Nigerian startups too are having a field day here. TechAdvance, leading Nigerian payment application development company is the latest to join startup fundraising bandwagon. The payment solution has raised $1m in new funding, putting the startup’s valuation at USD $20M.
Here Is The Deal
The investment was led by the Bahrain-based energy investment company Lamar Holding.
Lamar’s investment will support TechAdvance’s strategy to substantially expand its global expansion.
The move will broaden Lamar’s successful portfolio into the technology industry, and give the company a foothold into the African continent.
‘‘The payments space in emerging markets is buzzing with opportunities but faces a number of major barriers. These funds will allow us to shift our focus to these opportunities — especially the launch of our digital bank, without compromising our existing business lines,” Founder and CEO of TechAdvance, Edmund Olotu said.
A Glance At Lamar Holding
Lamar Holding is an established developer and long-term operator of projects across Saudi Arabia’s national energy infrastructure network. Through a portfolio of companies and strategic joint ventures, Lamar Holding has garnered an unrivaled record of winning and delivering contracts in the Saudi energy market.
Why Lamar Holding Chose To Invest In TechAdvance
On why TechAdvance, Hani Abdulhadi, Vice President at Lamar Holding noted:
“We are delighted to make this investment in one of Nigeria’s most exciting and innovative companies. This is an opportunity for Lamar and TechAdvance to collaborate and distribute its expansive suite of digital solutions to emerging markets in Africa and the Middle East.”
A Glance At TechAdvance
TechAdvance is a payment application development company founded in 2009 with a strategic focus in developing and deploying niche payment companies to serve the needs of large public and private sector organizations in Nigeria. It oversees various niche subsidiaries including GPay Africa, PayElectricityBills, Advance Bancorp Digital Microfinance Bank, and others.
TechAdvance runs a network of subsidiaries, each of which focuses on different verticals in emerging markets including utility bill payments, digital financial services, and transportation software. Earlier this year, the company was highlighted as one of the top companies to Inspire Africa in the London Stock Exchange Group’s Report for 2019.
TechAdvance, through its subsidiaries, recently acquired a microfinance bank and obtained approval in principle for a Payment Solution Service Provider (PSSP) license from the Central Bank of Nigeria. The company also recently received approval from the Central Bank of Bahrain to operate in the country, signaling its intentions to grow beyond Nigeria and Africa.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Egypt’s MoneyFellows has just joined the list of startup fundraisers in Africa. Currently, it appears Egypt’s startup ecosystem is having a field day. The Cairo-based fintech has raised over $1 million in a bridge round (Pre-Series A).
Here Is All You Need To Know
The investment came from 500 Startups and Dubai Angel Investors, both of which had previously invested in company’s seed round as well, last year, Beirut-based Phoenician Fund, and some individual investors including some of its previous angels.
MoneyFellows plans to use the latest investment for scaling the userbase mainly. The also plans to raise a $3 million Series A by the end of this year.
“With steady growth in our user base, we have been working hard over the past year in order to optimize and perfect our product and are now ready to begin our scaling journey. We will dedicate the money from this bridge round to raise greater awareness for MoneyFellows, in order to allow a much greater number of users to access our application and meet their saving and financial needs,” noted Ahmed.
The startup also has secured corporate deals with different companies in Egypt in order to facilitate the participation of their employees in money circles.
MoneyFellows has also partnered with different financial institutions including Fawry to make it easy for its users to pay their monthly installments and receive the payouts. Its partnership with Fawry allows users of MoneyFellows to pay installments at over 80,000 Fawry Point-of-Sale devices located all across Egypt and receive their payouts at over 200 Fawry Plus stores.
Founded in late 2016 by Ahmed Wadi, MoneyFellows is digitizing concept of money circles (ROSCAs), commonly known as gam’eya in Egypt and other Arab countries.
The years-old practice that is common across many countries in the world, known as chit funds in India, committee in Pakistan and Tandas in Mexico, allows a group of people (normally friends or coworkers) contributes a fixed installment every month to a pool with one of the members taking whole pool as payout every month. The circle ends when everyone receives their payout and is usually repeated if the participants are interested.
MoneyFellows with its group pooling platform for credit and savings is digitizing the entire process of money circles with a scoring model that compliments current offline model, making it more scalable, safe and efficient.
How The Startup Works
The users set up their profile on MoneyFellows and upload documents to verify their income and personal details. The more information and verification documents they share, the better their score and limit. Depending on MoneyFellows’ credit assessment, a user is then shown different matching circles. The user then selects one of these circles, a preferred (available) slot, and mode of payment and payout.
MoneyFellows makes money by charging a small service fee on monthly installments paid by the members.
“Our business model is currently comprised of collecting service fees from our users depending on their payout position in the money circle — starting with 5% fees for users with early payouts at the beginning of the circle, incrementally decreasing to zero fees for users paid out at the end of the circle. With millions of dollars moving through our accounts MoneyFellows are able to earn a percentage of float interest on our money in circulation. We are also planning to introduce several new options to generate revenue, including allowing our users to utilize MoneyFellows for bill payments, as well as using MoneyFellows in a variety of merchant locations,” explained Ahmed in a conversation with MENAbytes.
Speaking of their expansion plans, Ahmed said that they’re aiming to expand in MENA to different neighboring countries in the region in 2020 after closing their Series A. The startup also plan to expand into some Africa countries in 2021 as there are high prevalence and participation in offline ROSCA schemes, allowing MoneyFellows to access hundreds of millions of potential users in these markets. The startup is currently in advanced discussions with many key financial and telecommunication players in MENA to work on its potential expansion there.
Originally started in the United Kingdom, MoneyFellows moved its headquarters to Egypt later and currently employs a team of over 40 employees, all of whom are based in Cairo.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Founders have to be resilient and thick-skinned. Prepare yourself to exhaust your network of investors, and accept the fact that fundraising is going to take time, even if that’s a hard pill to swallow.
Securing a fresh injection of investment capital can drastically accelerate your startup’s growth, so it’s good to know that there’s no shortage of money up for grabs these days. According to a recent venture capital report from Magnitt, nearly US$800 million in investments were made in the MENA region last year.
But just because the money is out there doesn’t mean the fundraising process will be a breeze. The reality is that investors are picky and often guided by strict criteria to fit their investment thesis. When you seek them out, most will reject you, that’s just part of playing the game. Luckily, there are some rules that can make the process a bit more predictable. Odds are you get a “no”.
Taking into consideration the media’s infatuation with writing articles on multimillion-dollar investments into startups on a daily basis, it can look like these deals happen overnight. They don’t.
In fact, most entrepreneurs will openly tell you about what a struggle the fundraising process can be. Author and business guru Steve Schmitz puts this in perspective in the context of his own fundraising journey.
He wrote: “We raised $40 million of equity from 63 investors. We contacted more than 1,000 prospects. That’s about 6%. That means 94% of the people said no.”
Blackstone CEO Steve Schwarzman had the same 6% hit rate when starting out, too, and his company now manages more than $500 billion of capital.
Startup investment in Africa (2015–2017). Credit: Quartz/Partech Ventures
Think of it this way: let’s assume you’re raising a $600,000 seed round, and the average check size for your investors participating in the round is $100,000. This would mean you’d need six investors in on your round. If you operate under the 6% rule, you would have to meet with 100 investors to close your round.
Keep in mind that the 6% rule holds up for qualified investors who cut checks of the size you’re seeking at companies that are at the same stage you are. If you hit up the SoftBank $100 Billion Vision Fund for a $50,000 unit size, that wouldn’t count as an investor. Being told “no” is normal.
Famed speaker and author Tim Ferriss has an excellent podcast episode about just how critical it is to learn from every “no” we get. One of his guests mentions that she heard “no” at breakfast, at mid-morning coffee, at lunch and twice during the afternoon, before ever getting to dinner (where she heard it again).
Founders have to be resilient and thick-skinned. Prepare yourself to exhaust your network of investors, and accept the fact that fundraising is going to take time, even if that’s a hard pill to swallow.
How To Secure The Magic 6%
The 6% rule can apply in any part of the world, but some places will have to stretch outside their borders to make it work. In the MENA region, fundraising often forces founders to go outside their hometowns and home countries to complete fundraising. Online crowdfunding platforms have been instrumental in removing geopolitical borders stateside, and this will surely benefit the 344 million households in the developing world, too. Regardless of where your investment comes from, you can set workable goals to achieve success under the 6% rule.
Here’s How:
1. Use your unit size to set your investor target list size.
It’s easiest to break the total investment you’re seeking into smaller units for starters. Think back to the example above of the $600,000 investment. If you were aiming for $50,000 units, the 6% rule would require you to talk with 200 qualified investors (assuming each investor bought one unit in the worst-case scenario), or 100 investors at $100,000 unit sizes. You can use the rule and your unit sizes to determine the size of your investor target list.
Egyptian startup Swvl did this when it secured five investors for its $8 million Series A round in April 2018, and the Series B that followed at the end of the year.
Once you determine your list size, create a pitching schedule. Assuming it’s not Ramadan -which tends to bring the investment world to a screeching halt- start pitching five times each week for 20 weeks. Factor in eight weeks of researching targets and eight weeks for term sheets to close the deal, and you’re looking at 36 weeks minimum from start to finish.
2. Be ready with prepped materials.
I always have the staples ready to go during fundraising time. Read Venture Deals by Brad Feld to get your lingo down, and understand the basics, it’s VC 101. Then, put together a pitch deck, a term sheet, a clean cap table, a data room, accurate and up-to-date financial statements, and a financial forecast. Preparation is key to secure and close deals, and doing this homework in advance shows that you know what you’re doing.
Verifiable forecasts coupled with a concrete plan to reach them is what secured Wuzzuf its $8 million investment.
This Egyptian startup bootstrapped its job site and recruiting platform in the aftermath of the 2011 Egyptian revolution.
Having survived the toughest economic conditions, the company is now one of the fastest-growing internet companies in Egypt, with more than 250 employees expecting to help 1 million people get hired by the end of this year.
3. Lose the materials when it’s more about relationships.
Pitch decks are great for angel group presentations and pitch competitions, but I’m not a big fan of bringing all of that to one-on-one pitches. If you’re meeting an investor at your nearest Costa Coffee, pitch without materials.
Building a personal connection is what got Jamalon its $10 million Series B investment, not a stack of papers.
Founder Ala Alsallal credits the mentorship he received from Fadi Ghandour, Aramex founder and Wamda Capital chair, with his success, saying relationships made the difference in getting him where he is today. So put away your computer, break the ice, share your story, and dive into your big vision. If the person shows interest, you can talk about materials.
4. Maintain a pipeline, and take your time.
Organize your resources and manage the investors you talk to in a customer relationship management system or a spreadsheet, just as you would a sales pipeline.
Take a note from the Sandler Training book, and use the “submarine trick,” which is inspired by World War II movies in which crews handle attacks on their submarines by closing the door to each compartment behind them.
Salespeople should close each step completely as they go, that way there’s no risk of needing to turn around, and go back on something that’s already been decided. Never forget that a signed term sheet is engagement, not a marriage.
Definitive documents take time to prepare. Wires take time to transfer. Plan ahead so you don’t run out of cash before you complete your raise.
Ultimately, you won’t fundraise for your startup overnight. And rejections will come. Period. Just remember that even if 94% of investors say “no,” 6% will give you the “yes” you need to make the grind pay off.
Zach Ferres is the CEO, Coplex, a Venture Builder that partners with industry experts and innovative enterprises to start high-growth tech companies.
The startup recently announced a $2.5M equity financing round. The Series Seed Round was led by DFE, the family office of Bennett Dorrance of Campbell Soup fame; and AZ Crown, the family office of Insight Enterprises Co-Founders Tim and Eric Crown.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Kenyan agritech startup Taimba has joined the league of African startup fundraisers. US impact investor Gray Matters Capital is committing $100 000 in the Nairobi-based B2B agritech startup to help it scale its operations.
Here Is The Deal
The investment from Gray Matters Capital was made through its gender lens early-stage fund GMC coLabs.
The startup explained that the markets it wants to take on in Nairobi are Umoja, Kayole, Pipeline/Imara Daima, Kawagware/Waiyaki way, Kahawa west/Githurai, and Southlands/Langata.
Last year, Taimba was one of 15 startups selected to join the Make-IT accelerator.
The startup also emerged the winner of the inaugural Disrupt Africa Live Pitch Competition which was held in Nairobi last year. Taimba also won $10 000 at the 2018 Food+City Challenge Prize at SXSW.
The deal also marks GMC coLabs fourth investment in Africam with investment ticket sizes of up to $250 000. The impact investor’s other investees include Rwanda’s African Renewal Energy Distributor (ARED), Ghana’s Redbird Health Tech and Nigeria’s Sonocare.
In addition, the investor has also supported two other start-ups from the continent — Kenya’s parent advisory turned e-commerce start-up MumsVillageand Sierra Leone based Mosabi as part of its global digital accelerator program — GMC Calibrator earlier this year.
A Look At Taimba
Taimba is a mobile-based platform that connects rural small scale farmers to urban retailers, restaurants, hospitals, and schools in Nairobi.
The startup was founded in 2017 by Dominique Kavuisya and Joan Kavuisya
Taimba aims to remove middlemen, shrink the agricultural value chain, cut wastage and make products more affordable.
Gray Matters Capital said the startup currently works with 2000 farmers as well as 15 farmer savings and credit co-operatives that sell products that include potatoes, tomatoes, cabbages, and carrots.
Informal greengrocers make up the bulk of Taimba’s 310 customers at 85%, this while restaurants and cafes make up 10% of its customer list, with schools and hospitals located outside of Nairobi making up 5% of its clientele.
“The funding is a shot in the arm for us to strengthen our warehouse infrastructure by setting up cold storage facilities and also our delivery logistics so that we can cater to six new markets within Nairobi,” noted Taimba’s CEO Kavuisya.
Outside of Nairobi, Taimba is planning to launch a pilot in Mombasa and Kisumu City by next year. In addition, the startup is also looking to produce new products that include fruits, nuts, and eggs as part of its farm product catalogue.
The startup also has plans to replicate its model in Tanzania, Uganda, Ethiopia, and Rwanda over the next five years.
GMC coLabs portfolio manager Jennifer Soltis said Taimba has built a solution that can be replicated in other markets in East Africa “with minimal tweaks”.
The startup’s first deal which was signed last month marks Taimba’s first investment. The company currently employs a team of seven permanent staff and five part-time workers.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Startups and entrepreneurs in Ethiopia can now have access to a new fund. The Abu Dhabi-based Khalifa Fund for Enterprise Development (KFED) has signed a partnership agreement with the Ethiopian Ministry of Finance aimed at providing over $100 million to help promote a culture of innovation and entrepreneurship in the African country.
A Look At The New Funding
The new agreement, which was signed by Hussain Jasim Al Nowais, chairman, KFED and Admasu Nebebe, Ethiopian Minister of Finance, will help pave the way in enhancing innovation and supporting entrepreneurs in Ethiopia, a statement said.
The funding will be used to implement a series of projects aimed at consolidating the Ethiopian government’s efforts to create a stable and balanced economy while also driving in other benefits like the creation of employment opportunities for the youth, women empowerment and enhanced capacity building for entrepreneurs and local institutions.
The allotted $100 million will be supervised and maintained by the Ministry of Innovation and Technology, in cooperation with KFED.
The proposed fund is expected to play a significant role in reinforcing the Ethiopian government’s move to create economic entities that will be capable of supporting and enhancing the stability of the economy, including the creation of jobs and reducing unemployment and poverty in different cities and regions in Ethiopia.
“Under this agreement, the KFED looks towards providing the vital elements needed in helping Ethiopians realize and establish their own projects which can play a key role in the move to reinforce their national economy,” Admasu Nebebe, Ethiopian Minister of Finance noted.
The latest agreement highlights the growing strategic relationship between the UAE and Ethiopia which also saw the visit of Ethiopian prime minister Abiy Ahmad to the UAE back in March, where he met with the Crown Prince discussing a range of mutual bilateral issues.
Ethiopia Unemployment Rate
The prime minister also just last week announced plans of sending 50,000 workers to the UAE over the next year to help reduce unemployment among skilled Ethiopian nationals.
The Khalifa Fund for Enterprise Development, which was established 12 years ago in Abu Dhabi, supports small and medium enterprises (SMEs) in the UAE and has funded more than 1,600 projects within the UAE and across 20 countries in Asia, Africa, and Europe.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
