Uprise.Africa to refund all investors in R4.2m Sun Exchange crowdfunding campaign

SA equity crowdfunding platform Uprise.Africa has taken a decision to refund all 288 shareholders that took part in SA startup Sun Exchange‘s crowdfunding campaign last year.

The blockchain-based solar panel micro-leasing marketplace raised over R4.2-million through the campaign which concluded in 30 November last year (see this story).

The platform and the startup put the decision down to delays from the Reserve Bank and Companies and Intellectual Properties Commission (CIPC).

However, the latest news comes just days after the African Crowdfunding Association (ACfA) revealed that it was conducting a review of Uprise.Africa after an exposé by Ventureburn on the platform, its head Tabassum Qadir and a R25-million fake pledge made to SA startup Intergreatme (see this story).

The latest news comes just days after the African Crowdfunding Association revealed that it was conducting a review of Uprise.Africa after an exposé by Ventureburn

Uprise.Africa said in a statement today that while the prospectus for the campaign had been completed for Sun Exchange’s campaign, it still needed to be registered and filed with the CIPC for a formal public offering.

The step, it said, would have been the final stage of the review and approval process before Uprise.Africa issued the prospectus and subscription agreement, and then, share certificates to shareholders.

However, it said because of South Africa’s lockdown due to the Covid-19 pandemic, there has been limited access to government departments, including the CIPC.

“At this point in time, we do not have clarity on when normality will resume with regards to halted commercial and civil activities, nor do we know what the timescales will be on the filing process with CIPC.

“It is with these uncertainties and unprecedented changes to the world in mind, that the Uprise.Africa board has taken the decision to refund all investments made during our Sun Exchange equity crowdfunding campaign,” it said.

In a subsequent call with Ventureburn, The Sun Exchange founder Abraham Cambridge (pictured above) said the decision by Uprise.Africa to refund investor’s in The Sun Exchange’s campaign, came after discussions he held last week with the platform.

While he echoed Uprise.Africa that the discussions emanated after a prolonged closing period and delays in the share subscription registration and subsequent filing with the CIPC, he added that there were also delays in the approvals with the SA Reserve Bank (as the investment involved a US entity).

He said the refund will be made from Uprise.Africa’s trust account, where funds have been held since the pledges were made.

“It’s unfortunate that the deal did not ultimately go through. Sun Exchange worked hard with Uprise.Africa for months to prepare the prospectus and share subscription agreements, as we were eager to have the individuals who participated in the campaign join us as investors and partners,” he said.

However, commenting on the timing of Uprise.Africa’s decision and it coming after ACfA said it would probe the platform, Cambridge said there was nothing untoward in his experience with the platform. “From my experience it’s been fine,” he added.

‘Uprise Africa remains compliant with code’

Meanwhile, Uprise.Africa said in a statement yesterday that the ACfA had completed a review of Uprise.Africa’s compliance with its code of good conduct and is “satisfied” that Uprise.Africa remains compliant with its code.

While, the ACfA has yet to issue a promised statement, Uprise.Africa said the review process included members of the board, executive management, and compliance teams of Uprise.Africa.

“The review resulted in recommendations for Uprise.Africa in the areas of risk management and communication. In all other respects, ACfA is satisfied that Uprise.Africa remains compliant with our COGC,” Uprise.Africa said in its statement.

Read more: African Crowdfunding Association probing controversial Uprise.Africa
Read more: Questions for Uprise.Africa over alleged fake R25m Intergreatme crowdfunding pledge
Read more: The Sun Exchange raises over R4.2m against R7m target, as crowdfunding campaign closes

Featured image: Sun Exchange founder Abraham Cambridge (Facebook)

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Gold – the solution to a $5,300,000,000,000 money printing problem

A decade’s worth of US job gains has now been wiped out in under two months. The latest jobs losses are the worst monthly figure on record. 

Supplied

In South Africa, the economic outlook is also worsening with Investec saying 50% unemployment is possible and that 54% of businesses may no longer exist by the end of the year if the lockdown continues. A GDP contraction of over 14.0% for 2020 is now a real possibility.

So, what have governments done?

This year a global total of $3.9 trillion (6.6% of global GDP) has been magically created through quantitative easing. 

What’s crazy is this figure is expected to go as high as $5.3 trillion by year-end

That’s $5,300,000,000,000…

Why is this a problem?

A rising currency supply is the root cause of price inflation — an increase in the price of goods and services, decreasing the buying power of your hard-earned money.

Until 1971, there was some gold backing left in the system which prevented excessive inflation like this.

This meant that the value of money was backed by the value of gold. Since this backing has been removed, the value of gold has risen — because its supply is limited — while some currencies have been devalued as more and more money has been magically created through quantitative easing.

Legendary U.S. hedge fund investor Paul Tutor Jones recently had the following to say:

“It [the printing of new money] has happened globally with such speed that even a market veteran like myself was left speechless. We are witnessing the Great Monetary Inflation — an unprecedented expansion of every form of money unlike anything the developed world has ever seen. I still remain a fan of gold. I predict it could also rally to $2,400 and possibly to $6,700 if we went back to the 1980 extremes.”

Sean Sanders, CFA Charterholder and CEO of investment platform Revix added: “The loss of confidence in governments, rock bottom consumer sentiment and unprecedented money printing response from governments is why it’s critically important today more than ever to hold inflationary hedges like gold in your investment portfolio.”

Invest in PAX Gold risk-free for up to 6 weeks

Why invest in gold?

Gold is a safety net in terms of economic uncertainty and it acts as a hedge against inflation thanks to its limited supply and long trading history. So unlike central banks who are printing money at unprecedented levels, gold’s supply remains steady.

This means gold acts as a rand hedge and is widely recommended as part of a diversified portfolio. It’s one of a handful of investments with a positive return in 2020 — gold prices are around $1,750 an ounce and have gained 16.4% so far in 2020 and 37.4% over the past 12 months.

Revix, the fintech backed by JSE-listed Sabvest, is offering customers a remarkable gold investment offer.

Sign up to Revix using the code GOLD and they will fully guarantee your gold investment for one week

Then for every friend you refer to the platform, Revix will give you both an added week completely risk-free. You can get up to 6 weeks of risk-free investing by inviting friends to invest in gold too.

At the end of your risk-free period, if your investment has increased in value, the profits are all yours. If your investment declines below the amount you deposited, Revix will top-up your account back to its starting value. You are then welcome to withdraw your investment at any time after the promotion is complete.

Click here to learn more

About Revix

Revix brings simplicity, trust and great customer service to the investing space. Revix’s easy to use online platform enables anyone to own the world’s top crypto assets in just a few clicks.

For more information, please visit www.revix.com

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Naspers Foundry to invest R100m in SA’s Aerobotics

Tech giant Naspers has announced today that it will invest R100-million in SA aerial-data analytics startup Aerobotics, through its early-stage business funding initiative Naspers Foundry.

The investment is pending approval by local regulatory authorities.

Aerobotics is a subscription-based artificial intelligence (AI) company that provides intelligent tools for the agricultural industry to manage its crops.

The startup was founded by Benji Meltzer and James Paterson (pictured above, left to right) in 2014, is a leader in the application of artificial intelligence (AI) in agriculture.

Naspers’s R100-million in agritech startup Aerobotics is subject to approval by regulatory authorities

The insights Aerobotics provides to its clients include tree counts, the identification of missing trees, and the size and health of trees. The company has progressed its technology to engineer fruit counts, and to provide data on fruit size and colour.

Farmers use the intelligence to manage their farms, trees and fruit more efficiently. Aerobotics delivers the insights
through their proprietary Aeroview platform and Aeroview InField mobile app.

Naspers South Africa CEO Phuthi Mahanyele-Dabengwa stressed the importance of food security which has been highlighted further in the wake of the Covid-19 pandemic.

“This young, all South African team, has produced a world-class technology solution in South Africa
and has also successfully entered the US market where they are gaining momentum.

“This type of tech innovation addresses societal challenges, and is exactly the type of early-stage company that Naspers Foundry looks to back,” she said.

R29m Paper Plane Investment

Today’s announcement, follows Aerobotic’s announcement in February last year that it had received R29-million ($2-million) in investment from SA venture capital (VC) company Paper Plane Ventures (see this story).

In November last year Aerobotics was named the Best Startup and Venture Capital Company category at the 2019 Southern African Venture Capital and Private Equity Association (SavcaIndustry Awards (see this story).

Naspers Foundry, which was announced at the end of 2018, is a R1.4-billion initiative aimed at strengthening the SA tech sector by providing funding to talented and ambitious technology founders and entrepreneurs.

Last year, the initiative invested R30-million in online home cleaning services business, SweepSouth (see this story).

Read more: Aerobotics named Best Startup, Venture Capital Company at 2019 Savca Industry Awards
Read more: Naspers Foundry announces its first investment, with R30m in SweepSouth
Read more: SA startup Aerobotics secures R29m in funding from Paper Plane Ventures
Read more: SA’s Aerobotics launches five new precision agriculture products
Read more: SA drone startup Aerobotics launches bid to take on US market
Read more: SA startup Aerobotics secures funding round from Nedbank VC fund [Updated]
Read more: How Google Launchpad helped prepare newly cash flush Aerobotics to scale
Read more: Silicon Valley bound: Aerobotics team set to jet off to US for Launchpad Accelerator
Read more: Aerobotics one of three African startups selected for Launchpad Accelerator
Read more: SA drone startup Aerobotics secures R8m in funding from 4Di, Savannah Fund

Featured image: Aerobotics co-founders Benji Meltzer and James Paterson (Stephen Timm)

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SA fintech Peach Payments nets new investment to help it expand into Africa

SA fintech Peach Payments has raised new investment to drive its expansion into Africa, in a round led by Umkhathi Wethu Ventures (UW Ventures), in partnership with Allan Gray.

A number of industry executives from Europe and South Africa, as well as existing investors also participated in the round.

It comes after an announcement earlier this week that the two investors had, together with SA venture capital (VC) company 4Di Capital, invested in another SA fintech, CompariSure (see this story).

Peach Payments operates a B2B online payments platform for businesses in South Africa and was founded in 2012 by German Andreas Demleitner and Indian born Rahul Jain (pictured above, left and right, respectively). Jain, who is originally from Delhi, is based in Cape Town, while Demleitner lives in Berlin, Germany.

The company did not reveal the size of the investment. However, when pressed by Ventureburn on whether the round was above R10-million, Jain conceded it was.

Peach Payments operates an online payments platform for entrepreneurs, SMEs and large enterprise businesses in SA

Peach Payments previously raised a €50 000 seed round in 2013, after participating in the 2012 Google Umbono/88mph accelerator. The fintech netted a second, undisclosed investment a few years later from an Austrian angel investor.

Growing demand

Jain says demand for Peach Payments’ services is growing. He says the company currently services between 1500 and 2000 merchants — including three of South Africa’s four big supermarket groups — and is signing up 200 to 300 new merchants every week.

The Covid-19 pandemic has helped the fintech to close sales from merchants who for long have been mulling whether to go with Peach Payments or not.

To keep up with demand the company has made two hires each in March and April and now has 40 employees. This, while staff are working on weekends and in the evenings, to meet demand, he says.

It was like this that the company was able to close an agreement in March with the popular website building platform Wix.

The agreement allows the business to now offer support for platforms such as Xero and Wix – to make it easier for African startups and SMEs to easily take their business online.

As such Peach Payments now allows those who use the Wix platform to build online businesses, to have access to market leading card processing and EFT solutions. The fintech is also a payment partner for Shopify, WooCommerce and Magento, among others.

Jain pointed out that it had taken two years for the company to land the agreement with Wix, but that two weeks before South Africa’s lockdown the deal had finally gone through.

Turning to the company’s African expansion plans, Jain said while Peach Payments launched a bid to expand to Kenya in 2016, the company only began signing up merchants there at the end of last year, after coming up against regulatory challenges there. Things were made easier when the Kenyan government later changed a number of payment regulations.

And while the Covid-19 pandemic may have restricted travel between African states, Jain said the company will use the credibility it has built up over eight years and the numerous meetings already held with those across the continent before the pandemic to broker sales deals. The company, for example has already been visiting Nigeria for over three years.

“We’ve been pushed,” points out Jain when referring to how the company is having to service the increased demand. But he is certain that the pandemic has ushered in a totally new order of things, where online payments have become the norm.

Says Jain: “The acceleration of the adoption of ecommerce won’t go back after lockdown”.

Read more: SA insurtech CompariSure lands investment
Read more: Peach Payments to expand in Africa, launches new product

Featured image: Peach Payments founders Andreas Demleitner and Rahul Jain (Supplied)

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How SA businesses are pivoting to survive lockdown [Opinion]

Defying the odds to remain in business during the Covid-19 crisis is no mean feat. However, some businesses across South Africa are showing tenacity and innovation in the face of the country’s lockdown.

Covid-19 has forced digital transformation to the top of the agenda, with companies pivoting their business model to provide service offerings that are compatible to Covid-19 lifestyle changes.

Here below are some interesting examples of how SA businesses have pivoted in response to the current lockdown, providing insights into actionable steps to restructure and transform their business offerings to radically transformed conditions.

Digital disruption

At face value it would seem like the opportunity is currently lost for many retailers whose business deals directly with consumers. However, bathroom company, Bella Bathrooms and Tiles, has used digital transformation to pivot their business and change the entire landscape of their business’s operating model.

While pivoting comes with risk, inaction can pose a far greater threat to a business’s survival during the current times

The bathroom company is providing an innovative décor service allowing homeowners to download the Bella Bathrooms décor app which accesses the person’s smartphone camera (with the relevant permissions of course).

In this way, homeowners can enjoy a virtual consultation from the safety of their own homes with their bathroom designer.

If you believe your sales and consultations can only be done face-to-face, it might be time to re-evaluate your entire sales process and transform it.

This “new normal” demands that businesses find innovative ways to digitally engage with potential clients and to figure out how existing services can be offered in new ways.

By using technology to create alternative avenues of communication and engagement, businesses can enhance their service offering while accommodating lockdown regulations to support customers’ goals of staying safely at home.

Closing the (social distancing) gap

During this time when alcohol sales have been prohibited, boutique liquor company Dry Dock has been providing innovative, virtual wine tasting events, discussing various wines in online webinars.

Participants who have a wine collection at home can open the same bottle of wine, or if they have the same type of wine such as a Sauvignon Blanc from a different brand, then the sommelier webinar host will discuss the differences between their wine and the other brand.

Here’s a perfect example of how a company digitally updated an age-old way of doing something in order to accommodate the current restricted parameters. They’re staying relevant even at a time when many businesses in their industry have ground to a halt.

Business can pivot to transform tangible, interactive experiences into online alternatives. This allows for a personalised environment where participants can enjoy a one-on-one engagement with the host.

Using a digital platform also extends audience reach to include a potential global audience that could experience your expertise at the click of a button.

Servicing the Covid-19 economy

Epione, a healthcare technology platform, has added a Covid-19 pre-screening symptom checker onto its platform which provides seamless access to health professionals. This new facility enables patients to monitor and evaluate the progression of their symptoms remotely.

An important lesson from this crisis is creating flexible solutions to meet people’s needs within the current environment.

By using expertise in your particular domain, business can focus on a key feature that addresses consumer demand and pain points at a given time.

Showing solidarity

Pivoting doesn’t always mean reorganising your business for gain or profit. Some businesses and organisations have pivoted to bring their solutions to frontlines to pull South Africa through the pandemic.

A shining example is Kim Whitaker, a hospitality broker who decided to lend a hand while her own business had come to a halt by founding Ubuntu Beds — an initiative that aims to unite hospitality businesses that now stand empty, with our healthcare workers who are fighting the virus on the front lines.

Another example is the Sasol Foundation sponsorship of The Lockdown Digital Classroom — a voluntary virtual classroom created to support student learning during lockdown.

By giving South Africans the opportunity to donate in instalments, we are providing a more flexible option to those wanting to make a difference, accommodating different budgets in the process.

Pivoting to address specific needs of groups such as the educational community allows a brand to demonstrate empathy and understanding. This communicates a message of solidarity with a focus that goes beyond profit.

By striving to make a meaningful difference to those around you, brands can foster brand loyalty and alignment both during and long after the crisis has dissipated, while making a positive impact on people’s lives.

Leveraging current infrastructure

Website developers Redshift have onboarded local supermarkets and suppliers onto their platform, allowing shop owners to accept orders from shoppers during lockdown. The pivot has enabled Redshift to expand their business offering and help to support retailers providing essential services.

This is an example of using current digital infrastructure to expand offerings to remain operational and viable in a challenging economic time.

Think about your core infrastructure and how this can be leveraged to create a new revenue stream.

The solution is in the problem

Facilitating the signing of legal documents has enabled innovative digital disruption in the legal arena. Registered Communication is an electronic communications provider which has transformed the traditional paper paper-based notification and hard-copy delivery of contractual documents into a legally compliant digital alternative,

This business has found a way to solve a new problem, creating services that solve the challenges of this new normal.

Think of the problems companies or people are facing as opportunities to find the relevant solutions: we need to rethink the problems we’re solving. Leveraging technology can help restructure your service offerings to meet new demand and generate welcome revenue.

Pivoting has always been an integral part of innovation even in everyday business management. However, the Covid-19 impact is accelerating the need for radical business transformation to ensure business survival and long-term success.

Businesses are re-imagining themselves and using disruptive technology to remain relevant.

Although pivoting comes with risk, inaction can pose a far greater threat to survival in the economic and health challenges of this unprecedented time.

*Derek Cikes, is the commercial director at payment fintech Payflex

Featured image: Payflex commercial director Derek Cikes (Supplied)

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New township and rural fund to start lending by 1 June

The R1-billion township and rural economy fund announced by the Black Business Council (BBC) and Ubank last week, is expected to start lending its first loans from 1 June, says Ubank CEO Luthando Vutula.

It comes after Ubank, which is owned by mining group Thebe, announced last week that it had signed a “historic partnership agreement” with the BBC to establish the R1-billion fund for Township and Rural Economy Revitalisation (see this story).

An amount of R250-million will be available each year for the next five years, to lend to mostly black-owned businesses based in townships and rural areas.

Speaking to Ventureburn last week, Vutula said white entrepreneurs who developed solutions for the township and rural areas can also tap the fund.

The R1bn township and rural economy fund is expected to grow when contributions from the Black Business Council are announced

He said BBC is expected to match the R1-billion committed by Ubank. He said the matching funding would be arranged by the BBC but could come from the government or other funders.

Discussions to conclude the remaining R1-billion, he said, are “ongoing”. “I do know that they have some commitments, but they (BBC) must announce this,” he explained.

While firm criteria on the loan size and funding instruments has yet to be set, Vutula said the fund would provide loans of likely between R50 000 up to R1.5-million. He expects asset financing as well as invoice-discounting or factoring, to be one of the key lending products that the fund provides to entrepreneurs.

The funding would be available via Ubank’s branches, most of which are situated in mining areas and labour sending areas connected to the mines. The branch network is concentrated in the North West, Free State, the Eastern Cape and Gauteng (around Vereeniging and Westonaria).

A dedicated desk will be set up at the BBC to handle the fund and online applications will also be accepted, he added.

‘Impairments of 5% to 16% expected’

Vutula said while part of the lending criteria will have to be suitable for those operating in the townships and rural areas, it will in no way be a hand out. “Funds have to be repaid. But how you package the repayment terms is important,” he added.

Asked about whether the bank is prepared to take on the high risk associated with lending to the sector, Vutula said the financial modelling the bank has done for the fund has focused on a worst case scenario of 12% to 16% of impairments at a percentage of its lending book, and a best case scenario of 5%.

But he stressed that in disbursing the funding, Ubank and the BBC would rely strongly on partnerships with others in the sector.

This, he said, would include partnering with fintechs for credit scoring and with support organisations that can offer mentoring and post-approval support for those that received funding.

Before working as an Absa banker for many years, Vutula helped small businesses with business support.

About two decades ago he served at an Eastern Cape business support centre, the Xalanga Entrepreneur Development Centre, which fell under the government’s old Ntsika Enterprise Promotion Agency.

Explaining the need for the fund, Vutula said small businesses are a key catalyst to any economy and the world. “During and post Covid-19, most of the jobs will be created by small businesses,” he added.

All the big talk aside, the real test will come when the money is finally lent out. Township entrepreneurs have grown used to the empty promises of business bodies and government. It’s time now for action.

Read more: Black Business Council and Ubank set up R1bn township and rural economy fund

Featured image: Ubank CEO Luthando Vutula (Facebook)

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Covid-19 and African tech startups roundup [19/04/2020]

At least 75% of small businesses in South Africa will close down if the lockdown runs past 30 June, according to a new survey.

This, as a UK man stuck in Benin because of the Covid-19 pandemic, has teamed up with local health professionals, entrepreneurs and tech talent to create an online Covid-19 kit app which helps to share information on the disease.

With the coronavirus (Covid-19) headlining news all over the world, Ventureburn has launched a regular daily roundup on the virus and how it is affecting Africa’s tech startup sector.

At least 75% of small businesses in SA will close down if the lockdown runs past 30 June, a new survey has found

Those with any news releases relating to Covid-19 and Africa’s tech startup sector can send these to editor@memeburn.com.

Here then is the latest on the coronavirus and African tech startups:

Running out of runway: At least 75% of small businesses in South Africa will close down if the lockdown runs past 30 June, according to a survey (opens as a PDF) of 2280 business owners by entrepreneur organisation HeavyChef. The survey, which sampled a range of fintech customers, is mostly reflective of very small or micro enterprises — mostly services and retail firms — run by mostly white business owners. Just a third of those sampled were black business owners, while almost 90% had an annual turnover of less than R6-million. Sadly, the grim picture the results paint may therefore be even worse than this survey makes it out to be.

Word on VC: SA venture capitalist and 4Di Capital general partner Justin Stanford says startups that get investment right now shouldn’t be concerned about trying to get the perfect terms and conditions. “If you can raise cash now, you’re very lucky. Don’t sweat the valuation and terms right now. Rather, get funded, then go and press your advantage. At a time like this, if you can raise money, that will be an advantage,” he said during a webinar last week run by Flourish Ventures. Meanwhile, 4Di Capital revealed yesterday that it had taken part in an investment round in August last year, in SA insurtech CompariSure (see this story).

Boom in online life insurance: The Covid-19 pandemic is driving demand for online life assurance and related products. Cape Town-based insurtech Simply Financial Services, which sells products underwritten by Old Mutual Alternative Risk Transfer Limited, says it’s seen a more than 40% month-on-month growth in its retail life, disability and funeral cover sales since February. Simply CEO and co-founder Anthony Miller says people are getting used to the digital economy where things are done remotely. Commented Miller: “It’s a no-touch approach that suits the current environment”.

Stranded Brit gets stuck in: A UK man stuck in Benin because of the Covid-19 pandemic, has teamed up with local health professionals, entrepreneurs and tech talent to create an online Covid-19 kit app which helps to share information on the disease. The app, which Adam Bradford (pictured above, second from left with colleagues) launched last week, will be shared throughout African countries, beginning in Benin and Nigeria. Bradford’s organisation AdamStart has also partnered with Teens World Empowerment, a Nigerian youth organisation, to host training courses for youth in the areas of web design, graphic design, 3D printing and entrepreneurship. Said Bradford: “Rather than wallowing in the fact that I am stuck abroad, I am mobilising a global movement out of Africa which will come up with solutions that can impact the world”.

Read more: Covid-19 and African tech startups roundup [18/04/2020]

Featured image: Adam Bradford, founder of AdamStart, with colleagues (Supplied)

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The New Normal: Africa’s VC sector needs a new paradigm [Opinion]

The New Normal is a new regular column Ventureburn will run, featuring business leaders and how Covid-19 is reshaping the tech world. 

Last month AfricArena released its “The State of Tech Innovation in Africa”. Among its many findings, the research highlights the structural fragility of the continent’s tech sector in terms of getting investment to fuel its growth (see this story).

Firstly, the funding remains highly concentrated in the later stage, with over 90% of the $2-billion invested in 2019 going to just a handful of relatively mature startups in just about 70 deals.

This factor is a key structural inhibitor to a sustainable long-term growth of the entire ecosystem, as early-stage startups not raising enough capital limits the number of entrepreneurs that will make it to the maturity level expected by venture capital (VC) investors to make a risk.

To survive, those in Africa’s VC ecosystem must unite to largely rethink the approach, particularly on taking bolder steps

Secondly, the amount of Seed and angel investment — which typically would bridge that gap — is extremely limited.

AfricArena estimates it to be around only $35-million annually across 54 countries. That is far from sufficient for African early-stage founders to have a chance of making a dent in the universe.

Thirdly, the AfricArena report indicates that in a post-Covid-19 world, overall investment in African tech startups will fall by as much as 40%.

Given most startups typically hold about three months of cash on hand, the devastation that may affect the entire ecosystem may result in thousands of talented entrepreneurs falling by the wayside in the coming months.

Why are we in this situation?

It is important to understand that the growth of the investment available on the continent, to a large extent, is backed by international investors — primarily by the development finance institutions (DFIs), and to a lesser extent by corporate investors.

Typically DFIs take 18 months to make a decision on investing in VC firms. Their mandate, which passes onto the VC firms they invest into, creates a replication syndrome — in effect resulting in most African VCs investing in Series-B or Series-C rounds in relatively mature startups with ticket sizes of $1-million and higher. And thus as a result most of these firms compete for essentially the same, limited deal flow.

There are a few exceptions to this, or course, with some accelerator programmes such as MEST, Startupbootcamp or Founders Factory, and a handful of very early-stage VCs.

Yet the industry, structured as it is, with a lack of VCs covering the entire ecosystem, or investors focused on investing $50k to $500k with enough funds to make the required impact, will struggle to adapt to the new post Covid-19 reality.

What can be done?

Never waste a good crisis. The current situation, with corporates expected to cut on spending, a decline in gross domestic product (GDP) and generally difficult market conditions, will inevitably result in a drop of investments. Some startups can brilliantly navigate, but the large majority are struggling, and many failing.

In turn, this will dry up the investment pipelines of most VCs on the continent. There are three things that appear to make sense in terms of what the ecosystem can do.

Firstly, the VC industry must adapt and instead of retreating to just supporting their existing investment, take the opportunity of investing earlier than they would have done – if necessary by getting their limited partnership (LP) to agree to such mandate amendments.

This is the only way that the investment industry will structurally ensure the sustainability of the ecosystem.

Second, debt instruments must be much better utilised than they have in the past.

Venture debt has not been widely utilised by founders, either by lack of offering or by lack of understanding that debt cost is usually lower than equity, at least in the long haul. It would make sense in fact that every VC equip themselves: either via partnerships or via raising ancillary debt funds to provide mixed funding solutions.

Lastly, in a period with large amounts of helicopter money being made available, there is actually a unique opportunity to leverage on all this capital to raise new investment vehicle with the right mandate, and enough local investment team to ensure this also contributes to reinforce the local investment industry, which is essential to the long term economic success of the continent.

For this, flexing and adapting the regulatory framework to be investment-friendly should be a priority on the agenda of governments in Africa.

The potential of Africa to generate highly skilled tech jobs and continue on the great momentum built over the past four years, is dependent on our ability to unite as an ecosystem to largely rethink the approach, particularly on taking bolder steps and operate as a collective — from founders to corporates, investors and institutional stakeholders and government.

This might be the ultimate challenge, and prove long and difficult in a fragmented continent with fragmented ecosystems.

But resilience, creativity and adaptability are key qualities that maintain the humility in Africa’s digital leap. Let’s be the change we want to see.

Read more: New report estimates VC investments in African tech firms could fall by 40% in 2020

*Christophe Viarnaud is a Cape Town based entrepreneur & early stage investor, CEO of Methys, and founder of the French South African Tech Labs, Digital Africa Ventures and half a dozen ventures.

Featured image: Methys CEO Christophe Viarnaud (Supplied)

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Covid-19 and African tech startups roundup [18/04/2020]

SA agritech startup Agrigate One is hoping its seamless trading platform can help farmers reach the market during the pandemic.

This, as Indian food delivery startup Swiggy, which is funded by Naspers, announced that it plans to cut 1100 jobs and scale down some related businesses.

With the coronavirus (Covid-19) headlining news all over the world, Ventureburn has launched a regular daily roundup on the virus and how it is affecting Africa’s tech startup sector.

SA agritech startup Agrigate One is hoping its online platform can help farmers reach the market during the pandemic

Those with any news releases relating to Covid-19 and Africa’s tech startup sector can send these to editor@memeburn.com.

Here then is the latest on the coronavirus and African tech startups:

One-stop farm platform: SA agritech startup Agrigate One is hoping its seamless trading platform that integrates all aspects of the fresh produce value chain can help farmers reach the market during the pandemic. The startup was founded in 2018 by Greg Whitaker (pictured above), who grew up on a Limpopo citrus farm and is now based in the UK. His business partners are Dante Visser, David Skjoldhammer, Wian Potgieter and Irene Rupert. “Currently no farm visits are possible so buyers resort to the platform to raise purchase orders and updates of the stock they have purchased. The system also looks for alternative transport solutions and inefficiency in the supply chain due to less capacity due to Covid,” said Whitaker. He declined to reveal details of the investment the business has landed, saying it was confidential for now. In one year, three of the 12 farmers who signed up for a pilot, shipped 417 containers to 28 international buyers.

Naspers-funded startup to cut jobs: Indian food delivery startup Swiggy, which is funded by Naspers, plans to cut 1100 jobs and scale down some related businesses, US tech publication TechCrunch reported in an article today. Naspers in 2017 invested $80-million in the startup as part of a Series-E funding round (see this story).

Sokowatch providing relief: East Africa-based ecommerce Sokowatch is using its network of shop owners and tech to distribute e-vouchers to families in need living in informal settlements, identified in partnership with organisations such as Uweza Foundation in Kibera slum in Nairobi and World Hope in Kawangware. Sokowatch estimates that through its operations in the nine largest cities in East Africa, about 1.5-million vulnerable families and 14 000 local shops could be provided with assistance digitally, eliminating the logistical challenges that usually face relief efforts.

Read more: Covid-19 and African tech startups roundup [15/04/2020]
Read more: Covid-19 and African tech startups roundup [14/04/2020]
Read more: Covid-19 and African tech startups roundup [13/04/2020]
Read more: Covid-19 and African tech startups roundup [12/04/2020]
Read more: Covid-19 and African tech startups roundup [11/04/2020]

Featured image: Agrigate One founder Greg Whitaker (Supplied)

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SA insurtech CompariSure lands investment

Cape Town based insurtech startup CompariSure announced today that it has secured venture capital (VC) funding from SA Umkhathi Wethu Ventures in partnership with Allan Gray.

The deal comes off the back of CompariSure’s first external investment deal concluded in August last year with SA VC company 4Di Capital (which was not announced to the media at the time).

The details of the latest investment, as well as that of the 4Di Capital investment, were not disclosed.

CompariSure was founded in 2017 by Jonathan Elcock, a former manager at insurance provider MiWay according to his LinkedIn profile. He was joined subsequently by co-founder Matthew Kloos.

CompariSure was founded in 2017 by Jonathan Elcock, a former manager at insurance provider MiWay

The startup distributes financial services products via its proprietary chatbot technology that leverages platforms like Facebook Messenger and WhatsApp.

In a statement today, Kloos explained that at the time that the original deal was concluded in August last year, 4Di Capital was eager for the insurtech to find another institutional investor to diversify the shareholder base, which is how Umkhathi Wethu (UW) Ventures and Allan Gray came on board.

“In combining 4Di’s deep understanding of insurtech with Allan Gray’s extensive financial services expertise and  Ventures’ strategic and business support, we feel our investor base could neither be stronger nor more experienced,” commented Kloos.

CompariSure said it had recently begun licensing out its chatbot technology to insurance providers looking to enhance their own digital capabilities.

The startup has worked with some of South Africa’s top insurance providers, including the likes of Sanlam, Old Mutual, and Momentum Metropolitan.

Elcock said in the same statement, that over 70% of the startup’s sales are concluded without any human engagement, at all hours of the day and night.

Without revealing the figures, he said the startup had seen “record volumes” through the challenging and unprecedented Covid-19 pandemic.

The startup however claims that over 250 000 South Africans from all walks of life have interacted with its chatbot via its online platform.

“This growth capital funding has given us significant runway and will allow us to explore new strategic initiatives, such as new product and industry use-cases for our chatbot, as well as opportunities outside of SA,” added Elcock.

UW Ventures will support CompariSure with its scaling ambitions, including into international markets.

Edgar Loxton, a director at Allan Gray, and 4Di Capital partner Anton Van Vlaanderen will sit on the CompariSure board.

Featured image: CompariSure via Facebook

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