New Year – Time to Startup and Grind
January – the time of the year that all our hopes and dreams for the next 12 months are hanging on! You have been looking forward to it for months, and now it’s finally here! With a fresh new list of resolutions minted, it’s clear that all you need to have ringing in your head for the next month are the words : “JUST START” and we are here to ensure you do just that! But, I am here to not only get you to just start, but to get you to Startup and Grind! In order to do so I’d like us to have direction in terms of the intention of this year’s Grind – understanding how Africa Startups attract funding.
2021 ended off as being the year in which the highest amount of funding was pumped into African Startups – $5 billion, according to News24. The most amazing part is that in the previous year African startups raised just $1 billion, meaning this past year alone saw a 400% increase year on year. The amount is not the only mind-blowing figure, what’s is more exciting was that this was only distributed amongst just 800 Startups, meaning only one thing: your startup could be next and 2022 is your year! In order to get you there we intend to walk the journey with you and get you to a point where your venture is eligible to not only access this type of funding, but also courting VCs from all over the world. Throughout this year I will be familiarising you with 100s of different startups from all over Africa which have managed to secure $100K+ in funding. What I will be sharing with you is what most people don’t know about these startups. And that is mostly their Grind, i.e. how long they took to getting to the point where they were able to court VCs and close deals with them.
The goal and intention for this year is to gain an understanding of the African Startups landscape in order to fully grasp what the startup playbook on our continent is. It is definitely not as easy as coming up with an idea with your college roommate and deciding to work on it in your dorm, foregoing your studies and scholarships. Unfortunately, the nuances in Africa involve completing those studies(because Black Tax), working a few years – or more than a few and if you are fortunate; being able to travel to another country to startup there. These are the type of stories I shall be uncovering in the coming year and as time goes we shall get a clearer picture of what is the African Startup Playbook. To give you a taste of what we to expect I am going to start with the darlings of the African Startup scene – a few companies who have changed the game for Africa in the past year:
Nigerian based startup, Opera Pay, better known as OPay, raised $400 million in August 2021 in a series C funding round lead by SoftBank as reported by Bloomberg. The other investors in the round were: Sequoia Capital China, DragonBall Capital, Meituan-Dianping, Redpoint China, Source Code, SoftBank Ventures Asia and 3W Capital. The company was founded in 2018 by the Norway based Opera Software and therefore the founder is considered to be Lars Boilesen, the CEO of Opera. With the current ownership structure the company can be considered to have 0% African ownership. The company currently serves Nigeria and Egypt with its Headquarters being in the former of the two African Nations.
South African digital banking startup, Tyme Bank, raised a total of almost $180 million in 2021 in two stages of their series B capital raise according to IOL. The first of the two deals took place in February 2021 and this saw Tyme Bank raise $109 million from Apis Partners and JG Summit Holdings and they secured $70 million in their second deal which from Tencent and CDC(soon to be British International Investment). Tyme, which is an acronym for “Take Your Money Everywhere”, was originally developed as part of a Deloitte Consulting project, funded by the telecommunications provider, MTN Group. It went on to become a stand-alone business in June 2012 with Coenraad Jonker and Tjaart van der Walt as founders. The Commonwealth Bank of Australia acquired 100% Tyme in 2015 for a reported amount of $23 million. Tyme Bank was officially registered as a bank by the South African Reserve Bank (SARB) in September 2017, a first since 1999. In 2018, financial services company, ARC Imali-Madi (RF), bought a 10% stake in TymeDigital. On 5 November 2018, African Rainbow Capital Financial Services Holdings – owned by South African entrepreneur Patrice Motsepe – obtained approval from the South African Reserve Bank to acquire CBSA’s 90% majority stake in the business. The name of the business was changed in November 2018 from TymeDigital by CommonwealthBank SA to Tyme Bank Limited. African Rainbow Capital remains Tyme’s majority shareholder, with just over 50 percent. Following a period of testing, the bank was officially launched to the public in February 2019. Currently Tyme Global and Tyme Bank jointly have operations in South Africa, Vietnam and Singapore and are expecting to break even in 2022 as they oboard an estimated 5000 customers a day.
Nigeria based Andela ed-tech startup raised $200 million in their series E funding round in September 2021 allowing them to make the magic gallop to unicorn status. The investment was lead by SoftBank Vision Fund and included other VC funds such as: Whale Rock Capital Management, Generation Investment Management, Spark Capital and Chan Zuckerberg Initiative. Founded in 2014 by Iyinoluwa Aboyeji, Nadayar Enegesi, Christina Sass and Jeremy Johnson Andela has grown in leaps and bounds in fulfilling their vision to creating a world where the most talented people can build a career commensurate with their ability – not their race, gender, or geography. Since their founding they have raised a total of $381 million allowing them to fuel their current global expansion and are currently serving 37 countries globally. Their current legal battle with Toptal has not deterred them in anyway – in fact it has spurred them. Techcrunch reported that Toptal, a direct competitor in the remote work sourcing industry, claims that Andela copied their business model my by moving from physical talent hubs to remote talent and poaching talent from them. Investors remain optimistic about Andela as the impact of the work they do is predicted to be fully felt in the years to come.
With large investments into African Startups now being the name of the game 2022 is set to be a year in which trends such as female owned and run startups receive large investments, more local African companies will begin to see the value which local founders are creating and the amount of funding could possible double and exceed $10 billion. With 12 more months to go and burgeoning startup scene – expect more from news and view on tech and startups in Africa from the Startup and Grind Blog.