Tokyo-based venture capital firm Inclusion Japan has announced a fresh investment in Gebeya Inc., the SaaS-enabled Pan-African marketplace (ICJ). The additional investment intends to spur development and innovation to support Gebeya’s ongoing growth.
With the secretive strategic investment, Gebeya will go from a single, two-sided marketplace for software talent to a provider of marketplaces using a Marketplace-As-A-Service model.
Amadou Daffe, Gebeya’s CEO & Co-founder
Partech Ventures, Orange Ventures, and Consonance have given Gebeya a total of $4M in SEED funding since 2020. With the help of ICJ’s strategic Pre-Series A investment, Gebeya will be able to improve both the supply and demand sides of its target markets while also bolstering its product lineup, particularly its Marketplace-As-A-Service offering.
“We are grateful for the opportunity to partner with ICJ and are confident that this investment will help us to take our company to new heights,” said Amadou Daffe, Gebeya’s CEO & Co-founder. “We are excited to see what the future holds and are committed to delivering the best possible products and services to our customers.”
Why The Investor Invested
“We are delighted to be investing in Gebeya,” said Yasuhiro Yoshizawa, Director, and Co-Founder at ICJ. “As a fund manager with a $100 million investment budget that will focus on the Africa region, I consider myself very fortunate to have been able to invest in Gebeya, which has the greatest potential in Sub-Saharan Africa.”
“ICJ has so far invested in two African-based startups, both in Ethiopia. Dodai, an e-mobility technology startup, is run by my fellow CEO Yuma whose vision and commitment to Africa have made ICJ consider the second investment into Gebeya. ICJ investment is quite strategic in building a strong bridge between Japan and Ethiopia regarding investment, knowledge transfer, and business development.” said Amadou Daffe, Gebeya’s CEO & Co-founder.
Under their ICJ No2 Fund, ICJ has so far made investments in 16 businesses. The fund’s first venture into the African talent market is the undisclosed investment.
Gebeya, a company with headquarters in Addis Abeba and offices in Kenya and Senegal, has been operating for six years. During that time, it has worked to create job opportunities for hundreds of working tech professionals, upskill them, and support entrepreneurs who want to introduce their own innovations.
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
For all the glorification of the tech founders you see on the media, a business is a business.
Yannick Lefang, Chief Financial Officer at Gebeya
Like many folks of my generation (X), I’ve watched every Rocky movie and fondly recalled the scene where Rocky climbs the 72 stone steps leading up to the entrance of the Philadelphia Museum of Art and puts his hands up as a sign of victory. This scene has always been a perfect metaphor for an underdog or a regular joe rising to a challenge. On this rainy afternoon of February 2020 as I land in Philadelphia, Gebeya has just raised $2M seed investment from global investors and as the CFO, I am reporting on duty to acknowledge receipt of the funds and some other paperwork with the co-founder and CEO Amadou Daffe. It’s been a long and grueling process leading up to Philly and I am sharing a few lessons learned along the way:
Gebeya co-founder and CEO Amadou Daffe
Fundraising is not fun so raise when you really need to
I am no fan of the fundraising and I am probably the most unlikely CFO to raise a seed round in Africa. And here is why: If you are an African entrepreneur trying to raise, the odds are stacked against you. In 2019, several reports show that around 427 startups raised funding while a platform like VC4A lists a total of 13,500 startups in Africa. As a startup, you have a 3% chance of raising money. If you raise a seed round, it’s even worse because less money goes to early-stage startups. It is important to have a good rationale for fundraising because it is going to take time, energy, and resources. I always go by the rule of thumb that you will most likely raise when you don’t need capital to operate. It means it’s better to show revenue or some sort of market fit at minimum before you engage with investors.
The fundraising process is grueling but it doesn’t have to be
I had never raised money from investors before the Gebeya seed round but as a founder myself and a finance professional with over 15 years of experience with global financial institutions, I had the foundation and skills necessary to tackle the challenge. It was still a long and challenging process. A couple of things I learned along the way:
Put together the right team before you raise. The entrepreneurs who have raised money will tell you that it’s more than the pitch competition or the shark tank presentations. You need a team with legal, technical, and financial expertise. Make sure you have someone with project management skills, fundraising is a project and has to be managed as a project.
Have a clear understanding of the process. First, you need to get to know the investors and what they stand for (officially and unofficially), you need to really understand the terminology (term sheet, cap table, business model, spa, etc.), you need to take charge of the process and stay on top of things. While this is a do or die for your startup, investors have many deals they manage at once.
Be organized. This goes a long way in boosting investor confidence and also speeds up the fundraising process. Get your documents in order (contracts, agreements, licenses, etc.). You can create a virtual data room ahead of time so you are ready when you fundraise. It may sound easy but it’s not.
Your financials are important even if you are not making money
If you are like many African founders or founders in general, you are probably a developer or a techie who decided to follow the footsteps of Mark Zuckerberg (I hate this example but it’s what founders related to) and that may well be the reason you won’t be able to raise funds. For all the glorification of the tech founders you see on the media, a business is a business. The easiest part of the fundraise at Gebeya was the technical due diligence. The hardest part by far was the financial due diligence. So what should you do to make it easier?
Adopt best practices for financial reporting very early. Whether you are making money or not, you need to have decent financial reports. It gives you clarity as an entrepreneur and that clarity will boost investor confidence.
I was surprised by how simple the investor’s mind is when it comes to assessing business opportunities, especially in the tech space. It boils down to how scalable is your value proposition. If you are enabling transactions and taking a percentage along the way, how scalable is that process? It’s better to think about your business model in layman terms. Forget your product, focus on the business.
The most important thing good financials do for your startup is telling your story better than you can. I am a data geek and one of the reasons I love data is it allows you to shape and convey messages effectively, provided it’s well organized and structured. Your startup may not show fast growth but amazing margin – get your data to tell that story for you.
Fundraising takes time so expect the unexpected
It took a year or more to complete the seed round for Gebeya, it felt like 3 years! You will need hard work, perseverance, and a pinch of luck to make it through alive. Be prepared to spend more money because of the fundraising costs (legal, travel, project management, etc.) so you may actually run out of money during your fundraising. It is important to plan and anticipate these events and be transparent about it with your investors, especially if you already have a term sheet. You may request a SAFE or a bridge loan to stay afloat while the process is ongoing. Note that running out of cash doesn’t mean you have a bad business and investors will quit because of it. You may simply have receivables that are delayed or unexpected expenses. Ultimately, you have to plan for the worst and hope for the ok. Best is not an option.
Ultimately, it’s a human experience
When Amadou called me early January 2019 to ask me if I could help with his fundraising effort, I said no because I disliked fundraising and VC – the whole narrative in Africa was wrong for me. I still believe that raising VC money may not be the best way to start and grow a business in Africa. The exit options are just very limited. Where are you going to IPO? I understand why entrepreneurs want to raise VC, it is definitely an accelerator if you have the right business and strategy. The other reason I said no, was the fact that I had never raised VC money in the past except a few bad experiences with pitch competitions. But I knew one thing: I love challenges and I know a thing or two about finances. Most importantly, I know Amadou and fully embrace the vision to make Africa competitive by sourcing and nurturing Africa’s best talent.
When I agreed to take the challenge in March, I went through a grueling interview process with investors and had to immerse myself in the business. Then I came up with a plan to get the startup to a place where investors will have the confidence needed to invest. It was a total team effort, a unique and humbling human experience. I got to know an amazing group of investors along the way.
When I started to work on the fundraising, I agreed to get paid only after the round was completed successfully. I was confident that with my skills and experience I could make it happen but more importantly, I had a shared vision with Amadou and his team. Lastly, I don’t believe money is a good motivator/driver. At least not for me.
Back in Philly, as Amadou and I were getting ready to walk into the bank and close the round, we couldn’t help but think of the journey that got us there, a perfect metaphor for an underdog or an everyman rising to a challenge. We quickly ate our McDonald’s in the car and rushed to the bank.
Two weeks later, COVID-19 took the world by storm.
Yannick Lefang is the Chief Financial Officer at Gebeya, an Ethiopian edtech startup that raised $2 million earlier this year.
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.
Ethiopia looks to be announcing a major entry into the African startup space this year on a grand scale. Gebeya, the edtech and online software outsourcing marketplace has closed its $2 million seed investment round.
Amadou Daffe, co-founder and CEO of Gebeya
“This investment, made possible by global investment firms dedicated to Africa’s technological advancements, marks a pivotal moment for Gebeya. This investment will enable us to further strengthen the community of top-notch tech talents and position Gebeya as the go-to for other companies as well as startups,” Amadou Daffe, co-founder and CEO of Gebeya, said.
This round of financing follows a previous funding round that saw Gebeya securing $500,000 from the International Finance Corporation in 2019 towards supporting the startup’s efforts in balancing the gender gap within the African tech sphere.
The startup plans to use the seed funding to scale up its training and marketplace services in francophone Africa as well as launch its online African talent marketplace. The marketplace will provide substantial transparency for clients in choosing ideal talents best suited for their projects.
This expansion follows the establishment of the newly formed Senegal branch, which services regular corporate clients as well as Senegalese Startups.
Why The Investors Invested
‘‘With Gebeya’s model and the team’s dedication to this challenge and the amazing progress they’ve made so far, we are really excited to join them in the next stage,” General Partner at Partech Africa, Tidjane Deme said.
Partech Africa, one of the investors of this round, has been very active within the African startup space. In 2019, Partech Africa invested in about 8 startups, with its ticket sizes ranging from above $200,000 in each round. Globally, Partech maintains offices in San Francisco, Paris, Berlin, and Dakar.
Partech presently has capacity to invest about $1.4 billion through its fund. Its investment in Gebeya is its first African investment this year.
On its own, VC firm Orange Digital Ventures Africa is a €50M dedicated investment initiative of Orange group on the continent with an ambition to support tech entrepreneurship in Africa.
“With more than 60% of VC backed tech startups in Africa created in the last 5 years, our ecosystem is growing very fast and investments are booming, yet the talent gap remains wider. Skills shortage is a critical barrier to startups successfully exploiting the power of new technologies,” said Marieme Diop from Orange Digital Ventures Africa. She went on to add, ”At ODV Africa, we are happy to support the hardworking Gebeya team and strongly believe in their ability to build the appropriate and sustainable pipeline of really talented African engineers to meet future skills needs on a global scale.
Consonance aims at finding new ways of leveraging the vast human capital of Africa. The company’s Investment Managers invest in early-stage and growing businesses across subSaharan Africa. Consonance backs entrepreneurs who are building large and profitable enterprises that create systems to enable national wealth creation. It focuses on the following sectors and themes: Access to wealth creation, financial and capital markets infrastructure, access to essential services (education, health & power), culture and media, logistics and mobility, retail at scale, food and its distribution systems and technology infrastructure services.
“Human Capital, the ability and productivity of people, is by far the most important asset any country that wishes to develop must nurture. We believe Gebeya’s platform would do just that across Africa, starting from Ethiopia. We are proud to partner with Gebeya and our co-investors on this journey,” said Mobolaji Adeoye, Founding Partner, Consonance Investment Managers.
A Look At What The Startup Gebeya Does
Founded in 2016 and headquartered in Addis Ababa, Ethiopia, Gebeya allows project managers to hire specialized developers from its talent pool for a price ranging between $15 and $25 per hour to work on a project’s team either remotely or in-house. Gebeya also helps African youth to develop technology skills through training, turning them into technology specialists, before linking them to possible employers.
The startup claims to have produced over 600 tech talents, out of which over 30 percent had been matched with companies across Africa and the world.
Gebeya acquired CODERS4AFRICA, a software engineering firm that had a network of more than 3,500 African developers in six countries.
According to Gebeya CEO, Daffe, the endgame for the startup is to become the go-to brand for digital and tech talents in Africa, and most importantly, to become an African-based $100 million revenue company.
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.
He could be contacted at udohrapulu@gmail.com
