1 October 2017

Kenya's Number Two in the Ride Market, Start-Up Little Eyes 8-10 New African Markets and Is Raising U.S.$100 Million for Expansion

The large international start-ups like Jumia and Uber may attract the lion's share of the investment but they're not having it all their own way. Craft Silicon launched Kenyan start-up Little to compete with Uber. Russell Southwood talked to Kamal Budhabatti about his ambitions for Little and how it fits into the payment system ecosystem he is building with Craft Silicon.

Kamal Budhabatti launched Little because he thought he could do it better than Uber:"We saw there was an opportunity with the things that were happening on Uber. But the drivers didn't always like what Uber was doing so we wanted to build a product that was appreciated by drivers. It would be an Uber for Africa. We ran a small pilot and it worked out well so we launched 8 months back".

Little takes 15% from its drivers that is probably less than Uber is charging them:"Drivers can withdraw money from their Little wallet at any time. They go to the app and move money to their mobile money account."

According to Tech Loy, it has also said in February 2017 that it will launch a mobile phone-based Savings and Credit Co-operative Society (Sacco). Known as Little Sacco, it would be the first virtual Sacco in Kenya, and on the continent, when launched, and will cover Little's 5,000 drivers.

The Little app works in a very similar way to Uber's but has several significant differences. It can be used on pretty much all phones as it's not just a smartphone app but also can work with USSD by dialing a short code. The call to the short code generates a menu and the call uses adjacent cell towers to triangulate where the rider is. It also has a wallet that comes with the app and this means a rider can pay for a ride and send it to someone else. The rider can also use the app on Facebook Messenger and Little has got an IoT device that you can stick on a fridge and just press a button to get a cab.

Using this combination of smart, feature and basic phone users, it has got to the number two position behind Uber in Kenya. In doing so, it has attracted close to quarter of a million riders. There are two other ride apps in the market: Mondo Ride from the Middle East and Taxify from Estonia. Chinese billionaire Jack Ma has invested in Taxify Kenya's parent company through a ride company he partly owns called Didi Chuxing.

Little's parent company Craft Silicon is probably the second biggest payments processor in Kenya after Safaricom's M-Pesa. Last year it handled US$4.4 billion in payments. It does between 1-1.5 million transactions a day and has 9-10 million active customers.

So how does Little as a start-up fit into this kind of payment processor play?:"We wanted to start building verticals. So we launched Little for rides. We've invested (US$0.5 million) in Eat Out Kenya for hospitality and we'll be launching something in the healthcare space." It also wants to roll out the Little as a fintech product as "a small bank that sits inside the wallet."

Thus far Craft Silicon has self-funded these verticals but it is out in the market looking for US$100 million series B funding to expand Little across the continent. It's already started in Nigeria where it's carrying out tests and will do the same in Ghana before too long. It's also looking at a couple of countries in both Southern Africa and Francophone Africa so that it will then have an 8-10 country presence by mid next year.

As Budhabatti told me, the biggest challenge has been going from a B2B business with Craft Silicon to B2C with the new start-ups:"These are market businesses, transacting directly with customers. So we've had to learn from the experience. You need enough money to promote the product in the right way."

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