Hi, Quartz Africa readers!
Mind the gap
The first decade of Africa’s tech startup funding has been led by angel and early stage investors. Most of the funding was relatively modest in the early days but it helped entrepreneurs and local ecosystems get off the ground even when there was limited infrastructure or market capacity.
Entrepreneurs would usually get funding from $10,000 to $50,000 as angel investors and others backers spread their bets. That same level of investment still happened even after tech hubs and incubators began to proliferate around the big cities. For a few years it felt like six-figure deals were rare and deals over $1 million were the African unicorns we mythologize, but over the last 12 to 18 months that’s been changing.
The biggest startup ecosystems are moving to the next stage of maturity. We’re finally starting to see an almost regular flow of Series A fund deals come to fruition. This week, TradeDepot, a Lagos-based software-as-a-service platform for FMCG distribution, banked $3 million in Series A funding led by Partech Ventures. Over in Nairobi, Africa’s Talking, a provider of access to telecom operators’ communication and payment APIs, raised $8.6 million in Series A funding led by IFC World Bank, Social Capital and Orange Digital Ventures.
There will be more deals of this size as there are more African-focused funds being raised to support startups into Series A and Series B rounds and beyond. Entrepreneurs have complained over the last couple of years that while there have been options for seed funding from $50,000 up to $500,000 there have been few options for funding between $1 million and $5 million in Africa as they try to “scale up”.
It’s important to note there has been investment available for more mature larger businesses from private equity funds at $10 million and above. So you could say there has been an underserved gap in the market.
Investors have been listening. In January, Paris-based Partech launched an Africa Fund in Dakar with a target size of 100 million euros ($120 million). TLcom, a European VC, raised $40 million for its Tide Africa Fund last June, and in the last week led a $3.5 million round in mSurvey, a Nairobi-based mobile survey platform. Last month it led a $5 million round in Terragon, a Nigerian mobile marketing company.
Eric Osiakwan of Accra-based Chanzo Capital says the market is ready now to help startups get to the next stage. His firm is currently working on raising its largest fund to date to help local startups grow by expanding across Africa. It’s anticipating funding rounds in the $1 million to $5 million (or more) range. “For us the fund is not just about writing checks, it’s about bringing smart capital to help management execute and scale up with our expertise and support.”
— Yinka Adegoke, Quartz Africa editor
Stories from this week
Dear president, Nigeria’s youth aren’t lazy but they are uneducated, thanks to an education crisis. Speaking at a conference in London this month, president Buhari described Nigeria’s youth as entitled, unemployed and uneducated and sparked outrage back home. But Feyi Fawehinmi digs into the data and finds that the president is partly right, but his government hasn’t done enough yet to address a growing education crisis.
There’s a troubling link between the rise in online betting and mobile money’s growth in Africa. Mobile money services have created new opportunities for merchants , including those in the fast-growing sports betting sector. The unintended consequence of this, writes Victor Odundo Owuor, is that already impoverished youth in some African cities find it easier get addicted to gambling.
African immigrants are better educated than native-born Americans and Europeans. Analysis of population trends across the US and Europe shows African immigrants in major countries are usually more likely to be better educated than native-born populations—the only exception is Italy. In some cases, migration policies in countries such as the US are a factor in a higher education level of African immigrants.
How two South African women stopped Zuma and Putin’s $76 billion nuclear deal. The deal to build a Russian-run nuclear energy plant would have gone ahead if it weren’t for Makoma Lekalakala and Liz McDaid. They were awarded the Goldman Environmental Prize this week for their work, but as Lynsey Chutel writes the activists are still wary of nuclear energy in South Africa.
Britain has apologized for its colonial-era anti-gay laws but it won’t help African LGBT communities. It was historic when British prime minister Theresa May apologized to the citizens of Commonwealth nations for inflicting colonial-era anti-gay laws. Yet, May’s ‘deep regret’ won’t move the needle for African LGBT communities, writes Frankie Edozien. Instead, the prime minister should have condemned the governments who continue to use these laws to oppress them.
How a Ghanaian entrepreneur uses recycled plastic to make cheaper roads and building blocks. Ghana’s cities have a sanitation problem that costs the country $290 million each year and tons of clogged plastic. Kwasi Gyamfi Asiedu spoke with innovator, Nelson Boateng, who began working in a plastic factory at the age of 13, and now turns unwanted plastic into cheaper and durable pavement blocks.
Chart of the Week
African businesses are driving economic integration on the continent faster than policymakers. Economic integration across the continent is “gathering speed” and it’s driven by Africa’s top companies, finds Boston Consulting. This progress has come despite the continent’s logistical challenges and is dominated by Africa’s most advanced economy. As Yomi Kazeem reports, this integration shows what could happen if policymakers caught up.
Other Things We Liked
Who gets to picture and narrate Africa? For Al Jazeera, M Neelika Jayawardane examines how African photo journalists still struggle with exclusion and marginalization by major press organizations and award programs. Respected photographers, photo editors, and powerful media houses “get to choose who photographs and narrates the experiences of those who the geopolitical west has seen as “other”.”
The 1980s Sudanese holiday resort that was a front for Mossad rescue operations. Arous Village, a resort on the shores of the Red Sea popular among foreign diplomats and military, was actually a cover for several covert humanitarian missions by Israel’s spy agency to rescue stranded Ethiopian Jews. Through several clandestine flights and ship voyages, 18,000 Ethiopian Jews were rescued until Mossad shut down the operation in 1985, as Raffi Berg reports for the BBC.
Keep an eye on
Nigeria’s president Muhammadu Buhari visits the White House (Apr. 30). Buhari will meet his US counterpart president Donald Trump just weeks after the US secretary of state Rex Tillerson was fired while on his only Africa official tour.
Dak’Art: African Contemporary Art Biennale (May 3-Jun. 2). One of Africa’s most prominent art fairs, the takes place in Dakar, Senegal. This year’s theme is the “Red Hour”, borrowed from the writing of Aimé Césaire, with the international exhibition inspired by Frantz Fanon’s ideas.
*This brief was produced while listening to One Love by Onyeka Onwenu (Nigeria).
Our best wishes for a productive and thought-filled week ahead. Please send any news, comments, suggestions, best use of recycled plastic and your list of favorite Francophone African films to email@example.com. You can follow us on Twitter at @qzafrica for updates throughout the day. This newsletter was compiled by Lynsey Chutel and Yomi Kazeem and edited by Yinka Adegoke.
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