Africa Roundup: Nigerian fintech gets $360M, mints unicorn, draws Chinese VC

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November 2019 might mark when Nigeria (arguably) turned Africa’s unofficial capital for fintech funding and digital finance startups.

The month noticed $360 million invested in Nigerian-focused cost ventures. That is equal to roughly one-third of all of the startup VC raised for the whole continent in 2018, in response to Partech stats.

A notable trend-within-the-trend is that greater than half — or $170 million — of the funding to Nigerian fintech ventures in November got here from Chinese buyers. This marks a pivot (to tech) in China’s engagement with Africa. We’ll get to that.

Before the large Chinese-backed rounds, one among Nigeria’s earliest fintech corporations, Interswitch, confirmed its $1 billion valuation after Visa took a minority stake within the firm. Interswitch wouldn’t disclose the quantity to TechCrunch, however Sky News reporting pegged it at $200 million for 20%.

Founded in 2002 by Mitchell Elegbe, Interswitch pioneered the infrastructure to digitize Nigeria’s then predominantly paper-ledger and cash-based financial system.

The firm now supplies a lot of the tech-wiring for Nigeria’s on-line banking system that serves Africa’s largest financial system and inhabitants. Interswitch affords various private and enterprise finance merchandise, together with its Verve cost playing cards and Quickteller cost app.

The monetary companies agency has expanded its bodily presence to Uganda, Gambia and Kenya . The Nigerian firm additionally sells its merchandise in 23 African international locations and launched a partnership in August for Verve cardholders to make funds on Discover’s world community.

Visa and Interswitch touted the fairness funding as a strategic collaboration between the 2 corporations, with out a number of element on what that can imply.

One level TechCrunch did lock down is Interswitch’s (long-awaited) and imminent IPO. A supply near the matter stated the corporate will record on a significant alternate by mid-2020.

For the close to to medium-term, Interswitch might stand as Africa’s sole tech-unicorn, as e-commerce enterprise Jumia’s risky share-price and declining market-cap — since an April IPO — have dropped the corporate’s valuation beneath $1 billion.

Circling again to China, November was the month that signaled Chinese actors are all in on African tech.

In two separate rounds, Chinese buyers put $220 million into OPay and PalmPay — two fledgling startups with plans to scale in Nigeria and the broader continent.

PalmPay, a consumer-oriented funds product, went dwell final month with a $40 million seed spherical (one of many largest in Africa in 2019) led by Africa’s greatest mobile-phone vendor — China’s Transsion.

The startup was upfront about its ambitions, stating in an organization launch its targets to turn into “Africa’s largest financial services platform.”

To that finish, PalmPay conveniently entered a strategic partnership with its lead investor. The startup’s cost app will come pre-installed on Transsion’s cellular machine manufacturers, resembling Tecno, in Africa — for an estimated attain of 20 million telephones.

PalmPay additionally launched in Ghana in November and its U.K. and Africa-based CEO, Greg Reeve, confirmed plans to broaden to further African international locations in 2020.

OPay’s $120 million Series B was introduced a number of days after the PalmPay information and got here solely months after the mobile-based fintech enterprise raised $50 million.

Founded by Chinese-owned shopper web firm Opera — and backed by 9 Chinese buyers — OPay is the cost utility for a set of Opera -developed internet-based industrial merchandise in Nigeria. These embody ride-hail apps ORide and OCar and meals supply service OFood.

With its newest Series A, OPay introduced it will broaden in Kenya, South Africa and Ghana.

Though it wasn’t fintech, Chinese buyers additionally backed a (reported) $30 million Series B for East African trucking logistics firm Lori Systems in November.

With OPay, PalmPay and Lori Systems, startups in Africa have raised a mixed $240 million from 15 Chinese buyers in a span of months.

There are various issues to notice and be careful for right here, as TechCrunch reporting has illuminated (and can proceed to do in follow-on protection).

These strikes mark a subsequent chapter in China’s engagement in Africa and will elevate some new points. Hereto, the nation’s interplay with Africa’s tech ecosystem has been comparatively gentle in comparison with China’s deal-making on infrastructure and commodities.

There continues to be loads of debate (and critique) of China’s function in Africa. This new digital part will definitely add a recent element to all that. One factor to trace can be data-privacy and national-security issues which will emerge round Chinese actors investing closely in African cellular shopper platforms.

We’ve seen strains (allegedly) blur on these issues between Chinese state and private-sector actors with corporations resembling Huawei.

As OPay and PalmPay broaden, they might have to do some reassuring of African regulators as international locations (resembling Kenya) set up extra formal shopper safety protocols for digital platforms.

One thing more to comply with on OPay’s funding and deliberate growth is the extent to which it places Opera (and its whole suite of shopper web merchandise) in competitors with a number of actors in Africa’s startup ecosystem. Opera’s Africa ventures might go face to face with Uber, Jumia and M-Pesa — the cellular money-product that put Kenya out entrance on digital finance in Africa earlier than Nigeria.

Shifting again to American engagement in African tech, Twitter and Square CEO Jack Dorsey was on the continent in November. No before he’d completed his first journey, Dorsey introduced plans to maneuver to Africa in 2020, for 3 to 6 months, saying on Twitter, “Africa will define the future (especially the bitcoin one!).”

We nonetheless don’t know a lot about what this final journey — or his future foray — imply when it comes to concrete partnerships, funding or market strikes in Africa from Dorsey and his corporations.

He visited Nigeria, Ghana, South Africa and Ethiopia and met with leaders at Nigeria’s CcHub (Bosun Tijani), Ethiopia’s Ice Addis (Markos Lemma) and did some conferences with fintech founders in Lagos (Paga’s Tayo Oviosu).

I do know fairly effectively many of the organizations and other people Dorsey talked to and nothing has shaken out but when it comes to partnership or funding information from his latest journey.

On what might come out of Dorsey’s 2020 transfer to Africa, per his tweet and information highlighted on this roundup, a very good guess can be it should have one thing to do with fintech and Square.

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