you follow the right accounts for young African tech entrepreneurs and their startups on Twitter, it can feel like there’s a never ending debate about who gets funding or not in Africa. Like many Twitter debates the 140 characters and even the endless threads don’t capture all nuance of the issue, but while many of those debates have grown, founders from one sector of the startup space have been more positive than most: fintech.

Take Flutterwave, a payments company which builds infrastructure to ease processing payments across Africa, it’s just raised $10 million in its Series A round. It’s one of the largest Series A rounds by an African startup. Significantly, the round was led by leading Silicon Valley venture capital funds Greycroft and Green Visor Capital, with participation from Y Combinator and Glynn Capital. It helps that Flutterwave was co-founded by Iyin ‘E’ Aboyeji, who has a track record, and star power, as a co-founder of developer training company, Andela. But it’s also true that Flutterwave’s raise is the latest in a string of African fintech startups that have raised money over the past three years.

Fintech startups are the “most attractive,” for tech investors looking towards Africa, according to a recent report by Disrupt Africa. Nearly 20% of fintech startups tracked raised money in the last two years and in 2016, there was a 84% increase in the number of fintech startups secured investment compared to the previous year. In total, since 2015, fintech startups in Africa had raised $93 million in investment as of June 2017. Flutterwave’s raise takes that total past the $100 million mark.

Some of that activity is simply down to a larger pool of startups which investors can pick from. Following a recent surge in launches, over 300 fintech startups—more than half of which set up shop in 2015 or 2016—are currently operational in Africa. But it’s not just down to having more choices, investor interest in fintech startups is also linked to just how important they are for the future of business in Africa.

Read more: Why African fintech startups are becoming even more attractive for investors