⛰️ The Climb: October 2021
Welcome to the October edition (…a bit delayed) of The Climb!
Akwaaba from Accra! Conferences are alive again and it was awesome to attend the Ghana edition of AESIS 2021 where I got to meet the founder of Sherpa Ventures’ very 1st investment, Boost, for the very first time (requisite selfie below)! I’ve been blown away by the traction that Mike (Boost CEO) and his team have achieved, launching in 4 markets and hitting double digit MoM numbers in many of them!
I was also reminded this month about how many global programs are now explicitly (and sometimes exclusively through custom mandates) targeting startups in Africa. Beyond Y Combinator, teams within IDEO, Mercury, Plug And Play and many others are ramping up their cohorts for, and in, Africa. I have no doubt they’ll be critical in building the kind of deal flow the range of soon-to-be-announced growth funds in Africa will be accessing.
If you’re a founder out there and want to speak to the Sherpa team, or even our founders, about their experience in these programs, please let us know! Zach (Payhippo CEO) did an incredible write-up of his YC experience (link in newsletter), but we want to do more to make sure founders on the continent are accessing the right programs for the right reasons with the right preparation.
I know we’re all pushing hard to wrap up 2021 with a bang but don’t forget to breathe, folks!
PORTFOLIO HIGHLIGHTS ⭐️
Koa got accepted into the prestigious Mercury Raise Program for top tech companies raising seed rounds, in addition to being selected as one of two African startups pitching at the 2021 TechCrunch Disrupt event.
Mike Quinn pitched Boost on The Nest by Untapped Global. In other news, Boost was accepted into the IDEO Last Mile Accelerator, which comes with a $50,000 grant to help develop their payments partnership with Fidelity Bank in Ghana.
CashBackApp was selected as one of eight finalists for the 2021 VC4A Venture Showcase on the Seed track, allowing them to participate in a virtual readiness program ahead of next week’s Africa Early Stage Investor Summit.
Payhippo CEO Zach Bijesse penned an honest Medium article about the Nigerian fintech’s recent experience in Y Combinator. In other news: Payhippo announced its $3 million seed fundraise. Check out this TechCrunch article to read more!
WHAT’S NEW WITH SHERPA 🚀
We shared our first #CommunityVoices piece this month, where we featured Sherpa LP Andrew Garza and his story. A former Bain Consultant, Andrew is an operator-investor based in Lagos who runs a healthtech startup called Lifestores Healthcare. In this short interview, we chat with Andrew about his journey into Africa, the contours of the Nigerian tech market, and some of the lessons he’s learned since becoming an investor.
Our fearless Managing Partner Aaron was featured on Episode #359 of The Meb Faber Show podcast! He discusses the trajectory of the African startup ecosystem and how Sherpa Ventures has evolved. Give it a listen here.
WHAT WE’RE READING 📖
The B-Side of African Tech 👉 Link
Stephen Deng from DFS Lab, an early-stage investor supporting digital commerce startups, uses lessons from other emerging markets to break down the playbook for African tech startups serving populations with so-called “consumption ceilings.” A logical follow-up to their series of pieces aptly named The Frontier Blindspot – which we suggest you check out – Deng’s take on how trends around physical ubiquity (think mobile money agents), supply chain digitization (think MSME aggregation) and last-mile logistics (think Kobo360) interface with existing advantages around “informal” commerce is spot on. Leveraging both online and offline distribution that enables consumption for the 95% of Africans consuming under $10 per day has proven to be a winning strategy for African tech founders, and like Deng cites, there is room for excitement over adopting this online-offline strategy across new business models already taking form in other emerging markets, such as social commerce, dark stores and cloud kitchens. Expect more movement in these sectors in the months to come.
“We weren’t motivated to become a unicorn”: Wave’s West Africa head reflects on startups’ rapid growth 👉 Link
When Wave’s $200 million Series A round (announced in September) catapulted it into unicorn territory, becoming Francophone Africa’s first, the African tech ecosystem was put on notice about the under-appreciated opportunities across the 20+ country block. While much has been written about Wave (read Everett Randle’s brilliant piece here), it’s sometimes more eye-opening to hear from those inside the company charting its course. Coura Sene, Wave General Manager for the West African Economic and Monetary Union, spoke with TechCabal about the company’s work culture, agent network, how its meteoric rise to $2 billion valuation (in just four years!) was unanticipated, and where the company sees broader opportunities across Francophone Africa.
The most exciting applications of cryptocurrency and blockchain in the African context 👉 Link
We dive deeper into blockchain on the heels of Yellow Card’s recent $15 million Series A round – the largest investment in a crypto exchange on the continent – which drew investment from Jack Dorsey’s Square. How important is it to the overall African tech narrative, and what’s next on the horizon? In a recent edition of Afridigest, ten of Africa’s leading voices on cryptocurrency and blockchain discuss how these technologies can be a game-changer for the continent. Some intriguing takes from those interviewed include:
Chris Maurice (Founder and CEO, Yellow Card): “Crypto is African. The adoption on the continent is being driven by crypto's ability to solve real problems that people across the continent face every day. That's why you see such fast-paced growth of the industry in countries like Nigeria, South Africa, and more. The reason we're most excited about what we're doing is because we're bringing people into this space. It isn't always easy to access Bitcoin in the first place and enter the crypto space for people in Ghana or Uganda, for example. We're providing people that access to start their journey in the industry and find incredible projects and solutions.”
Tope Alabi (Co-Founder and CEO, Afriex): “The mainstream applications of blockchain technology have largely been finance-focused (remittances, exchanges, DeFi, P2P payments, etc.) but over time it will disrupt other industries across the African continent as the technology has widespread potential for sustainable development in multiple sectors. Key drivers include educating more people on how blockchain works, talent development in blockchain technology (coding), getting more business to accept payments in crypto, etc.”
Bernard Parah (Co-Founder and CEO, Bitnob): “I’m most excited about applications that enable streaming payments. Think of a situation where, using my phone in Uyo, Nigeria, I’m playing a game where the points I earned are streamed to my Bitcoin wallet. Or what if instead of waiting for payday, I can be paid by the hour? Or what if as a content creator, I can be paid in real-time while my content is being consumed? I believe technology that makes streaming payments possible will have a massive impact on so many business use cases in Africa.”
M-Pesa, Opay, Telebirr, Palmpay: How Chinese tech is powering African fintech 👉 Link
According to Eric Olander, Managing Editor of the China Africa Project, “The fact is that you wouldn’t have a thriving African tech ecosystem today without the Chinese.” Indeed, China’s enterprising tech sector has its fingerprints all over the African fintech landscape. Huawei and Beijing Murong Technology have helped develop mobile money platforms M-PESA and TeleBirr in Kenya and Ethiopia, Transsion (Africa’s leading mobile phone maker) controls roughly half of Africa’s phone market and is publicly traded in China, and Nigerian fintech unicorn Opay raised its $400 million round from major Chinese investors, including Sequoia China and others. While much of the headlines surrounding China’s involvement in Africa focuses on the physical infrastructure being built, relatively less attention gets placed on the indispensable role that Chinese tech plays in the continent’s future. As the African tech story continues to be written, however, Chinese tech infrastructure will only become more deeply entrenched into other areas across the continent’s tech landscape. Whether this is a good thing or a bad thing for startups and innovation – due to security reasons, monopolistic concerns, and opaque data privacy standards – is still up for debate.
How to think about Africa’s creator economy 👉 Link
The global market for creators (e.g. writers, gamers, videographers, podcasters) is estimated to be worth over $100 billion, yet relatively less attention is being paid to the newly emerging creator economy in Africa. Despite recent events being hosted on the subject – namely last month’s Africa Creative Industries Summit and next month’s UpNext virtual event from IFC – entrepreneurs operating in the creator economy still face issues monetizing, advertising, and distributing their work. As David Adeleke writes in his Comminiqué Substack, top creators face three main challenges today:
Monetising content as an African creator is hard, partly because several payment-related problems exist.
It's also hard because disposable income is low in many African countries. This makes it difficult for creators to monetise their audience directly.
Creators have to depend on brands for advertising and sponsorship deals. This option is fragile because it means they have no equity and their income is tied directly to their output, putting them at the mercy of the entities that pay them.
Consequently, new business models must open up to unlock broader opportunities within Africa’s creative industries. Adeleke offers various solutions around payment infrastructure, unique credit facilities, social tokens and more, all of which we happen to find quite compelling.
The truth about Africa’s tech talent shortage 👉 Link
One of the most widely discussed issues among ecosystem insiders is the competition for strong tech talent on the continent. As the number of tech-enabled startups continues to grow, more locally-based software development and engineering talent must be available to fill new job opportunities. However, with Big Tech companies moving into the continent vying for talent, and many still choosing to move abroad for work, African startups face challenges finding and retaining strong talent. As a result, some companies are being forced to hire abroad, pay higher salaries than they would have liked, or hire junior developers instead of more senior talent. Though last year’s IFC and Google report estimated that there were some 700,000 professional developers on the continent, insiders who spoke with Yinka Adegoke for Rest of World say that the actual figure is much lower. Moreover, with over half of them concentrated in just five countries (Egypt, Kenya, Morocco, Nigeria and South Africa), there are valid concerns that not enough is being done to nurture and diversify the local tech talent pipeline for the continent’s ecosystem to continue flourishing. Even Andela, Africa’s newly minted unicorn, has deemphasized its commitment to training African developers, instead focusing on building a global tech talent network. At Sherpa, we’re keeping a close eye on this trend to better understand how it could affect early-stage startups going forward.
OPEN ROLES IN SHERPA’S PORTFOLIO 🤓
CTO/Head Engineer @ ZUMI
Engineering Lead @ Shara
Financial Operations @ Shara
Lead Product Manager @ Shara
Software Engineer @ Shara
Lead Data Scientist @ Payhippo
Finance Manager @ Payhippo
Corporate Finance Director @ Payhippo
People Manager @ Payhippo
Marketing Manager @ Payhippo
Sales Manager @ Payhippo