South African fintech innovator Ukheshe has unveiled an exciting development within its Scan to Pay app, making waves in the financial landscape by integrating cryptocurrency payments into its services.
Ukheshe’s Scan to Pay app, previously known as Masterpass, boasts a substantial user base, comprising over 600,000 merchants, 14 major banks, various fintech enterprises, and an impressive 94 payment service providers. The company heralded its latest move as a significant step toward introducing cryptocurrency payment options to a broader audience in South Africa.
Clayton Hayward, CEO of Ukheshe
In a statement released on a Thursday, Ukheshe articulated its enthusiasm for the newfound partnership that promises to seamlessly bridge the gap between conventional and cryptocurrency-based transactions. The fintech pioneer is collaborating with the renowned service provider, Xion Global, to deliver this innovative crypto solution.
Tracy-Lee Schoeman, the head of loyalty and rewards at Ukheshe, shared her insights on the evolving financial landscape, remarking on the fresh opportunities arising from the growing popularity of cryptocurrencies. Schoeman emphasized how cryptocurrency payments could revolutionize the way financial transactions are conducted, citing lower fees, faster settlement times, and enhanced financial autonomy as key advantages that Ukheshe is thrilled to offer via the Scan to Pay app.
Ukheshe’s partnership with crypto specialist Xion Global, led by CEO Ronan Quarmby, is poised to make a significant impact in South Africa, given Quarmby’s estimate that approximately 12.5% of the country’s population is involved in cryptocurrency ownership.
For those curious about how this crypto solution functions, Ukheshe provided a clear explanation. Users can anticipate a seamless payment process that closely mirrors traditional payment methods. After linking their Metamask wallet, customers can simply scan a QR code on their receipt, verify the transaction amount in the Scan to Pay app, choose the ‘pay with crypto voucher’ option, and execute the transaction effortlessly with just one click.
Moreover, Xion Global’s infrastructure offers robust security features, including Anti-Money Laundering (AML) checks, Know Your Customer (KYC) verification, Know Your Business (KYB) assessments, and Know Your Transaction (KYT) monitoring. These safeguards are designed to protect against unauthorized fund access and deter malicious actions by merchants.
In sum, Ukheshe’s groundbreaking integration of cryptocurrency payments into its Scan to Pay app, in partnership with Xion Global, signifies a pivotal moment in the South African fintech landscape. This innovation not only expands financial options for the masses but also underscores the evolving nature of the digital payment ecosystem, setting the stage for a more accessible and secure financial future.
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
In a momentous unveiling at the Global Entrepreneurship Congress in Melbourne, the Startup Genome has introduced “The Scaleup Report,” a definitive exploration of the intricate factors that propel startups toward the illustrious realm of scaleups. Presented by JF Gauthier, the Founder and CEO of Startup Genome, this report unravels the enigma behind what distinguishes prosperous scaling startups from those that falter. Moreover, it proffers practical insights of immense value to entrepreneurs, enterprise support organizations, and policymakers fervently endeavoring to elevate the proportion of startups achieving the coveted $50 million+ valuation.
JF Gauthier, the Founder and CEO of Startup Genome
This groundbreaking report derives its strength from an unparalleled treasure trove of data sourced from the most exhaustive dataset on startup ecosystems. This rich resource harnesses the wisdom accrued over a decade of rigorous longitudinal research, scrutinizing hundreds of objective metrics associated with tens of thousands of startups that have participated in Startup Genome’s comprehensive founder survey. Enriched further by contributions from eminent thought leaders, including the Global Entrepreneurship Network and Dealroom, the report stands as a testament to over a decade of independent research, assessment, and policy strategy work undertaken by Startup Genome.
Key revelations from “The Scaleup Report” are as follows:
Founders’ Strategy for Scaling: Founders aspiring to enhance their prospects of scaling must ensure they offer stock options to all employees, cultivate more than five global connections to top ecosystems, and enlist at least three advisors for their nascent ventures.
Local Connectedness and Revenue Growth: Startups wielding a Local Connectedness Index score of 6 or above achieve a 5.1% scaleup rate, a significant boost compared to the 3.8% rate for those scoring 2 to 4. Higher Local Connectedness correlates with revenue growth that’s twice as rapid.
Global Connectedness and Scaleup Success: Scaleup success directly correlates with Global Connectedness, with highly connected startups boasting a 3.25x higher chance of scaling. Ecosystems deeply intertwined with top global counterparts, such as Silicon Valley, New York City, and London, see their startups attain global prominence at a substantially higher rate.
Global Scaleup Leaders: The United States, China, and the United Kingdom reign as the top countries by the number of total scaleups, with the U.S. leading the pack with 7.1K scaleups — 4.8x more than China and 11.5x more than the U.K. India, Canada, Germany, Israel, France, South Korea, and Singapore follow closely.
Venture Capital Investment: Top countries for VC investment in scaleups include the U.S., China, India, the U.K., and Germany. North America commands a lion’s share, contributing to 55% of global VC investments in scaleups, with the U.S. alone accounting for 53%.
Global Expansion and Revenue Growth: Early-stage startups with a global customer base (more than 50% foreign customers) experience revenue growth that is twice as swift as those without. For non-U.S. startups targeting the global market initially, the scaleup rate doubles.
B2B and Global Focus: B2B and mixed startups that set their sights on the global market from the outset enjoy higher scaleup rates than B2C startups. B2B startups that initiate global targeting from day one achieve a remarkable 6.8% scaleup rate.
Serial Founders and Motivation: A third of all current scaleups are founded by serial entrepreneurs, who exhibit an 85% higher scaleup rate compared to their counterparts. Founders driven by a desire to accumulate wealth exhibit the strongest correlation with scaleup success, followed by a desire to effect change and create exceptional products.
Funding Sources: Founders relying on friends for funding are more likely to foster scaleups than those with personal or family resources.
Age Bracket and Scaleup Success: Scaleup success tends to peak among founders in the 26–40 age bracket, both in terms of scaleup rate and the absolute number of scaleups.
JF Gauthier, the visionary Founder & CEO of Startup Genome, aptly remarks, “The quintessential billion-dollar question has always been what characteristics, behaviors, and decisions of early-stage startups significantly increase your chance of success at scaling.” The Scaleup Report, a product of 11 years of exhaustive primary research involving nearly 100,000 startup founders globally, provides empirically grounded answers to this pivotal question.
Jonathan Ortmans, Founder and President of the Global Entrepreneurship Network, acknowledges, “The Global Entrepreneurship Network is proud to partner with Startup Genome on groundbreaking new research in The Scaleup Report to equip policymakers, investors, and support organizations with a timely, independently-verifiable way of identifying scaleups.” He further affirms the report’s role in delineating the critical success factors that set apart flourishing scaleups.
Yoram Wijngaarde, Founder & CEO of Dealroom, emphasizes, “The data shows definitively that startups can scale anywhere in the world.” He underscores that the pace of global distribution in entrepreneurship and venture investing is accelerating, marking the advent of a global innovation era.
To delve deeper into this comprehensive report, access it in its entirety at Scaleup Report (available since September 20).
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
Startups are often hailed as the lifeblood of innovation and progress, but they also come with inherent risks. While some startups thrive and transform industries, others face the harsh reality of failure, leaving their employees in a precarious position. One such instance recently came to light when CSIS Health Ltd, a startup in the health technology industry, struggled to raise money and had to deal with the ramifications of unpaid employee remuneration. This case, decided by the Workplace Relations Commission (WRC) of Ireland, teaches important lessons concerning the obligations of startups and the rights of employees while facing financial difficulties.
The Case of Per Johansson
Per Johansson, a software engineering manager, was employed by CSIS Health Ltd from May 2022 to December 2022. However, the startup experienced financial difficulties and could not pay its employees, including Mr. Johansson. As a result, Mr. Johansson took his case to the WRC, seeking unpaid wages, notice pay, and accrued holiday entitlements.
The Struggles of a Startup
CSIS Health Ltd, like many startups, faced the daunting challenge of securing funding to sustain its operations and growth. Despite their best efforts, the company’s attempts to obtain grants or shareholder funding were unsuccessful. They even explored international opportunities, engaging with potential investors in the US. However, the COVID-19 pandemic disrupted their plans, and they were unable to secure the much-needed investment.
The WRC’s adjudicating officer, Peter O’Brien, carefully examined the case and acknowledged that CSIS Health Ltd owed Mr. Johansson the unpaid wages, notice pay, and accrued holidays. While the company acknowledged its financial obligations, it claimed a lack of funds to make the payments and had little hope of obtaining them in the near future.
In the ruling, Mr. O’Brien found in favor of Mr. Johansson, emphasizing that the unpaid wages were legitimately due and uncontested. The decision highlighted a breach of Section 5 (6) of the Payments of Wages Act 1991, which is intended to protect workers’ rights regarding their compensation.
The Compensation Award
Based on the WRC’s decision, Mr. Johansson was awarded €3,489 for unpaid wages from September 2022, €8,333.33 for each of the months of October and November 2022, and €4,545 for December 2022. Additionally, he received €25,000 gross as compensation for the non-payment of his notice period and €1,008.06 gross for his accrued holiday entitlements. The total compensation amounted to €50,708.72.
Credits: Burke Broadcast
Takeaways for Startups and Employees
The case of CSIS Health Ltd and Mr. Johansson offers essential lessons for both startups and their employees:
Transparent Employment Contracts: Startups should ensure that employment contracts clearly outline notice periods and procedures for termination by either party. Clarity in contracts can prevent misunderstandings and disputes.
Responsibility and Accountability: While startup founders face immense challenges, they must also be accountable for their employees. Adequate financial planning and responsible management are crucial to meeting obligations to employees, even during difficult times.
Legal Compliance: Startups should familiarize themselves with employment laws and regulations in their respective jurisdictions to avoid breaching any provisions related to payments, wages, or termination.
Investor Contingency Plans: When startups rely on external funding, they should have contingency plans in place to manage potential financial setbacks. Diversifying funding sources and exploring alternatives can mitigate risks.
Communication: Open and transparent communication between startups and employees is vital. In times of financial distress, keeping employees informed about the company’s challenges and efforts to address them fosters trust and understanding.
The case of CSIS Health Ltd underscores the challenges startups face and the importance of honoring employees’ rights. Financial struggles do not absolve startups from their obligations to their workforce. By learning from cases like this, startups can build a more resilient and equitable business environment, fostering trust and promoting fair treatment of employees even in times of adversity.
compensation when startup fails compensation when startup fails
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
Morocco’s Mohammed VI Polytechnic University (UM6P) has announced a significant milestone in its contribution to the development of innovative national entrepreneurship. Over the past three years, UM6P’s startup campus, StartGate, has supported over 500 startups from over 15 countries in various stages of their maturity, including pre-incubation, incubation, acceleration, and venture building.
StartGate is currently home to 12 programs that support the launch and development of start-ups, aimed at creating a pipeline of future entrepreneurs by helping young entrepreneurs launch their companies. UM6P’s incubator also offers mature start-ups access to international markets and investment.
Director of Entrepreneurship & Venturing at UM6P, Yassine Laghzioui
The incubation programs offered by UM6P are developed with a multitude of international partners, including prestigious universities such as MIT. The program called “MIT Sandbox” aims to support project holders from five Moroccan universities, both public and private. The MIT-UM6P program provides expertise and mentorship, in addition to funding of up to MAD 250,000 ($28,320), with the goal of helping each startup develop a prototype and find its first customers.
In addition to supporting startups, StartGate provides support for students with innovative ideas. Through its U-Founders incubation program for students, researchers, and entrepreneurs, lasting from six to 24 months, UM6P has so far supported over 105 startups in 15 different fields.
UM6P has also launched a cluster of four incubating programs called the Moroccan Retail Tech Builder (MRTB). The program is dedicated to startups working in retail and was co-created with the Industry and Trade Ministry and OCP Foundation, covering 40 startups.
The Moroccan university has also partnered with Silicon Valley’s global innovation platform Plug&Play, supporting some of the most promising Moroccan startups and linking them to international investors. In November 2020, UM6P became home to the first office of Plug&Play in Africa.
Moreover, UM6P is leveraging its two investment funds, UM6P Ventures and Bidra, to invest in future unicorns, mainly in the fields of agriculture, water, mining, and energy.
Director of Entrepreneurship & Venturing at UM6P, Yassine Laghzioui, said, “This step marks a turning point in our contribution to the development of innovative national entrepreneurship,” adding that UM6P’s “culture of innovation is rooted in Moroccan youth.”
The new milestone also demonstrates that “because behind our value creation, there is also a community whose components reflect the spirit of initiative within Moroccan society. 30% of our project leaders are women, and 50% are students. Entrepreneurship is also a powerful lever for socioeconomic empowerment.”
Here are Key Lessons from UM6P’s Case Study:
Provision of a range of programs: UM6P’s StartGate offers a variety of programs for startups at different stages of development. By offering pre-incubation, incubation, acceleration, and venture building programs, UM6P is able to support startups from idea to market entry.
Collaborations with international partners: UM6P has partnered with prestigious universities like MIT and Plug&Play to provide expertise, mentorship, and funding to startups. These collaborations can help to bring global perspectives, networks, and resources to your incubator.
Focus on specific sectors: UM6P’s Moroccan Retail Tech Builder (MRTB) program is dedicated to startups working in retail, while UM6P Ventures and Bidra invest in fields like agriculture, water, mining, and energy. By focusing on specific sectors, you can provide targeted support to startups and build expertise in these areas.
Host open innovation events: UM6P has hosted open innovation events for large Moroccan groups, which can help to connect startups with potential customers and partners.
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
Zumi, a Kenyan e-commerce site that sold non-food items, recently shut down after its funding ran out, adding to the increasing number of digital companies that have failed recently in Kenya.
William McCarren, the co-founder and CEO of the company, said on LinkedIn that the move would result in at least 150 people being let go due to fundraising challenges that threatened viability.
“With a heavy heart, I share the news that Zumi will be closing its doors. The current macro environment has made fundraising extremely difficult, and unfortunately, our business was not able to achieve sustainability in time to survive,” wrote McCarren.
According to Crunchbase data, Zumi raised more than $920,000 (Sh120 million) in investment since its founding in 2016, and according to McCarren, the company had 5,000 clients and over $20 million (Sh2.6 billion) in revenue during that time.
Zumi, which began as a women’s-focused digital magazine, withdrew from the media business and switched to e-commerce after experiencing difficulty generating enough cash from digital advertisements.
The company’s decision to shut down is part of an ongoing pattern in which promising digital firms have been going out of business one after another, with the majority of them claiming challenging market circumstances and financial challenges.
As Kune Foods, Notify Logistics, WeFarm, BRCK, and Sky-Garden closed their doors in the past year, hundreds of jobs were lost, making the latest shut down the seventh tech start-up with headquarters in Kenya.
Sendy, for its part, shut down Sendy Supply, a platform for trading between retailers and suppliers, and reduced its personnel by 20% in October.
Source: Co-Creation Hub
Here are a few lessons to be gleaned from Zumi’s shutdown
Fundraising is critical: Zumi’s demise serves as a warning that startups must prioritise and must continuously work on its fundraising strategies in order to stay in business. Startups may struggle to exist without proper finance, especially during difficult economic times.
Another takeaway from Zumi’s experience is the need of creating an effective business model that can create long-term profitability. After failing to earn money from digital adverts, Zumi pivoted from a lifestyle and fashion-focused media platform to an e-commerce site. Nevertheless, the shift was not effective, and the firm was finally shut down. Before beginning on any substantial pivot, startups should verify that they have a sound business model that can produce sustained revenue.
Additionally, founders must have a thorough understanding of the industry-specific difficulties and the market they are competing in before setting out on the startup journey. It must be admitted that founder William McCarren struggled to identify more specific obstacles that Zumi experienced in the Kenyan market, as well as the strategies used to overcome those obstacles. The effect of Zumi’s transition from a media platform to an eCommerce platform (a 360-degree turn) on the company’s fortunes is also not extensively investigated.
Additionally, startups must be adaptable and willing to pivot or modify their business models if initial strategies fail to provide positive results. Nonetheless, pivoting should be done with caution, taking into account the possible influence on the company’s operations and finances.
Again, financial sustainability is important: Businesses must prioritise financial sustainability from the start, establishing a clear route to profitability. Failing to attain sustainability can result in closure, as was the case with Zumi. It is interesting to note that Zumi could not attain sustainability despite recording over $20 million in revenue.
Tough market circumstances are a reality: Startups must prepare for the business landscape’s demanding market conditions. Startups need to have a robust business strategy that can endure market volatility and unpredictability.
Learn from failure: Other business owners can benefit from Zumi and other Kenyan startups’ shutdown by taking note of their mistakes. When Zumi’s scenario is compared to that of other Kenyan startups, it is clear that they all face the same funding and market viability challenges. Yet, it is vital to remember that each of these firms had distinct obstacles that contributed to their death. Kune Foods, for example, had to struggle with high production costs and little market demand. BRCK, on the other hand, struggled with scalability because to the high cost of hardware fabrication. Understanding the causes of failure can assist avoid repeating the same missteps and improve the likelihood of success in the future.
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
After investing Sh1.6 billion to expand its business, the agri-tech company Twiga Foods is now reducing its personnel in ways that would cause those who remain to forfeit some of the perks they have been receiving.
The business, which previously stated it had 1,000 employees, now claims that all of its trade development representatives have been converted to agents as it transitions its sales team’s operations to an agency model. Out of the more than 1,000 employees, 21% have now been laid off.
twiga foods
The business had stopped working with foreign nationals who were providing various services across multiple departments in October.
In addition, Twiga has reduced the staff per diem for the remaining employees from a high of Sh4,000 to Sh1,000, with lodging being offered on a bed and breakfast basis.
“As a result of this transition to the agent model, your employment with Twiga will terminate on November 30, 2022,” reads a communication to the staff. “We invite you to transition into a new relationship with Twiga as an agent effective November 1, 2022”
In order to give them time to look for alternative engagements, the company stated people who decline appointment as agents won’t be obliged to work as trade development representatives during the one-month notice period.
The company has also restricted travel reimbursements to those employees whose jobs require them to travel for more than 75% of the month.
“The travel allowance will include all costs related to the movement of the employee in her/his personal vehicle to attend to the business of the company. Executives will identify employees in their team, whose jobs fit the criteria for a travel allowance,” said the firm.
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. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh
Onlookers might have assumed that by the time Egyptian transport firm Swvl made it to Nasdaq via SPAC purchase, it would have become one of the African startup ecosystem’s few success stories. However, it appears that this is no longer the case. Swvl’s hopes of relying on the Nasdaq adventure are dwindling by the day: the company’s share price has plummeted from $9.33 to $1.64 in the four months after it announced its Nasdaq listing. As per its latest statement, Swvl has also cancelled one of the largest purchases by an African startup in recent years, the acquisition of UK-based competitor Zeelo for about $100 million. Swvl indicated in the statement to its stakeholders that all prerequisites for finalising the Zeelo sale had been completed, but the transaction could not proceed due to the present financial market turbulence.
Swvl’s Recent Notable Timelines
August, 2021: Swvl acquired Spain’s Shotl, and consequently entered Europe. Shotl was present (at the time of the acquisition) in 22 cities across 10 countries, including Brazil, Japan, and had a pan-European footprint, with over 350,000 bookings.
August, 2021: Swvl received $35.5m in PIPE (Private Investment In Public Equity) funding including from investors Agility and Chimera Abu Dhabi. Swvl’s proposed business merger with Queens Gambit Growth Capital (the SPAC acquisition) was the reason for the investment. The PIPE investment was made using Swvl’s exchangeable notes. Each note was exchanged for shares of the combined company at an exchange price of $8.50 per share.
November, 2021: Swvl announced its second acquisition, gobbling up ViaPool, a mass transit company in Latin America (Argentina). The deal was reportedly worth about $10 million.
February, 2022: Swvl received extra $21.5 million in PIPE funding. Again, each note was exchanged for shares of the combined company at an exchange price of $9.1 per share. Swvl pegged $8.50 per share for notes issued in 2021 and $9.1 per share for notes issued in 2022.
March, 2022: Swvl announced its third acquisition, of door2door, a German-based high-growth mobility platform that partners with municipalities, public transit operators, corporations, and automotive companies, providing software for on-demand mobility, multimodal routing and mobility analytics. door2door has 24% market share in Germany, which is Europe’s largest mass transit market. The value of the deal was not disclosed.
March 31, 2022: Swvl went public (through a SPAC merger with Queen’s Gambit Growth Capital). As a result of this, Swvl Holdings Corp. Class A common stock and warrants of Swvl Holdings Corp. began trading on NASDAQ under the ticker codes “GMBT” and “GMBTW.” Shares were sold at $9.33 per share on the first day. An aggregate of 35% of Swvl’s total ownership became public tradable.
April, 2022: Swvl announced the acquisition of Volt Lines, a Turkey-based B2B and mobility-as-a-service company. The acquisition was made one month after Swvl’s public listing. Swvl stock was down 12% in pre-market trading at this time. The value of the deal was not disclosed.
April, 2022: Swvl announced the purchase of Zeelo, the UK’s largest smart bus platform and technology scale-up by bookings, for US$100 million. The transaction was scheduled to close in May 2022.
May, 2022: Swvl announced it has laid off 32% of its entire workforce. The lay offs affected staff in the startup’s engineering, product, and support divisions. Swvl it expected to be cash-flow positive in 2023 as a result of the downsizing.
June, 2022: Swvl the suspension of its daily and city-to-city services in Kenya and its daily services in Pakistan. In a statement, Swvl noted that the suspension was “in light of the worldwide economic slump.”
July, 2022: Swvl announced the acquisition of its Mexico-based Urbvan Mobility Ltd (“Urbvan”), a shared mobility platform that provides tech-enabled transportation services to Latin America’s second biggest country by population. Formed in 2016, Urbvan is present in 18 cities around Mexico. The value of the deal was not disclosed. According to Swvl, the deal will be completed in Q3 2022.
July, 2022: Swvl terminated their previously-announced $100m transaction whereby Swvl would acquire Zeelo. Swvl previously funded a $5M convertible promissory note to Zeelo. Following the termination of the acquisition transaction, Swvl and Zeelo mutually agreed to terminate the convertible promissory note and Swvl forgave the $5M balance under the transaction.
August, 2022: Swvl announces first major partnership outside of acquisition with the Kuwait-based City Group, a premier transport operator and provider of warehouse services in Kuwait, under which City Group will use Swvl’s Software as a Service (“SaaS”) products.
A Woeful SPAC Outing
According to Swvl’s Form 424B3 filed on July 7, 2022, it is clear that the five-year-old startup is not only dealing with the current volatility in the financial markets, but it also appears to be dealing with the uncertain confidence of its SPAC investors, who appear to be willing to hang on even longer without redeeming their shares in the company. According to lock-up extension agreements signed between Swvl and the concerned investors, who own 84 percent of the shares currently trading on Nasdaq, they would be required to hold on for extra periods ranging from one year to eighteen months after the prior lock-up periods expired.
The lock-up agreements, together with other alternative financing agreements, provide a mechanism to avoid the existing high redemption rates among SPAC investors. SPAC redemptions were on the upswing for 2021. From January through July, the average monthly SPAC redemption rate ranged from 7% to 43%, according to SPAC Research/SPAC Alpha. From July to November, however, this range expanded to 43 percent -67 percent, with the average SPAC having a redemption rate of 60 percent across these four months.
The purpose of redemption rights under a conventional SPAC arrangement is to assist motivate investors by giving them a sort of “money-back guarantee” that entitles them to return their shares for the initial IPO price, which is normally a modest $10 per share. However, if a considerable proportion of shareholders choose to exercise their right to redemption, as has recently happened with several SPACs, the combined SPAC business’s capital available for future operations may be significantly reduced. This will almost certainly expose the SPAC to the risk of failure if it occurs. A common scenario that triggers this right of redemption is when the share trades below its listing price. Swvl’s stock price has since fallen from $9.33 to $1.64. The table below depicts these difficulties among recently-listed SPAC companies.
S/N
NAME OF SPAC COMPANY
INDUSTRY
SPAC MERGER COMPLETION DATE
STOCK MARKET
PRICE PER SHARE ON FIRST DAY OF PUBLIC TRADING (IN USD )
CURRENT PRICE PER SHARE AS AT AUGUST 3, 2022 (IN USD)
Lessons African Startups Can Draw From Swvl’s SPAC Outing
Speedy Execution Is Key But Regulations Remain King
Swvl’s co-founders’ ability to execute quickly has never been questioned. Indeed, one of its early backers, Vostok New Ventures (now VNV Global), stated succinctly in 2019 that “The entrepreneur in this case is of exceptional calibre. Mostafa Kandil, previously of Rocket and Careem, has established a team that executes well and quickly. Indeed, Mostafa could be the first Arab tech entrepreneur to build a global product.” This quick execution skill ensured that the founders were able to expand the startup globally and take it public within a record period of just 5 years.
However, swift execution frequently entails dangers, notable among them being those related to regulation. SPAC was formerly only weakly regulated by the Securities and Exchange Commission (SEC), which is in charge of overseeing securities and investments in the US. SPAC financial statements were fairly brief and could be created in a matter of weeks in the IPO registration statement (compared to months for an operating business). There were no past financial results or assets to reveal, and the company risk indicators were modest. The IPO registration statement was basically standard language with director and officer biographies thrown in for good measure.
The following primary modifications for SPACs would now be required by the proposed rules: a) in certain SEC filings by SPACs, new disclosure and financial statement requirements, especially in relation to financial projections and fairness evaluations in de-SPAC transactions; b) the removal of the safe harbour for forward-looking statements under the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) for disclosure in those registration statements; c) new registration requirements under the Securities Act of 1933, as amended (the “Securities Act”), for de-SPAC transactions; Securities Act liability for “underwriters” in de-SPAC transactions; and a 20-calendar-day minimum dissemination period for disclosure documents in a de-SPAC.
Perhaps the SEC’s most significant disclosure rule is the one which provides that SPAC sponsors must now inform SPAC shareholders that their incentives are to close any deal, and that shareholders who continue to hold SPAC shares through the deSPAC will have their holdings diluted by at least 20%, and frequently substantially more.
Due to this increased attention from regulatory organisations like such as the SEC and the Financial Industry Regulatory Authority (FINRA) in recent months, SPAC acquisitions are now intrinsically riskier. Numerous high-profile SPACs have recently been the subject of federal investigations, which has probably put many ordinary investors on the defensive.
Therefore, startup owners should push for speedy execution while simultaneously keeping an eye out for any regulatory ambushes and preparing a response in advance. There is no point in denying that the string of SEC regulations that were enacted after Swvl’s SPAC went public undoubtedly caught the company off guard. This is clearly evident in its recent operational decisions.
Increasing A Startup’s Burn Rate Due To High Compliance Costs May Be Costlier In The Long Run, Especially For Startups Without Any Future Funding Clarity
In any case, every startup’s ultimate goal is to exit as soon as possible, but doing so need not be costlier, especially if the startup is not yet mature enough to handle certain costly operations.
Swvl had raised $122 million in total funding as of February 2022. It then paid more than $10 million in fees for its SPAC IPO. While acknowledging that it may incur significant expenses and devote significant management effort to ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase further when it is no longer an “emerging growth company” as defined under the US Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), Swvl suggests that it may have to delist from Nasdaq in the future if it becomes increasingly unprofitable to continue to list.
The higher compliance costs, as well as the company’s dismal performance on Nasdaq, explain why it has recently had to curtail its operations. It is still unclear whether the company would avoid more downsizing in the future.
Startup’s Management Should Implement Standard Corporate Governance Practices And Undergo Relevant Training Early Enough
One important takeaway from Swvl’s SPAC adventure is the importance of early exposure to sound corporate governance principles. This will get the startup’s management ready for the challenges of following and putting into practise the accepted corporate governance standards.
Swvl acknowledged that its management team has limited expertise to handle a publicly traded firm, deal with investors in public companies, and adhere to the ever-more-complex legislation governing public corporations.
“Swvl’s management team may not successfully or efficiently manage their new roles and responsibilities or the transition to being a public company subject to significant regulatory oversight and reporting obligations under U.S. federal securities laws and the continuous scrutiny of analysts and investors. These new obligations and constituents will require significant attention from Swvl’s senior management and could divert their attention from the day-to-day management of Swvl’s business, which could adversely affect Swvl’s business, financial condition and operating results,” the recent disclosure from the company reads.
Startups should therefore prepare themselves from the beginning for the challenges of building a global company as well as the regulatory and corporate governance practices they will face during the growth stage of their business.
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. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh
Africa’s foremost brand monitoring platform, Brand Africa, has unveiled the 12th annual Brand Africa 100: Africa’s Best Brands 2022 rankings of the Top 100 most admired brands in Africa at a live event hosted by Brand Africa, at Eko Hotel & Suites, Lagos, Nigeria.
Against a backdrop of internal focus as a consequence of an urgent rebuilding of economies devastated by the Covid-19 pandemic and the acceleration of AfCFTA’s goal of driving greater intra-African trade, after a 5-year decline, African brands have surged 4% to 17% from an all-time low of 13% in 2020 and 2021 in the 2022 Brand Africa 100 | Africa’s Best Brands survey and ranking of the best brands in Africa.
Challenger brands such as South Africa’s lifestyle footwear brands, Bathu (#52) and Drip (#65), despite being primarily available in South African but accessible everywhere through e-commerce, massive growth in retail footprint in the middle of the pandemic and unmatched marketing and PR dollars, rocketed into the Top 100 as 17 brands exited, and heralded a notable return of African brands which once dominated the rankings as high as 34% when the rankings started in 2011.
MTN, the perennially leading African brand has returned to the Top 10 as the highest ranking African brand and switched places with Dangote as the #1 African brand recalled when prompted to consolidate its status as the #1 African brand.
Dangote, the pre-eminent African brand founded in 1981 by Nigerian Aliko Dangote, emerged as the #1 brand that symbolises African pride in a question where Brand Africa sought to establish which brand in Africa is a flag carrier and embodiment of rising optimism and pride in Africa. South Africa, led by MTN, leads the African list, with Nigeria, led by Dangote, the overall #1 brand, at 28%, and Kenya with flag carrier, Kenya Airways, at 8% and Ethiopia, with its flag carrier brand, Ethiopian Airline at 4%.
Non-African brands, led by overall pace-setter Nike for the 5th consecutive year, continue to dominate with a share of 83% of the most admired brands in Africa.
In a separate list of the Top 25 most admired financial services brands, African brands dominate with 68% of the share to 32% for non-African brands.
DStv, through its brands across the continent, has consolidated its position as the #1 African media brand for the second year running, in a category that is fast going digital and mobile.
Recognising that while the rebound in African brands is notable, the results will not be sustainable without committed and inspirational leadership, in 2022, Brand Africa recognised those leaders who are the catalyst for growth for Made in Africa brands both in corporate and in those who have championed and supported the development of great local brands in supporting industries. GT Bank’s Group CEO, Segun Agbaje and Nigerian doyenne of marketing, founder and chairman of Troyka Group were awarded the inaugural Africa Brand Leadership Excellence awards for inspiring brand-led excellence that drives the growth of made in Africa brands.
“As we emerge out of the pandemic and Africa seeks to assert itself, the results are very inspiring and bode well of an African renaissance led by competitive world class African brands,” says Thebe Ikalafeng, Founder and Chairman of Brand Africa and Brand Leadership.
“With increased number of countries and greater sample size this year, more than ever, and especially so during the pandemic, mobile proved to be the effective tool for us to reach and access respondents across the continent,” said , Bernard Okasi, Director of Research, GeoPoll, which has been the lead data collection partner since 2015.
Karin Du Chenne, Chief Growth Officer Africa Middle East for Kantar, which has been the insight lead for Brand Africa since inception in 2010 says, “despite volumes of brands analysed as a results of increased sample size in terms of respondents and countries, the survey continues to yield a very consistent picture of brands and trends that are transforming the continent.”
Now in its 12th year, every year on or around Africa Day, 25 May, Brand Africa releases the results of the survey on the most admired brands in Africa based on a survey across 29 countries that represent as much as 85% of the continent’s GDP and population. The 2022 survey was conducted between March and April 2022 and yielded over 80,000 brand mentions and over 3,500 unique brands.
The Brand Africa 100 results will be published in the June issue African Business magazine which is on sale globally in June 2022 and will be available online to subscribers on www.africanbusinessmagazine.com.
The 2022 Brand Africa 100: Africa’s Best Brands were organised by Brand Africa partners in Nigeria, AT3 Resources and Open Squares Africa, and supported by the Central Bank of Nigeria, South African Tourism and NQR, Africa Media Agency and BCW Africa.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
NBA Africa and KFC Africa has announced a marketing partnership that will see NBA Africa and KFC Africa collaborate on a number of promotions and activations for basketball fans across eight countries on the continent: Botswana, Ghana, Ivory Coast, Kenya, Namibia, Nigeria, Senegal and Tanzania.
Through the partnership, KFC Africa and NBA Africa will launch co-branded product campaigns, limited-edition merchandise giveaways, and limited-edition KFC x NBA promotions, including the opportunity for basketball fans to win tickets to live NBA games in the U.S. and complimentary access to NBA League Pass, the league’s premium live game subscription service. Additional details about the promotions will be announced at a later date.
NBA Africa CEO Victor Williams
“We are proud to announce this exciting partnership between our iconic KFC brand and one of the most epic sports brands in the world,” said KFC Marketing Director, Rest of Sub-Saharan Africa, and Emmanuel Kasambala. “As a brand that has been on the continent for 50 years, we are passionate about connecting with the youth at the touchpoints that really mean something to them. So, beyond the extremely cool products and merchandise we will offer, we have longer-term plans to inspire the youth to achieve more in life through basketball. We are exploring various grassroots basketball initiatives, like the refurbishment of courts, and basketball clinics in communities. It is about inspiring and enabling the youth to reach for, and achieve, their dreams.”
“We are excited to partner with KFC Africa to launch a series of fan-centric activities and promotions as part of our efforts to provide compelling ways for basketball fans across the continent to engage with the NBA,” said NBA Africa CEO Victor Williams. “We want to meet our fans where they are and make the game of basketball more accessible, and through this partnership with one of the world’s most iconic food brands, we look forward to reaching new and existing fans and providing them with more opportunities to experience the NBA.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
DeFi is the height of cryptocurrency, as a novel application, it is being said among cryptocurrency buffs that DeFi is the replacement of traditional banking, and the truth is, how can you not believe that?
Pioneering borderless payment, using the blockchain and bypassing gatekeepers through the use of the blockchain. DeFi has moved from being a cryptocurrency thing to being a real contender and an example of what banking can be.
cryptocurrency
Since Decentralised Finance (DeFi) is based on secure distributed ledgers which are akin to the systems used by cryptocurrencies, it can bypass Central Banks and other institutions that serve as barriers in the traditional banking system. There are a lot of entrants into the DeFi space, including tokens like Ripple and Fantom, these tokens were some of DeFi’s frontrunners, however, DeFi is getting re-DeFi’ned. Logarithmic Finance is set to become a big name.
Ripple (XRP)
Coming into the cryptocurrency space in the year 2013, Ripple (XRP) had the advantage of early entry. It fell quickly into contention and rose into the top ten of all cryptocurrencies in the world by the end of the year. It has since then gone on to make great gains, however, a few shadows follow Ripple (XRP). The organisation behind it was locked in a legal stalemate for the better part of 2021, the class action filed in December of 2020 stagnated the all-time high of Ripple at $3.84.
Fantom (FTM)
Fantom is another of DeFi’s hot tokens, at $1.07 per token, Fantom (FTM) is outside of the crypto top 10 by the ranking of Market Capitalization. Fantom (FTM) uses the proof of stake method of validation and it has been stated by some as the most suitable replacement for Ethereum (ETH). This is a high goal that it is yet to live up to despite having spent ample time in the market.
The light, scalable nature of Fantom (FTM) makes it a token to reckon with. This token is quite established now. Perhaps its time for a fresh face, Logarithmic Finance.
Logarithmic Finance (LOG)
Logarithmic Finance (LOG) comes packed with promise. It is a layer-3 switching protocol that intends to deliver the moving of financial assets at ease across borders, blockchains and languages. Logarithmic Finance (LOG) will boast a cross and multichain system that will allow financial assets to be generated and moved across any major blockchain network that will include the Ethereum (ETH), BNB Chain, Polygon (MATIC), Solana (SOL), and Avalanche (AVAX) ecosystems.
This singular use case, when implemented will be a potential winning principal that will push Logarithmic Finance to the forefront of DeFi. At the moment, the code of the project is in the works and is being reviewed independently by Certik. Logarithmic Finance (LOG) is also interoperable and open source, with a public-driven and highly spirited drive towards overall development, the coin has a lot of potential.
The mass adoption from the prelaunch state means that there should be enough investors holding the coin by the time it goes public. This will drive appeal, access and use cases as others will be willing to use it too. This could circumnavigate the issues that Fantom (FTM) is currently facing.
With all of these promises, it is an absolute steal to have Logarithmic Finance (LOG) at a locked presale of $0.10. The potential truth is that at no other time will the Logarithmic Finance (LOG) cryptocurrency be cheaper than it is today. Everything is in place, DeFi is going to see a massive shift and Logarithmic Finance (LOG) looks like it could be the centre of it.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry
