The French President Emmanuel Macron has made a new EUR130 million (US$150 million) commitment to support 500 African startups as part of a rejigged Digital Africa initiative. The Initiative was launched in 2018 with the mission to equip African tech entrepreneurs with capabilities to design and scale up ground-breaking innovations for the real economy, Digital Africa brings together startups, academia, incubators, institutional financiers, venture capitalists and technology clusters to help develop the African startup space.
President Macron’s renewed financial commitment of EUR130 million, made at the New Africa-France Summit last week, covers the next three years, while a reorganisation means Digital Africa is now part of Proparco, the private sector subsidiary of the Agence Française de Développement (AFD).
President Emmanuel Macron
At the event, Digital Africa also unveiled a host of new programmes. In terms of financing, it announced the Fuzé project, which focuses on Francophone Africa and aims to support at least 200 tech startups by early 2022 via a new small ticket fund. This will provide, in stages, funds of between EUR10,000 (US$12,000) to EUR200,000 (US$230,000) in the form of repayable loans.
In terms of skills, Digital Africa has joined forces with Make IT and the German government to set up Talent4StartUps, a fellowship programme designed to meet the needs of talents that have been trained in tech and digital, and put them in touch with startups actively recruiting.
More broadly, Digital Africa will continue to develop non-financial activities such as knowledge production, training, networking, research, and support for the evolution of regulatory frameworks, while having the opportunity to raise funds from other public or private donors. This will be enabled by its new status as a subsidiary of Proparco.
“Digital Africa’s new organisation, redefined with our partners, allows us to reinforce our commitment to “made in Africa” tech innovations and become a factory for future African unicorns. Startups need a one-stop-shop combining training, research, project-structuring, support to pro-tech and pro-innovation reforms, and financing,” said Digital Africa’s chief executive officer (CEO) Stéphan-Eloise Gras.
“From now on, thanks to the merger with Proparco, they will find in Digital Africa a partner capable of offering them support from ideation and seed to growth and hypergrowth. By putting tech at the service of transparency and efficiency in development aid, and by getting closer to the private sector, Digital Africa wants to make a long-lasting difference.”
The Digital Africa team is now preparing a roadshow that will take place at the end of this quarter and will stop in several African regions to strengthen connections with key partners and players, promote the programmes, and invite African startups to apply. These field trips will also be an opportunity to finalise new projects, including the “product-market fit academy” designed to improve the suitability of tech solutions for local markets, to be launched in 2022.
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
A new initiative aimed at helping African startups has been launched. The initiative is the brainchild of Asia Africa Investment & Consulting Pte. Ltd. (AAIC) in collaboration with Rakuten Group. The AAIC-Rakuten Africa Innovation Project aims to promote the growth of African startups addressing social challenges with technical and management mentoring. The launch of the AAIC-Rakuten Africa Innovation Project aims to assist the growth of African.
CEO of Rakuten Europe, Toby Otsuka
According to the CEO of Rakuten Europe Toby Otsuka, African startups participating in Rakuten and the Africa Healthcare Fund, led by AAIC, will share information and expertise to assist with solutions that efficiently solve social challenges. “Since the day Rakuten was founded, we have always believed in the power of innovation, and throughout its history, our company has always been dedicated to contributing to society. In recent years, many startups in Africa have achieved tremendous growth and are using technology to change people’s lives in significant ways. By collaborating with AAIC and engaging in dialogue with startups that are confronting local challenges head-on, we hope to solve social challenges with our partners as a team leveraging Rakuten technology and business assets.”
Founded in 2013 and based in Singapore, AAIC is a Japanese growth equity fund and consulting firm that aims to improve the performance and expansion rate of rapid growth companies in the healthcare sector in Africa. AAIC provides capital growth and an increase in long term value for companies they decide to invest in. Rakuten, an eCommerce and online retailing company that offers services including fintech, digital content, communications, and more, launched in 1997 in Tokyo. The company aims to empower entrepreneurs and businesses to optimise their performance in the market.
AAIC and Rakuten came together to launch their collaborated innovation project that aims to assist local startups who want to solve social issues in the fields pertaining to agriculture, nutritional value, and clean drinking water. AAIC established the Africa Healthcare Fund in 2017 to invest in startups within the healthcare sector with the objective of growing businesses in developing countries, using strategic consulting, funds, and human resources. Shigeru Handa, Director of AAIC, comments on the social issues present in the healthcare sector and how important the collaboration with Rakuten is to grow technology-based businesses.
“Scaling up for further growth is a big challenge as we invest in and support companies that are driving innovation in the healthcare sector, which is one of Africa’s social challenges. We expect this collaboration with Rakuten to provide opportunities to promote synergies and business growth for startups, particularly in the area of technology.”
By September 2020, the AAIC had invested in 21 companies that strive to eliminate healthcare services related issues by making use of healthcare ecommerce, fintech for international money transfers, an ambulance dispatch platform, online mental health counseling, teleradiology platform, advanced imaging centers, dialysis centers, and maternity hospitals.
Focusing on practical measures to address and solve social challenges faced in Africa, the initiative plans to take place from October 29 to December 2021. The project will assist participating African startups in improving their business model, offering products with mentoring, and providing support in business operations. With experts providing one-on-one mentoring to participating entrepreneurs and African startups, the project aims to develop innovative solutions to social challenges faced in Africa and the healthcare sector.
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
Some Lagos Based Startups with The Nigerian Vice President, Prof. Osibanjo
What startup ecosystem is the most valuable in each geographical regions of the world? and;
Which ecosystem has the highest number of startups?
Why Lagos may not have the highest startups in town, it however has one of the most valuable startups in Africa, and here are some of the reasons.
The Size of the Lagos Startup Ecosystem Has Seen Some Appreciable Growth.
Although the ranking pointed out that Lagos does not have the highest number of startups, as at 2017, it did however state that the city has an estimated 400–700 active and viable start-ups that have sprung up.
According to Michael Porter, the more people you have in a particular industry, the higher the productivity of the industry’s participants, and the higher the level of innovation, and the higher the rate of new business entry. Notable startups such as Flutterwave, Farmcrowdy, Iroko Tv, etc are all part of a teeming ecosystem.
Startups In Lagos Have Formed Local Communities and Clusters Through Which They Help Themselves.
When the Lagos State Government collaborated with CcHUB, MainOne, TechnoVision, and others to launch a 27km fibre optic cable project around the Yaba neighbourhood in 2013, little did it know that startups would one day form clusters around the neighbourhood that would give birth to a vibrant startup community. Today, there are so many startup hubs and co-working spaces among startups in Lagos which reinforce a sense of community among startup owners. Notable among them are the:
The Facebook’s Lagos-based NG_Hub, which is run in partnership with CcHub. It is Facebook’s first community hub in Africa. The hub offers work spaces, meeting rooms, games and chill out room, an event space and a well catered café. The hub includes Facebook’s Fb Start Accelerator programme — a research and mentorship-driven programme focused on those building high tech solutions, with a focus on artificial intelligence (AI), machine learning, augmented reality (AR) and virtual reality (VR). This has helped to create a succession of successful startups.
StartupGrindis a global community powered by Google for Entrepreneurs, with goals to educate, inspire, and connect entrepreneurs . The Lagos arm, with over 7000 members, meet at least once in a month. There are other large startup hubs and communities spread around the city.
The importance of community for every startup ecosystem is captured by Michael Porter, when he wrote that the degree of interconnectivity is the second key dimension of industry clusters because “economic activities are embedded in social activities; that ‘social glue binds clusters together.
Production Scale Up and Startup Output Volume
Although the level of funding a startup gets does not determine its value in terms of production and startup output volumes, how well a startup ecosystem performs also depends on its production capacity. While information about the production scale of startups in Lagos are still sketchy, appreciable startups in Lagos have justified their existence. With $15.7 million in funding, Flutterwave (the payment processing & electronic remittance startup) for instance, has been able to process over $1.2 billion transactions for African businessmen. In fact, the total processed value for transactions conducted in 2018 signified a 401% increase when compared to $205 million in 2017.
More Startups In Lagos Are Plugging Into The Global Value Chain
A higher level of global connectedness helps startups integrate into the global fabric, raising their level of performance. Most startups in Lagos, which have gotten the strong funding capacity are beginning to get globalised. The recent listing of Jumia, a startup started in Nigeria, on the floor of the New York Stock Exchange, is a great case in point. Flutterwave has also got licenced to operate in the United Kingdom and Zambia bringing the total of countries it operates in to 7 (Nigeria, Uganda, Tanzania, Kenya, Ghana, and now United Kingdom and Zambia). However, an indicting fact is that startups in Lagos still have one of the lowest rates of foreign customers at 6% with overall average at 23%, suggesting challenges to go global. Only 11% of start-ups have plans to expand globally, according to the Genome Startup Report.
Few things can signify the arrival of a city as a contender on the global startup scene a visit from Mark Zuckerberg, who came to Aso Villa Demo Day to share his journey to developers and the 30 startups in attendance. As a more general trend, the ecosystem benefits from globally connected expats bringing back knowledge and financial capital after working in the U.S or U.K, writes Startup Genome.
Lagos’ Startup Ecosystem Has High Valuation
Valuations of startups, which are tied to funding rounds, occur regularly and in higher numbers, providing better and faster feedback on the quality and improvement of a startup ecosystem.
From the Genome Report, the Lagos startup ecosystem was worth $2 billion as of 2017 making it the most valuable ecosystem in Africa and only second in number of start-ups after Cape Town. Cape Town has the largest ecosystem on the continent, with between 700–1,200 tech start-ups.
The Growth Index of Lagos Startup EcosystemIs High
The growth momentum of each ecosystem varies, but it is not easy to compare them and account for different local perspectives.Startups in Lagos have grown so fast since the creation of the first startup community in Lagos in 2011.
From the original Yaba neighbourhood startups — such as Konga, eCommerce company which arrived in 2013, valued at approximately $200 million after raising $20 million in Series C rounds; Africa Internet Group, which transferred six of its companies to Yaba in 2014 with $469 million in 4 Rounds from six investors —
to subsequent startups such as BudgIT, Andela–a Nigerian-founded talent accelerator for programmers that has campuses in Lagos, Nairobi and New York; Hotels.ng, which claims to be the largest hotel booking site in Nigeria and which secured $1.2 million in funding from Omidyar Network to expand its listings across Africa,
the Lagos startup ecosystem has witnessed steady growth and development.
Other notable startups include Iroko TV— the biggest digital retailer of Nollywood worldwide with total funding of $40 million — and Paystack, an alternative e-payments company which raised $1.3 million investment in December 2016 from international investors.
The Talents of Most Lagos Startups Founders Are Above Average
Although it is difficult to quantify the extent of a founder’s talent, certain metrics such demographics, economic and educational data, may go along way. The Global Startup Ecosystem Report, 2017 hints that the Lagos ecosystem has the 9th highest rate of Founders with an Undergraduate Degree at 59% while 93% of them have a technical background, the 3rd highest rate in the world.
The number of women founders at 14% on average is only 2% shy of global average at 16%. Cape Town, South Africa however has 25%.
Lagos Startup Ecosystem Is One of The Most Funded Startup Ecosystems in Africa
Founder Irokotv, Jason Njoku
The rate at which startups obtain funding in Lagos has also improved. iROKOtv, often referred to as ‘Netflix of Africa’, for instance, has secured several funding rounds in excess of US$40m, since the company started in 2010. With a Series A Venture Capital investment of $3M from the US-based hedge fund Tiger Global, it is now the world’s largest online platform for African entertainment.
Andela which was founded in 2014 has so far also obtained more than $180 million in fundraising. Its investors include Steve Case, Omidyar Network, Founder Collective, Rothenberg Ventures, Learn Capital, Melo7 Tech Partners, Chris Hughes, Generation Investment Management—an investment firm co-founded by former US vice president Al Gore, Chan Zuckerberg Initiative, GV (Google Ventures), Spark Capital, CRE Venture Capital, among others
Hotels.ng,started in 2012, has now been transformed into one of the biggest online hotel booking agencies in Nigeria, after the startup was able to secure investment of $225k from SPARK in 2013. It also got Series A round of $1.2m funding from EchoVC Pan-Africa Fund, a seed-stage technology fund, and from Omidyar Network, and it currently has a total funding capacity of $1.5m.
Again, Vanso International Corporation, a mobile payment Company was able to attract an USD75 million investment from Interswitch Limited in March 2016.
Interswitch Limited, a payment switching and mobile payment company also attracted USD110 million in December 2010 from Helios Investment Partners and Adlevo Capital Managers, LLC and USD20 million from International Finance Corporation in September 2011.
Founder of Wakanow
The US investment giant The Carlyle Group has also invested $40m in Nigeria’sWakanow, an online travel agency launched in 2008, while the Nigeria-based trucking logistics startup Kobo360, raised $7.2m in 2018 from the International Finance Corporation and private funds in the US and Nigeria. The Lagos-based start-up is now targeting another $15m-$20m by the end of April to finance its expansion in East Africa.
A recent report by the US-based venture capital firm Partech Partners has ranked Nigeria as the number two country with the highest funding for tech startups in Africa, with $306m raised in 2018 alone. The city of Lagos was the greatest beneficiary of the funding.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
Barely six years old, Ghanaian pharmacy start-up mPharma, which manages prescription drug inventory for pharmacies and their suppliers, is sealing a deal on Kenyaan second-largest pharmacy chain, Haltons.
With this transaction, mPharma is entering the East African regional market for the first time, meaning that the young Ghanaian company will now control 20 Haltons stores spread across Kenya’s capital Nairobi and the second most populated coastal city of Mombasa. Baring any last minutes changes and subject to Kenya’s Capital Markets Authority’s approval, the deal would be sealed for a whopping a $12 million Series B funding round led by 4DX Ventures, an Accra/San Francisco venture capital firm, and Nairobi-based Novastar Ventures.
Greg Rockson of mPharma
So far, the sum of $9.7 million has been paid and the full round is expected to be completed in a couple of weeks with other investors including Unbound Ventures, the VC arm of India’s Bharti Mittal Family office, early Facebook investor Jim Breyer and former Novartis chief executive Daniel Vasella, who has joined MPharma’s board.
Key Facts To Note About The Deal
The startup raised $6.6 million in Nov 2017 after raising a seed round of $5 million in 2015.
MPharma was founded by Greg Rockson to primarily improve the efficiency of pharmaceutical supply chains in African countries.
Its proprietary Vendor Management Inventory (VMI) system is already being used in over 250 pharmacies in Ghana, Nigeria, Zambia and Zimbabwe.
Rockson said the unusual deal came about as part of conversations to market its VMI platform to the chain, but realized there was an opportunity to prove just how much the efficiencies of managing both front end and back end could help African pharmacies drive down their biggest costs: inventory.
The startup is taking control of Haltons from Fanisi Capital, a Mauritius-based private equity firm, but senior management at Haltons will retain a stake in the business.
Last year, Haltons raked in $1.5 million in revenue, Mary Ngige, Haltons’ managing director said.
mPharma is expected to meet a tough game in Kenya from the much bigger Goodlife Pharmacy which has 47 stores and is owned by South African investor Leapfrog Investments, which invested $22 million in 2016.
At one point in its history, Haltons was the biggest pharmacy chain in the whole of Kenya with more than 50 stores but slimmed down, closing unprofitable stores and working on improving its service delivery.
Ngige says the aim is for its new ownership and better systems to work on methods to bring back to Haltons’ past glory.
Ngige also says Haltons was attracted to the deal because the pharmacy desires to improve efficiency within its supply chain using better inventory management software which ultimately aligned with Halton’s own mission to improve drug accessibility and affordability. Consequently, they hope on mPharma’s business and their technology to help Haltons fine-tune their model and improve competitively.
In the short term, mPharma’s team is focused on expanding its VMI and QualityRx platforms to over 14,000 community pharmacies in Ghana, Nigeria and Kenya, using those platforms to leverage more market power with pharmaceutical companies and also use its “‘just-in-time” inventory management to lower prices for its retail customers.
mPharma is also preparing to partner with African governments in order to help improve drug availability through better centralized systems, in the long term.
Rockson Is Using the QualityRx Franchise Model.
Using the QualityRx franchise model, which replicates similar features seen with co-operative retailers in the US and Europe, employing common branding, inventory systems and collective purchasing, mPharma is attempting to shake the market up a bit.
“We’ve not always been able to control the customer experience and fully address the issue of drug affordability with our pharmacy clients particularly because they manage their profit margins,” says Greg Rockson.
“Through our QualityRx service, we’re starting to invest in improving the customer experience and pricing that patients get from pharmacies. Haltons will serve as testing ground for us to develop patient-centered services we can provide to our franchise pharmacies. This way we can encourage lower margins and pass the savings on to the customers.”
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
