Pariti, a Kenyan community-led marketplace that builds digital infrastructure for emerging market startup ecosystems, has raised $2.85 million in seed funding, the company announced today.
Harlem Capital, based in the United States, led the round. It’s the first deal in Africa for the diversity-focused fund, which just raised $134 million for its second fund. Better Ventures, Accelerated Ventures, Diverse Angels, AVG Basecamp, and New General Market Partners were among the other investors who took part.
“The pandemic was a Black Swan event because we saw a major jump in activity on our platform. Remote staffing and remote investing accelerated tremendously. This was a bet we made a while back but obviously could not anticipate what was coming,” CEO Yacob Berhane, said.
“And after taking nearly ten years to get Africa’s first unicorn, we had six announced in roughly six months. This led to a significant increase of interest from local and international investors for African startups.
Pariti’s first funding will enable it to develop SaaS processes that include several kinds of capital raising, such as traditional equity and debt, as well as DeFi solutions.
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The company also intends to improve its talent marketplace and develop a custom solution for investors wishing to invest in and support founders, employ talent, grow into other areas, and build larger communities.
Why The Investors Invested
The startup has generated considerable traction since it was founded two years ago. Pariti now has over 880 companies on its platform, spread across 42 countries, up from 500 earlier this year. The company has also risen 795 percent in the last year, according to CEO Berhane, who attributes this success to the pandemic and how the African digital ecosystem has reached an inflection point, minting half a dozen unicorns in the process.
“We’re thrilled to be working with Harlem Capital,” co-founder and CEO Yacob Berhane said of Harlem’s participation. “Their focus on data, process and supporting underserved ecosystems aligns perfectly with our mission and makes them an amazing partner for us to build with.”
Harlem Capital is a black-led venture capital firm based in New York. The VC recently raised a second fund of $134 million to assist 45 largely seed-stage companies led by women and people of color. Harlem Capital aims to continue to focus on a few core sectors with the new fund, according to the founders: e-commerce, enterprise software, fintech, HR tech, property tech, and wellness. They haven’t done any deals in ed tech or cryptocurrency. A partner at the firm, Jarrid Tingle, said the VC provides seed-stage checks of $1 million to $1.5 million for equity shares aimed at 10% or 12% ownership, which is higher than Harlem Capital’s initial fund’s $750,000 to $850,000 checks, which typically brought ownership of about 8.5 percent.
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Based in Oakland, US, Better Ventures is a micro VC fund investing in early stage Venture, seed-stage startups. The firm has previously backed African startups such as 54gene as well as Africa-focused energy fund, SunFunder. Majority of its investments are in health-tech. It looks out for startups with strong technical teams working on new solutions that potentially have a huge impact in vast markets, and typically writes checks of $500,000.
With base in the United Kingdom, Accelerated Ventures, calls itself a patient VC that invests in scalable companies that can take 10 or 20 years to build. The VC has previously invested in Kenya’s WeFarm.
With headquarters in California, Diverse Angels is angel network that brings together current and aspiring investors from underrepresented and diverse backgrounds (people of color, women, etc.) to share access to early-stage digital company ownership opportunities. The network recently raised $1,500,000 for its Fund 1.
Based in Manchester, New Hampshire, AVG Basecamp recently announced the launch of its AVG Basecamp Fund 2021. AVG has evolved to offer 16 alumni funds and five targeted funds, serving a network of over 500,000 community members and subscribers, since opening its first venture fund in 2014.
New General Market Partners is a New York-based investment firm. It recently participated in Squire’s $45,000,000 Series C round.
A Look At What The Startup Does
Founded by Yacob Berhane and Wossen Ayele in 2019, Pariti connects emerging market entrepreneurs with resources, skills, and finance.
Pariti’s main product is the Recommendation Engine, which allows entrepreneurs to submit their businesses for assessment and comments from Pariti’s experts. The engine then recommends customised next steps for the founders in areas where the company requires assistance.
The Kenya-based marketplace also assists talent in monetizing their abilities, as well as VCs and angel investors in locating, vetting, and closing transactions.
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Pariti’s pitch assessment and recommendation engine, according to Berhane, includes some predictability elements that allow the platform to forecast how startups would do in terms of funding.
“So we’ve looked at the companies that have been able to go on and raise money after submitting the Pariti pitch review, and companies that score over 70 on a Pariti score have a 50% likelihood of connecting successfully with investors,” the CEO said. “But companies that score above 78 have shown correlation to having 8x likelihood of raising capital, which is pretty dramatic.”
Pariti has helped five firms get into Y Combinator, according to Berhane. Kenyan neobank Fingo, which was featured in a previous piece and received a $250,000 pre-seed investment in March, is one of the startups.
“If Pariti builds this community of founders, investors and freelancers that have the right mindset to elevate this ecosystem, nobody has to be a gatekeeper. You’re fostering a certain mentality of ‘we will get further together.’ It’s bigger than any one of us,” Berhane stated, emphasizing the need for Pariti to democratize access to global investors and accelerators.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer