Jetstream Africa, a Ghanaian e-logistics startup, has announced that it has acquired $13 million in pre-Series A loan and equity financing.
The sole loan financing was provided by fintech lender and private equity firm Cauris, and equity investors included Octerra, Wuri Ventures, Seed9, The MBA Fund, French development organisation Proparco, and ASCVC, a venture fund established by Project44 leaders. Additionally, previous investors Alitheia IDF and Golden Palm took part.
A $3 million seed investment (including $1 million in debt) was disclosed by the Tema-based cross-border logistics platform roughly 18 months before to this round. With this additional funding, Jetstream claims it will be able to grow internationally (it already operates in 29 countries, 12 of which are in Africa) and continue to build up its technological platform, which vertically integrates disparate logistics and financing vendors in the African trade market.
Why The Investors Invested
The startup has acquired considerable traction since its last funding. From the $1 million debt Jetstream secured in the middle of 2021 to the roughly $9 million in total loans disbursed thus far, the company has expanded its trade finance product. By the end of this year, it is anticipated to have multiplied that sum by five, according to chief executive Miishe Addy. The chief executive also noted that Jetstream changed its business model and went from disbursing one loan per month to up to 50 loans per month, becoming EBITDA positive. In addition, according to a statement released by the e-logistics company, which manages shipments made up of 47% air freight, 44% ocean freight, and 9% land transport, revenue has increased by 48% and the number of active clients has increased by 102% over the past year.
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The 44-person team, which competes with firms like Sote, SEND, One35 Port, and MVX among others, has also been successful in forging a number of crucial alliances for its upcoming phase of growth, including with multinational financial institutions like Societe Generale and start-ups like Lami and MFS Africa.
One of Jetstream’s investors, Tokunboh Ishmael, says this round of funding will help the startup take advantage of trade agreements like the African Continental Free Trade Area (AfCFTA) by enabling “richer inter-continental trade, which is needed to support inclusive economic development and unleash the continent’s full potential.”
A Look At At What The Startup Does
In 2018, Miishe Addy and Solomon Torgbor founded Jetstream. Their startup’s mission is to meet a pressing need in the African logistics and port sector.
Jetstream Africa had two business divisions at the time of its seed round: one offered logistical services to cargo owners dealing with import and export, and the other distributed funding to freight forwarders. But during the past few months, Jetstream has combined the two offerings to cater to just cargo owners. Miishe Addy, the startup’s CEO, claims that Jetstream successfully attained product-market fit.
“Running those two lines side by side, we observed that the import or export business controls the supply chain,” she said on the pivot. “Although the cargo owners and freight forwarders have a lot of information asymmetry, the importer and exporter can put pressure on the freight forwarder to digitize the supply chain. We simplified our business into just the import-export product line by directly them with a combination of trade financing and logistics.”
The new business strategy for Jetstream is now a freight forwarder. In addition to charging a fee and providing loans to individuals in need, the company now participates in the end-to-end movement of shippers’ cargo (both import and export). Most cargo owners typically go to banks to obtain a letter of credit when they need to take out a loan to operate their operations. Whether they receive it or not depends on the counterparty bank. To clarify: Let’s say a Ghanaian importer transacts with a Chinese exporter. The Ghanaian bank receives cedi and communicates with the Chinese exporter’s bank, which, after certifying the cargo owner, disburses the yuan.
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It’s a lengthy process that can go on for several weeks. Furthermore, the letter of credit system is ineffective for cargo owners on both sides of the transaction who want access to quicker credit, forcing them to look for alternative sources of funding that demand some sort of collateral in exchange for their loans. They essentially receive working capital from Jetstream, backed by actual shipments. The three-year-old firm, according to Addy, has a security stake in the cargo. Instead of handling the letter of credit itself, Jetstream underwrites loans through its banking partners that must be repaid within 15 to 90 days and distributes the loan proceeds to each supplier in the supply chain.
“If you’re importing 10 containers, in addition to paying for the actual good, importers have to pay the shipping line, customs broker on both sides, truck drivers on both sides, you have to pay a warehouse operator in some cases, or container terminal. There’s a minimum of nine different vendors you have to pay,” noted Addy, who co-founded Jetstream with COO Solomon Torgbor in 2018.
“And when someone applies for a Jetstream loan, they’re not just saying give me $50,000 but enough money to fund this entire shipment and pay these nine vendors. Also, we don’t give the money to the cargo owners but to the nine vendors directly.”
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard