Weekly Investor Update (May-WeekTwo-2024)

11 min Read May 10, 2024 at 5:00 PM UTC

Monday

Google opens applications for new cohort of Africa AI accelerator

Google Africahas unveiled the commencement of applications for the eighth iteration of its Google for Startups Accelerator Africa program.This year, the program is placing a special emphasis on startups leveraging artificial intelligence (AI) and machine learning (ML) to address significant challenges and unlock new opportunities across the continent.The Accelerator is a three-month virtual program that does not require equity and provides African startups with mentorship, technical support, and access to a global network of experts and investors. Applications are openhereuntil May 20.

AI has the potential to be transformative in Africa and could add as much as $1.3 trillion to the continent’s gross domestic product by 2030, according to McKinsey. That underscores the importance of initiatives like Google in supporting the startups working to ensure Africa does not miss out on the gains of AI. Since its inception in 2018, the program has supported 106 start-ups from 17 different African countries. These startups have collectively secured over $263 million in funding and have generated more than 2,800 direct jobs, according to Google’s reports.

Senegal’s Wave only African startup on YC top earners list

Senegalese fintechWavehas achieved a notable milestone for the second consecutive time, securing its position as the sole African Y Combinator (YC) alumni with the highest revenue on the 2024 list.Although the specific revenue figure remains undisclosed, Wave stands among 47 other companies, including prominent tech entities likeAirbnb,Coinbase, andReddit, collectively generating $57.2 billion in revenue last year.It’s important to recognize that the inclusion of companies in the list was voluntary, suggesting that not every high-performing YC startup from Africa may be represented. Nevertheless, Y Combinator has provided backing to over 100 African companies, with Wave notably being the first recipient of its support.

Wave, a provider of mobile money services, made history in 2021 by becoming the first unicorn from Francophone Africa following a $200 million Series A funding round. The startup, which operates in Senegal, Uganda, Burkina Faso, Cote d’Ivoire, and The Gambia, has quickly gained market traction despite competition from industry giants like Orange. Wave’s innovative pricing strategy, charging just 1% of the transaction value, has significantly disrupted the market where Senegalese residents previously faced fees as high as 10% for similar transactions. This competitive pricing model has enabled Wave to rapidly expand its user base and establish a strong foothold in the mobile money sector across multiple African countries. As one of the most active investors on the continent, Y Combinator has played a pivotal role in supporting the growth of African startups, with investments in over 80 African companies, including notable names like Flutterwave, Paystack, Kobo360, and Cowrywise.

Startups with Africa presence draw 58% of off-grid solar funding

Last year, the off-grid solar sector raised a total of $425 million across 158 deals, with a significant portion—$281 million—coming from debt financing.Sun King,d.light,EngieEnergy Access,M-KOPA, Zola, andBboxxcollectively accounted for 58% of the total investments in the sector. This data underscores that a majority of the funding flowed to startups or scale-ups with operations in Africa.These ventures play a pivotal role in addressing the challenge of energy access. According to theGlobal Off-Grid Lighting Association(GOGLA), they provide products and solutions tailored to meet the needs of communities lacking access to electricity.

Globally, 75% of the population remains without access to electricity, with 46% of those individuals located in Africa. Despite the pressing need for expanded energy access, equity investment in household solar startups has remained relatively low. GOGLA warns that this trend signifies a troubling failure to support the emergence of new companies dedicated to electricity access, which is essential for achieving electrification goals worldwide.

Amazon South Africa launches in play for $3bn e-commerce market

Amazon has launched its long-awaited e-commerce marketplace in South Africa, marking its entry into sub-Saharan Africa. This move comes two years after the tech giantannounced its plans.South Africa becomesAmazon’s first marketplacein the sub-Saharan region, complementing its existing operation in Egypt following the acquisition of Souq in 2017. Notably, the launch does not include its famous Prime membership program.In South Africa,Amazonwill face competition from local players such asTakealot(majority-owned by media giant Naspers),Makro, and Bob Group’sbidorbuy. These competitors have already established a presence in the country, tapping into an e-commerce market estimated to generate $3 billion in revenue annually.

South Africa, often regarded as Africa’s most advanced economy, has historically been viewed as an attractive entry point for companies seeking to expand into the continent and Amazon’s service in the country comes at a time when it has experienced a significant increase in online shopping, particularly following the pandemic. More so, the retail sector in South Africa is growing and evolving, attracting international fast-fashion e-commerce retailers such as Shein and Temu. These companies have experienced rapid growth driven by strong demand for their affordably priced apparel. Temu, in particular, launched in South Africa earlier this year, capitalizing on the country’s expanding e-commerce market. Retailers in South Africa are also intensifying their investments in e-commerce infrastructure as internet connectivity and smartphone penetration rates continue to rise in the country.

Accel leads $4m round in Egyptian corporate cards platform Swypex

Swypex, an Egyptian fintech that provides corporate cards and management solutions for businesses, has secured $4 million in seed funding.This funding round was led byAccel, a renowned venture capital firm based in the United States, with participation from other investors such asFoundation Ventures,The Raba Partnership, and several angel investors.With this fresh infusion of capital, Swypex aims to boost both the business and technical aspects of its platform. The fintech, which is two years old, plans to leverage these funds to enhance its platform’s functionality and scale its operations to better serve its clientele.

The Egyptian market has witnessed a notable uptick in card usage, with more than 30 million cards in circulation. Prepaid cards, in particular, have seen a surge in usage, surpassing both debit and credit cards combined. This growth, amounting to around 14% over the past four years, can be attributed to the incentives introduced by fintech companies and banks. These incentives have enticed millions of Egyptian consumers who previously relied heavily on cash for their transactions. However, the adoption of corporate cards presents a different narrative. Despite the rise in card usage among individuals, businesses of all sizes have been hesitant to embrace corporate cards due to limited access and inadequate spending controls. Traditionally, banks have been the main providers of corporate cards in Egypt. However, fintech companies are now entering the market to address these challenges and drive increased adoption of corporate cards among businesses.

Seamfix secures $4.5m in debut funding to expand beyond Nigeria

Seamfix, a veteran identity solutions company with 17 years of experience, has secured $4.5 million in funding fromAlitheia IDF, marking its first institutional investor. The investment comes as Seamfix aims to expand beyond Nigeria.Specializing indigital identity creation and verificationfor large organizations and governments across Africa, Seamfix also offers transaction accreditation solutions to its clientele. Already established in Uganda, Cote d’Ivoire, and Ethiopia, the company also has a partnership with MTN, providing identity solutions in regions where the telco operates.The funding round is earmarked for Seamfix’s expansion into more stable African markets, driven by the impact of naira fluctuations on its dollar revenue growth. With plans to enter Ghana, Kenya, and South Africa, Seamfix seeks to solidify its position and broaden its impact across the continent.

Indeed, the issue of digital identity poses a significant challenge in Africa, where a staggering 542 million individuals lack identity cards. Bridging this identity gap holds immense potential, with estimates suggesting that addressing this issue could spur GDP growth by up to 7%. However, the task comes with a considerable price tag, estimated at around $6 billion. Digital identity and verification systems play a pivotal role in unlocking substantial economic value across Africa’s burgeoning and progressively digital societies. These systems are instrumental in facilitating financial inclusion, streamlining government services, enhancing public health initiatives, and fostering job creation. As such, they serve as a cornerstone for driving economic growth and development across the continent.

Inflation in Egypt slows again as foreign currency crunch eases

In April, Egyptian inflation continued its deceleration trend for the second consecutive month, buoyed by increased availability of foreign exchange following a recentcurrency flotation, which seemed to alleviate some of the price pressures in the region’s most populous country.According to data from Egypt’s statistics agency CAPMAS, the annual urban consumer price inflation rate dipped to 32.5% in April from 33.3% in March, indicating a continuation of the downward trend observed since September, when inflation peaked at 38.0%.On a month-on-month basis, prices saw a 1.1% increase in April, up from the 1.0% rise recorded in March. Notably, food prices experienced a decline of 0.9% in April, although they remained significantly elevated, standing 40.5% higher compared to the same period last year.

Inflation in Egypt has remained elevated over the past year, primarily fueled by the rapid expansion of the money supply. In response to this persistent inflationary pressure, the central bank took decisive action by tightening its monetary policy. This included a significant increase in interest rates by 600 basis points on March 6, coinciding with the signing of a $8 billion financial support package with the IMF, and allowing the currency to depreciate. Egypt also pledged to resume tightening its monetary policy if deemed necessary to prevent further erosion of households’ purchasing power. Additionally, the government implemented measures to address inflationary concerns, such as increasing the prices of various fuels including petrol and diesel.

South African fintech Lesaka snaps up Adumo in $86m deal

Lesaka Technologies, a fintech company headquartered in South Africa, has entered into a definitive agreement to acquireAdumo, a payments startup also based in the country, in a deal said to be valued at around $85.9 million.The acquisition, expected to close in the third quarter of 2024, is contingent upon approval from shareholders and regulatory authorities. Under the terms of the agreement, the transaction will be completed using a combination of $12.5 million in cash and the issuance of 17,279,803 shares of Lesaka common stock to Adumo’s current “ultimate” shareholders.The cash portion of the deal will be financed through a combination of external financing and internal cash reserves. Adumo’s “ultimate” shareholders include Apis Growth Fund I, a private equity fund managed by UK-based VCApis Partners, andAfrican Rainbow Capital(ARC), a South African investment firm.

This acquisition solidifies Lesaka’s position as a significant player in the Southern African fintech sector. With the combined resources, the entity will now cater to over 1.7 million active consumers and 119,000 merchants spread across five countries: South Africa, Namibia, Botswana, Zambia, and Kenya. Following its $15 million funding round from IFC in 2021, Adumo embarked on an acquisition spree, acquiring companies such as SwitchPay, WireCard, GAAP, SureSwipe, iKhokha, and several other smaller payment firms.Africa is anticipated to experience rapid growth in the fintech market throughout this decade, with a projected fintech revenue compound annual growth rate (CAGR) of 32% until 2030. This growth will be driven by the establishment of new ventures as well as the consolidation of both smaller and larger players in the industry.

Axmed raises $2m seed to boost medicine supply in emerging markets

Axmed, a B2B marketplace, has secured $2 million in seed funding fromFounderful Venturesto support its mission of connecting manufacturers with health institutions to address inefficiencies leading to shortages, high costs, and counterfeit drugs proliferation in the healthcare sector.The startup aims to achieve this goal by aggregating demand, allowing buyers to source drugs directly from manufacturers at reduced costs, and bypassing the traditional pharmaceutical supply chains characterized by multiple intermediaries. Both sellers and buyers in the marketplace must meet various regulatory and legal requirements to participate in trading.Initially focusing on markets such as Kenya, Nigeria, Ethiopia, Tanzania, and Rwanda, Axmed plans to target faith-based institutions, non-governmental organizations, government-led care providers, and procurement agencies to establish its presence and drive the adoption of its platform.

The global challenge of access to quality and affordable essential medicines affects around 2 billion people, particularly those in lower and middle-income countries. This issue is compounded by the presence of low-quality or counterfeit drugs, which further exacerbate health risks and contribute to preventable diseases and fatalities. Axmed aims to address this problem by tackling supply chain fragmentation in the pharmaceutical sector. In doing so, Axmed joins a growing cohort of platforms like Africa Medicines Supply Platform and Xs2Meds, as well as healthtech firms such as Drugstoc and Remedial Health. Together, these entities are leveraging digital solutions to streamline the pharmaceutical supply chain, enhance sourcing and distribution processes, and ultimately improve access to vital medications for pharmacies and healthcare institutions, including hospitals.

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