Africa Tech Summit goes from strength to strength as an event bringing together successful start-ups, new contenders and key investors. Russell Southwood picks his way through the menu on offer.
Two of the key events in the African start-ups investment circuit seem to go from strength to strength. This year's Afrobytes was held at Paris' massive start-up hub Station F and drew large crowds. Its London equivalent Africa Tech Summit was held yesterday (June 11) and drew what looked like its largest audience yet.
I wouldn't usually start a report by describing the sponsor's speech but when it's Facebook I make an exception. Its Public Policy Manager, Africa, Access and Connectivity Kojo Boayake described what it's doing on the continent to help start-ups and it was all interesting. (Note to other event sponsors: have something to say and stay on topic). Boayake hobbled to the stage because he'd injured his foot but didn't let that break his stride.
He spoke about Facebook Connectivity, its arm for investing in connectivity infrastructure, which - among other things - is working with Main One to roll-out more fibre connectivity in Nigeria and has invested in local Wi-Fi hot-spot start-up Tizeti. It has also made fibre investments in Airtel (in Uganda) and BCS. The representative from Nigeria's Ogun State featured in the video he showed said:"In 10-15 years time, it (the internet) will have transformed society".
It has launched a start-up assistance programme called FloStartAccelerator@Ng_Hub to provide non-equity funding for start-ups and students and will roll it out in other countries on the continent in partnership with other players in the ecosystem. It also claims to have trained 66,000 African developers with new skills and helped 50,000 young entrepreneurs through #SheMeansBusiness.
All this is good business for Facebook as 145 million people a month connect to its various apps across Africa It has also introduced an insights product called Cross Border Insights Finder which can help African start-ups find buyers for their products globally. It can look at your existing buyers and find people with similar characteristics in other countries. Indeed the second Facebook session focused on helping African start-ups to sell globally. An interesting global stat was that 70% of purchases were made from an international site in 2017.
Tedd George chaired the Blockchain and Crypto for Africa described himself as a "sceptical enthusiast". He asked for a show of hands for different options: broadly, want to know more, want to understand more and have heard more than enough already. I was tempted to raise my hand for the last proposition but the absence of other hands made me shy. Blockchain and Crypto currency are doubtless important for Africa but as with teenagers, there is lot more talk about sex than actually doing it.
One of the early pioneers, Elizabeth Rossiello, BitPesa said that when they first talked to the Central Bank of Kenya:"They looked at us like 'what space ship did you get off?'". Kenya subsequently banned bitcoin but a number of other African countries have taken a more sympathetic approach. She commended South Africa's Central Bank which she said had issued a number of interesting White Papers on the topic:"There's a lot of fluff and crazy stuff but if you're an investor or entrepreneur, you need to get out there."
Tedd George pointed out that only 3% of people used bitcoin for actual transactions but the pushback argument was that it was really a store of value: in other words, it was investors. Making transactions on bitcoin is very slow compared to other methods. Rossiello pointed out that when a German company working with Jumia to supply merchants with credit approached BitPesa:"(The partnership) was all done in two weeks because we all had interoperable systems." This seemed to me more like an argument for digitally interoperable systems than bitcoin itself.
So what of Blockchain, the quieter and often more modest cousin of crypto currency? Rossiello said there were several banks operating private blockchains and there are examples of blockchain being used for information tracking. But my later conversation with Ola Oyetayo, Verto who pairs organizations that want to exchange currencies (initially it was Nairas and dollars but later other currencies) struck me as more rooted in the day-to-day realities of the continent.
Because not everything seems to happen fast on the continent. Two start-ups I saw last year at Africa Tech Summit and Afrobytes were back again still looking for funding and both are interesting ideas. Karanvir Singh, CEO, Yegomoto was back pitching his version of ride hailing and looking for US$15 million. He argued that Uber had actually made drivers poorer and that his approach would do the reverse using intelligent connected meters. The other start-up pitching was Dayo Akinrinade, founder of African and Caribbean dating site Africlick. Its USP is that it is culturally sensitive to things that matter to African and Caribbean daters.
The Fintech panel opened with the Chair noting that US$500 million had been invested in the sector in 2018. Saad Sheikh, TLG Capital noted that m-money has been more successful in East than West Africa and it is "investing in these landscapes." The big announcement of the session was on 1 October this year that US investment agency OPIC (represented by Richard Woodhull) will be recreated as something called DFC and its investment cap will be increased to US$60 billion and the requirement for a US shareholder will be removed.
In other news, O, Global Partnerships and Expansion, Flutterwave said that it had gone into Zambia with a local partner rather than trying to set up its own operation and that in the future:"I hope and wish to do more of that".
In the New Wave: Mobile Financial Services, Credit and Data for African Consumers, Chijoke Dozie, OneFi/Carbon highlighted the credit disparity for individuals. When he was in the UK HSBC sent him a card offering him a GBP1,500 credit limit but that getting credit in Nigeria and elsewhere in Africa was extremely difficult even if you're earning. Some banks in Cote d'Ivoire actually charge 10 euros a month to have a bank account and others charge for account balance enquiries. And as Maria Rotilu, General Manager, Branch International said:"On our platform, you can access a loan in a minute."
Christos Thomaras, CFO Jumo argued that its business model had lower overheads so it would be able to address those who are financially excluded more easily than banks. But this was not the only difference:"60% of our staffing is feature creation technologists and that's very different to a bank." It does both loans and savings and claims a 92% repeat rate from customers.
Tunde Kehinde, Co-Founder, Lidya made a version of the same point:"It's impossible for everyone to solve everything. We focus on a single problem. We loan as little as US$150 to an SME. We don't have to be in every location if we use data (to assess our customers' loan requests)."
The Venture Capital: Raising Returns and Exits Panel wrestled with the difficulties investors have with African start-ups and vice-versa. Tokunboh Ishmael, Co-Founder, Alitheia Capital said that African founders often looked for money too early before they had worked out the business idea:"They are not asking what does the customer want and what does he or she need. These are not always the same thing." She also stressed that start-up founders need to focus on a single product:"Do one thing extremely well. Anything new needs to be complementary so you don't take your eye off the ball."
Eline Blaauboer, Co-Founder and Managing Partner, African Tech Venture cautioned against expanding too quickly:"Cellulant expanded too quickly... Sendy wanted to expand to East Africa and we said no, let's just do Nairobi (initially) but it has now expanded into several other countries".
From the start-up perspective, Christina Sass, Co-Founder, Andela observed that:"If you don't want to scale, you should rethink. Working with VCs is like a marriage, you're stuck with each other for a long time."