Nigerian startups attract local and foreign investors
By Jeph Ajobaju, Chief Copy Editor
Local and foreign investors pumped $992 million (N412 billion) into 35 Nigerian startups in direct investments in the 10 months of the year to October, gleaned from Nigerian Investment Promotion Commission (NIPC) data and other sources.
“This is surely a reflection of the entrepreneurial spirit of the increasingly young tech-literate generation of Nigerians.
“Consequently they will continue to attract venture capital from across the world,” says Ayo Olukanni, Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA) Director General.
Nigerian startups in the package cut across payment platforms, education tech, agritech, e-commerce, IT, legal tech, digital freight, fashion, gifting, quick service restaurant (QSR), mobility, et cetera.
The data comes on the heels of the ranking by the Global Startup Ecosystem Index 2021, released in June by StartupBlink, which showed that Lagos has overtaken Nairobi as Africa’s top startup hub.
Financial Vanguard reports financiers saying that African e-commerce is accelerating faster than imagined a decade ago, estimating it could reach $45 billion by 2025.
The top five fund beneficiaries by October are
- Opay – $400 million
- Andela – $200 million
- Flutterwave – $170 million
- Kuda Bank – $80 million (two tranches)
- Decagon – $26.5 million (two tranches)
__________________________________________________________________
Related articles:
Five investors may power Nigerian startups beyond $400m this year
Startups in Nigeria raise outlay with $248 million
Digital economy bill in the works for startups
__________________________________________________________________
OPay secured $400 million in August, the single largest investment round for a startup based in Africa.
The funding was led by SoftBank Vision Fund, the venture capital arm of Japanese conglomerate SoftBank – supported by Sequoia Capital China, DragonBall Capital, Redpoint China, Source Code Capital, SoftBank Ventures Asia, and 3W Capital.
Andela announced in September it raised $200 million from investors, led by SoftBank Group Corp., a Japanese tech investor, backed by Whale Rock Generation Investment Management, Chan Zuckerberg Initiative, and Spark Capital.
Flutterwave raised $170 million in Series C round in March, led by private investment firm Avenir Growth Capital based in New York and United States hedge fund and investment firm Tiger Global.
Other investors include DST Global, Early Capital Berrywood, Green Visor Capital, Greycroft Capital, Insight Partners, Salesforce Ventures, Tiger Management, Worldpay FIS and 9yards Capital.
Kuda Bank raised $55 million in a Series B round in August, after securing Series A of $25 million in March.
The round was co-led by existing investors Target Global and Valar Ventures, supported by SBI Investment and other angel investors.
IT startup Decagon has raised a total $26.5 million this year – $1.5 million in August, led by Kepple Africa and Timon Capital, backed by UNITED Inc based in Tokyo.
It added to the $25 million student loan fund Decagon raised earlier, facilitated by a partnership between financier Sterling Bank and the Central Bank of Nigeria (CBN).
Mono, a financial data startup, raised a total $17 million – $15 million in Series A round in October, led by Tiger Global, besides a seed round of $2 million in May.
Autochek, auto-tech startup, raised $13.1 million seed in October, co-led by follow-on investors TLcom Capital, and 4DX Ventures; including existing investors Golden Palm Investments, Enza Capital, and Lateral Capital.
Other investors are new participants ASK Capital and Mobility 54 Investment SAS – the venture capital arm of Toyota Tsusho Corporation.
Alerzo, an e-commerce retail startup based in Ibadan, received in August a $10.5 million Series A round, led by London-based Nosara Capital; with FJ Labs and other investors from the US, Europe, and Asia also participating.
Other fund injections into startups as reported by Financial Vanguard include:
January
- Cowrywise, fintech – $3 million pre-Series A funding.
March
- Bankly, fintech digitising cash for the unbanked – $2 million seed.
July
- Lidya, SME finance – $8.3 million.
- Chaka, trading and investment platform – $1.5 million pre-seed.
- Zowasel, agritech – $100,000 from Guinness and Promisador.
August
- Appzone, fintech software provider – $10 million.
- Eat N’Go, Quick Service Restaurant (QSR) – $5 million.
- CapitalSage Technology – $4 million.
- Omnibiz, Business to Business (B2B) e-commerce – $3 million.
- Rooomxix, urban streetwear fashion brand – $1.5 million.
- MVX, digital freight and hauling firm – $1.3 million seed.
- Plentywaka, mobility – $1.2 million seed.
- Chekkit, anti-counterfeiting – $500,000 pre-seed.
- Showlove, gifting – $300,000 pre-seed.
September
- Releaf, food processing – $4.2 million seed.
- Prospa, software and financial services – $3.8 million pre-seed.
- Definely, London-based Nigerian legal tech – $3 million pre-seed.
- ReelFruit, dried fruit – $3 million Series A.
- Bumpa, e-commerce – $200,000 pre-seed.
October
- Verto, B2B payments – $10 million.
- Sparkle, digital bank – $3.1 million seed.
- Klasha, payments – $2.4 million.
- Sendbox – $1.8 million seed
- Payday, fintech – $1 million.
- Edves, edutech – $575,000 seed.
- Bitmama, payments – $350,000 pre-seed.
- Jise, food order delivery – $100,000 angel fund.
Here are the views of investors compiled by Financial Vanguard:
Kentaro Matsui (SoftBank Vision Fund Managing Partner)
“We believe our investment will help [OPay] extend its offering to adjacent markets and replicate its successful business model in Egypt and other countries in the region.”
Lydia Jett, (SoftBank Investment Advisers founding Partner)
“Hiring remote technical talent is one of the top difficulties that businesses confront today.
“As remote and hybrid work arrangements become the standard, we believe Andela will become the chosen talent partner for the world’s greatest firms.”
Jamie Reynolds (Partner at Avenir Growth Capital)
“Flutterwave is at the forefront of innovation in payments technology, and we are excited to support the team as they build the last available payments infrastructure frontier in the world – connecting merchants and consumers intra-Africa and globally.”
Andrew McCormack (General Partner at Valar Ventures)
“Kuda’s approach to the market is the reason behind its decision to invest in the startup.
“With a youthful population eager to adopt digital financial services in the region, we believe that Kuda’s transformative effect on banking will scale across Africa and we’re proud to continue supporting them.”
Walter Baddoo (4DX Ventures co-founder and General Partner)
“African e-commerce is accelerating faster than anybody could have imagined a decade ago and it needs smart solutions to ensure that logistics and fulfillment capacity doesn’t lag behind.
“Not only were we impressed by Sendbox’s 300 per cent year-on-year growth since launch, but we’re seeing the market potential balloon with over 40 million Nigerian SMEs and a projected industry value for social and e-commerce reaching $45 billion on the continent by 2025.”
Below are the views of analysts:
Muda Yusuf (former Lagos Chamber of Commerce and Industry (LCCI) Director General, now Centre for the Promotion of Private Enterprise (CPPE) Chief Executive Officer)
“The ICT sector is one of the fastest growing in the Nigerian economy. In the last two quarters, the sector posted a GDP growth of 17.92 per cent in Q2 2021 and 14.91 per cent in Q1 2021.
“Even the pandemic boosted growth in the sector as businesses leveraged ICT to facilitate recovery.
“The opportunities in ICT are immense and the investment risk is relatively lower when compared with other sectors.
“It is also a sector driven largely by the younger generation of investors who are very innovative, dynamic and mobile.
“These are some of the factors that may have been responsible for the relatively impressive investment outcomes in the sector.”
Ayo Olukanni (NACCIMA Director General)
“Certainly these figures on these Nigerian owned startups are a reflection of the confidence in the potentials of the Nigerian economy and much more importantly the potential return on investment.
“Nigeria may be a difficult economic terrain but it remains an attractive spot for any discerning investor who can take a long view of history.
“The capacity of Nigerian tech entrepreneurs has also been demonstrated beyond all doubt. The growth of the fintech sector has been the work of innovative skilled young Nigerians.
“They are our bold and creative Tech Entrepreneurs who have floated and are operating some very successful startups.
“This is surely a reflection of the entrepreneurial spirit of the increasingly young tech-literate generation of Nigerians. Consequently they will continue to attract venture capital from across the world.
“The decision by Google to include Nigeria in its $1 billion Support Fund for Africa’s Digital Transformation is not surprising.
“And I think we will see more interest in the Nigerian Digital and Telecom sector and startup of our young Tech Entrepreneurs as we continue upgrading our Digital Infrastructure just as witnessed with the launch of the 5G Policy which is part of our National Broadband Plan 2022-2025.”
