TechCabal Daily – African founders backing each other

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AFRICAN FOUNDERS LEAD PAYHIPPO’S $3M SEED INVESTMENT

There’s a new exciting trend in the African tech ecosystem: African founders backing fellow founders especially in pre-seed and seed funding, which is an indication that the African tech ecosystem is maturing.

Yesterday, Payhippo, a fintech startup providing capital for small businesses in Nigeria, was another example of the existence of this trend when it announced that it has closed $3 million in seed funding, led by a number of African tech founders.

The round was led by Ham Serunjogi and Maijid Moujaled, co-founders Chipper Cash; Olugbenga Agboola, co-founder Flutterwave; Bolaji Balogun, CEO Chapel Hill Denham; and Hakeem Belo-Osagie, founder Metis Capital Partners.

Angel investors from Paystack, Brex and Tala also participated in the round. TEN13, VentureSouq, and Prodigio Capital were the only institutional ventures that wrote a cheque for this round.

This investment is coming barely five months after the startup raised a $1 million institutional pre-seed. Besides earlier undisclosed capital raised from friends and family, the company’s total fund raised is now at $4 million.

Read on: African founders lead Payhippo’s $3m seed investment

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MOVING MONEY IN AND OUT OF AFRICA

When Africans want to send or receive money to or from their family, dependents, children studying overseas, or businesses domiciled in Africa, they have few options and encounter problems.

Western Union, PayPal and MoneyGram are some of the products Africans use to process payments, but these options are typically expensive, take weeks to process payments and restrict customers from certain locations from using their services. For example, PayPal allows Africans living in Africa to receive but not send money.

Enter Lemonade Finance

Founded in October 2020 by Ridwan Olalere, who used to be Country Head of Uber Nigeria, and Rian Cochran, former Director of Finance at Opera Software AS, Lemonade Finance was built to be “a borderless money app for Africans”.

“Before now, when Africans living in Africa moved to the diaspora, they could only create a bank account with the currency of their new country or the US dollar. While some can use their phone numbers to operate an African bank account, like with Guaranty Trust Bank (GTB), others have to travel back home to renew their token,” said Olalere.

In this article, Sultan explains
how Lemonade Finance, which just raised $725,000 in pre-seed funding, is serving Africa’s diaspora remittance needs.

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AFRICAN FINTECH’S INTRA-CONTINENTAL EXPANSION TARGETS SMEs

In the last month alone, a number of startups have either raised growth funds, acquired another player present in regional markets within the same vertical, or tapped top talent in the telecoms industry. Their intention appears to be the targeting of small industries and traders seeking cross-border opportunities in new African markets.

Some fintechs riding on this trend are:

  • Kenya’s Asante Financial Services Group. They are focused on supporting the growth of micro, small and medium enterprises (MSME’s) in Kenya and Uganda, and have raised $7.5 million series A funding and expanded into Nigeria and Rwanda.
  • Tala. They operate in Kenya, Nigeria and Tanzania and have begun a “Rebuild Fund Business Programme” targeting Kenya’s hard-hit micro, small and medium-sized enterprises, to help them build back better post-COVID-19 pandemic. This comes after the company raised $145 million.
  • MFS Africa. They are also making inroads in Nigeria through the acquisition of Baxi, a Nigerian startup with a 90,000-agent network. The October move gives Nigerian SMEs listed on Baxi access to MFS Africa’s multiple mobile money payment wallets, currently serving up to 320 million customers in more than 35 African countries.
  • Yabx, with a presence in 12 African countries, recently tapped a telecoms industry expert with over 15 years of experience as a new director for its business.

Read on: A surge in African fintech’s intra-continental expansion to target SMEs.

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AI UNICORNS SEEM UNAFFECTED BY CHINESE GOVERNMENT CLAMPDOWN

The past year has been discomforting for Chinese tech companies, but it looks like artificial intelligence (AI) unicorns aren’t feeling the heat.

Tell me more

In November 2020, the Chinese government began clamping down on tech companies by ordering Ant Group to cancel its hotly anticipated IPO, at the last minute. And, earlier this year, ByteDance, owners of TikTok, shelved their plans to go public shortly after Chinese regulators removed the app of ride-hailing company Didi (which went public) from Chinese app stores.

Other tech companies in entertainment, food delivery, education, and recruitment space have also been affected.

But…

In the midst of these clampdowns, two giants of China’s artificial intelligence industry, SenseTime and Megvii, are proceeding with plans for IPOs, seemingly unbothered, with listings on the Hong Kong and Shanghai stock exchanges, respectively.

Why?

One potential reason is they are aligned with the government. Per
Wired
, the two companies are notable providers of facial recognition technology to both the private sector in China and public entities like city police departments. SenseTime says in its
IPO prospectus
that during the first six months of this year, nearly 48% of its revenue came from its Smart City business, which involves selling services such as surveillance and traffic management technology to local governments.

Dig Deeper:
Even as China Cracks Down on Tech, AI Companies Plan IPOs.

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