Funding for Africa’s tech ecosystem has been on a downward spiral since the start of the year as interest rates rise globally and investors continue to make safer bets. However, some venture capital firms are still increasing their footprint on the continent. One such VC firm is MaC Venture Capital, a sector-agnostic firm with $500 million in assets under management and an African portfolio with more than 10 startups. 

MaC Venture Capital invests up to $3 million in seed-stage companies as its initial entry ticket size, in exchange for 10–15% ownership in the companies on a fully diluted basis. “For us, seed means that you have a viable product that you have recently taken to market, or that you’re about to take to market,” Nichols said in a fireside chat with Tomiwa Aladekomo, CEO of Big Cabal Media, at the recently-held Moonshot by TechCabal conference. “We feel we can add the most value to the go-to-market strategy,” Nichols added. 

Some of the African startups that are in the firm’s portfolio include Big Cabal Media, the parent company of TechCabal; Spleet, a prop-tech startup; and Prembly, a digital security startup. Nichols shared that the firm’s investment thesis on the continent is centred on finding the challenges “stopping people from living their best lives”.

“We want to make money for our investors,” Nichols said, “so we look for really big problems in big markets that are being tackled by very smart people that have a fit with the market, the company, and the challenge.”  

With 197 startups in their portfolio, Nichols said MaC Venture Capital decided to invest in Africa after being introduced to Ajua, a Kenyan customer experience startup. “What happens is [that] you start to build this network of people and you learn about more exciting opportunities, so you just start writing more cheques.” 

Due diligence and corporate governance have been running themes in Africa’s tech ecosystem this year as several startups have closed due to bad corporate governance. On due diligence, Nichols said that the firm relies on angel investors and founders in their portfolio for advice and validation of the pitches they receive in markets where they do not have enough context. 

Watch the full video of the fireside chat with Marlon Nichols and Tomiwa Aladekomo on YouTube.

Here’s a question: How do you build a global launch pad for innovation in Africa? The answer is bringing together all the relevant stakeholders in Africa’s tech ecosystem, said Tomiwa Aladekomo, CEO of Big Cabal Media, in his opening address at the maiden edition of Moonshot by TechCabal conference in October. 

The two-day event played host to over 2,000 founders, business leaders, innovators, venture capitalists, and regulators from around the world. Conversations at the event centered on five content tracks: the future of commerce, Big Tech and enterprise, emerging tech, startup festival, and the creative economy. 

“We believe that there is value in bringing together some of the brightest thinkers and brightest regulators together to share ideas that can drive the ecosystem forward,” Aladekomo said in his speech

By definition, a “moonshot” refers to a lofty goal. Relating to the African context, Aladekomo explained that the word represents a monumental effort to build radical or innovative solutions to huge problems in the continent. This, according to him, is the central idea of the conference. 

“It isn’t just networking,” he said. “It is the opportunity to talk to people who are passionate about solving problems.”

In the last decade, Africa’s tech ecosystem has witnessed incredible growth evidenced by the rise of unicorn startups, billions of dollars in venture funding flowing into the ecosystem, and milestone deals like BioNtech’s $682 million acquisition of Tunisian AI startup Instadeep earlier this year. But, despite these wins, Africa still faces real challenges including a rapidly growing population that is undereducated and under-resourced, and more disturbingly, a brain drain wave that has seen young people leave the continent in droves in search of opportunities on foreign soil. 

For Aladekomo, there is still huge optimism about how important technology has become for the future of the continent. Africa is witnessing a steady increase in the adoption and use of technology, with innovative startups and established tech companies driving growth in various sectors. 

“We see technology as a critical tool in solving Africa’s problems. It isn’t the only one, but it is the most potent,” he said. 

While Moonshot by TechCabal serves as an avenue to share innovation and the endless possibilities of technology, it is also an opportunity to showcase Lagos as one of the important centres of technology in Africa. The Yaba district of Lagos is often credited as the foundation of the Nigerian tech ecosystem. Today, Lagos is home to a number of successful tech startups on the continent as well as an attractive tech hub. Nigeria’s minister of communications and digital economy, Bosun Tijani—who also spoke at the event—played a critical part in that evolution through Co-Creation Hub, Nigeria’s pioneering open-living lab and pre-incubation space.

Click here to watch the full video of Tomiwa Aladekomo’s speech.

“Sabi [in Nigerian speak] means to know what to do,” Anu Adedoyin Adasolum, CEO of Nigerian B2B platform Sabi, explained to the teeming audience at the Moonshot by TechCabal conference. The three-year-old startup has been helping African businesses solve the problems of Africa’s fragmented commerce sector. 

“We make money by helping people make money,” Adasolum said.  In Nigeria, and many African countries, commerce is challenging due to inadequate infrastructure, and access-related problems. This slows the growth of businesses. Sabi, through its online tools and in-person services, fills the gaps in the fractured supply and demand chain for small and large enterprises on the continent.

For example, if a farmer has a lot of groundnut produce, Sabi can connect her to different off-takers so that she doesn’t have to be worried about demand. Through its online tools or in-person services, Sabi helps businesses find demand, access credit or working capital, and manage inventory and supply, from sourcing goods to safely transporting them to off-takers. 

Currently, Sabi’s biggest customer base is in agriculture, but Sabi extends its services to small, medium, and large businesses in sectors like fast-moving consumer goods (FMCG), electronics and pharmaceuticals. 

Smaller merchants can access credit, order products, and manage inventory and sales through Sabi’s app.  Big producers of commodities in the agriculture, minerals, or chemicals sector can use any of Sabi’s initiatives such as Technology Rails for African Commodities Exchange (TRACE) to close commercial agreements, facilitate exports, imports and more.  

Larger-sized businesses, who are typically wholesalers or distributors, would typically work with Sabi through any of its relationship managers. 

De-risking the process

Sabi works with about 200,000 businesses and has to manage risks so it conducts customer assessments. “We have a very large network, so it is very unlikely that we do not know you or anyone that you work with,” Adasolum told Aladekomo. 

“We will use that information from our network to understand your history and determine if you are reliable or not.” 

Once Sabi confirms the reliability of a client, it leverages its network and partnerships to meet the business’s needs. For example, if a client needs capital to fulfill a ₦200 million  ($255,901) purchase order from a reputable buyer, and they have 100 farmers supplying the products, Sabi can connect you with a finance partner. 

“We vouch for your credibility and ensure the transaction’s legitimacy,” Adasolum said. “We also manage the logistics, from paying the farmers to overseeing the product’s transport and delivery to the buyer.” 

Adasolum also revealed that Sabi is currently exploring how artificial intelligence (AI) can streamline its processes. While some AI applications might align with the data products that Sabi offers at an enterprise level, the team is gradually developing ideas for how AI can be integrated into the business. Adasolum anticipates that, in the coming year, parts of Sabi’s tech stack will be replaced by AI solutions as they continue to innovate.

If you would like to watch the full conversation with Sabi’s CEO, head over to our YouTube channel!

truQ, a logistics startup, has emerged winner of the debut TC Startup Battlefield, pitching against eight other startups at the just concluded Moonshot Conference by TechCabal.

TruQ, a logistics startup streamlining mid-mile logistics across Africa, has won the TC Startup Battlefield competition. The startup clinched the ₦2.5 million cash prize ahead of nine other competitors. Jamit, a social audio network, emerged as runner-up, walking home with ₦1.5 million.

The competition was held at the just concluded flagship Moonshot Conference by TechCabal. TC Battlefield competition is dedicated to showcasing local startups’ innovations to a global audience. The maiden edition featured only Nigerian startups which include: Flickwheel, an auto tech startup; Stackjunior, an edtech platform; Powerful Technology Limited; Royalty.io, a music cataloguing startup; Jamit, a social audio network; Payslice, a fintech startup; Fless, a money management platform for small business owners; Belarush, a food delivery startup; TruQ a logistics startup; and Deepbux, a growth-as-a-startup service. 

The competition was judged by Hope Dilthakanyane, investment principal at Founders Factory Africa—who also chaired the panel; Nela Ekpenyong, head of portfolio, Ingressive Capital; Uwem Uwemakpan, head of investments, Launch Africa VC Fund II; and Gloria Okorie, venture partner at Republic.

Speaking on the win, Williams Fatayo, CEO of TruQ, said the win is a validation of the work that the startup is doing. This is not TruQ’s first rodeo; the startup was a recipient of the 2023 Google Black Founders Fund. The startup was also part of the Techstars 2022 accelerator cohort, and the V8 Growth Labs. According to Fatayo, TruQ’s win coincided with the startups seed raise which will be announced in the coming days. 

Jamit’s co-founder and CEO, Ike Orizu, is proud of the company’s win, which he sees as a confirmation of the team’s hard work and commitment to excellence. In an interview with TechCabal, Orizu noted that the money will be reinvested into the company. Beyond the cash prize, Orizu asserts that Jamit has gained increased global recognition and publicity with both local and international audiences. 

Launched in 2018 by Stan Agbadugo and Ike Orizu, Jamit is styled as “the African podcaster’s platform, built with love from Africa, for African podcast listeners and creators”. The startup released its first podcast in 2019, proceeding into podcast production and distribution, and became a podcast platform in 2020. According to Orizu, the startup has over 170 creators on its platform at the moment and has partnered with global giants, Dolby and Sony. 

Solving the problem of logistics for the African market is critical. Africa is still heavily reliant on roads which accounts for 80% of the movement of goods and passengers, according to the African Development Bank. Of that 80%, only 15% is paved in Nigeria, per this Stears report. On another hand, investment in logistics startups on the continent is not as easy as it seems. Ciku Mugambi, CEO of Kobo360, a Nigerian logistics startup, admitted that operating a logistic business in Africa is not “sexy” compared to other tech sectors like fintech, for instance.

Mugambi said this during a panel session at TechCabal’s flagship conference, Moonshot, on Thursday, October 12. “We are literally just moving goods and people from one place to another and most people don’t find that to be very exciting. There is no doubt about how important logistics is. Nothing goes anywhere except we provide the means for that to happen,” Mugambi said.

The inevitability of finance

Very closely associated with the logistics business is the consistent need for finance. Mugambi said this is inevitable because the business deals with micro-fleet owners who need to get paid before they run their next trip. “For us to mobilise as many transporters to guarantee reliable supply to our enterprise clients, we need that velocity to be happening faster. Because our bank won’t extend purchase orders financing, we have to bridge that gap,” she explained.

Another panellist, Miishe Addy, co-founder and CEO, Jetstream Africa, shares a similar view. Addy insisted that truck drivers should not be given loans to fulfil orders without any assets. She explained that unsecured loans can lead to loss of one’s investment in the business. “If lenders don’t have a security interest in a cargo, you are at a loss,” she said. Her argument is simple: no logistics company should give free money away. If credit is provided, it would have to be on top of the asset to mitigate against any form of default from the fleet owners.

Solving the problem a step at a time

Lack of finance is just one portion of the many issues that logistics companies face. Many logistic startups have to decide whether to own their own fleet or have another firm fulfil those orders. For investors, how these companies manage this aspect is top of mind at all times and the determinant factor for any investment. On the other hand, it is a challenge coordinating drivers of these trucks or e-hailing drivers in the mobility sector who battle fuel hikes, asset maintenance and poor road systems. 

Mugambi is positive about the outlook for logistics despite the fact that the sector is “highly fragmented, opaque and informal”. She admits that the business requires investors who are familiar with devaluation amidst the other economic situations plaguing the continent. “If I show my numbers when the naira was at ₦450 and now it’s ₦750, you are not asking what happened. Also, it requires investors who are in it for the long haul and a specific kind of capital attached to it,” she said.  

Another panellist, Onyeka Nduka, head of growth and marketing at Haul247, said it is time to activate the African Continental Free Trade Area  (AfCFTA) agreement and get government buy-in on road maintenance. “We need more financing and structure for the businesses to have access. I believe that private-public sector partnership will drive that, and it makes projects more efficient,” she added. 

General manager of FilmOne Entertainment, Ladun Awobokun, believes technology has provided transparency of numbers in Nollywood. Still, Nollywood has much work to do to boost cinema attendance.

The general manager of FilmOne Entertainment, Ladun Awobokun, has hailed the role of technology in bringing about what she calls a “transparency of numbers” in Nollywood.

Speaking at a fireside chat at the Moonshot Conference hosted by TechCabal, Awobokun noted that “A lot of tech has been used in Nollywood to simplify the way we do things. One which we’re most proud about, which has made our industry grow, is the transparency of numbers,” she said.

Awobokun highlighted Comscore, the global media measurement and analytics firm that provides data and analytics to evaluate media across platforms. The company had in 2019 announced that it was expanding into West and Southern Africa. It now partners with the Cinema Exhibitors Association of Nigeria (CEAN) to provide weekly performances of movies at the box office. The use of analytics to track the data of cinephiles has had a profound impact on Nollywood, informing how movie producers decide on the kind of movies they put out. Awobokun also added that technology has helped filmmakers confirm and track payments.

Despite these, Awobokun says technology can improve to create accessible options for filmmakers. “Cinema screens are expensive, sometimes between $30,000 and $70,000. It would be nice if someone came in with alternatives that are accessible for us,” she said.

The evolution of Nollywood
Awobokun disclosed that the industry had evolved over the last decade, particularly with respect to film quality and career development. The global appeal of Nollywood movies, such as The Black Book and Gangs of Lagos, speak to this, which she says informs why more international cinemas are coming to Nigeria to set up shop. These early successes are also creating a pipeline where local filmmakers go overseas to acquire skills to improve local content. “Nollywood is here to stay,“ Awobokun said. “It is now an industry where people can have full careers in areas like scriptwriting, unlike before.”

Improving cinema attendance

Despite the strides, Awobokun expressed some concern. She highlighted issues regarding cinema operations in Nigeria. “Let me give you a few numbers. Between January and September, in the cinema industry, over ₦4.8 billion [was spent], but there were only 1.6 million admissions. Lagos alone has 20 million people, yet there were only 1.6 million filmgoers in Nigeria for nine months.”

Awobokun says the low numbers in cinema attendance affect how moviemakers invest. “Cinema owners looking at these numbers will find them sobering,” she said. 

Through a trial-and-error approach, filmmakers learn the ropes of what kind of movies do well and how to market them. Awobokun said she knows from experience not to put out sombre movies during holiday seasons as they tend to perform poorly. Ultimately, she noted, “Investment in filmmaking isn’t an emotional decision; it’s a business one.” 

Less than eight years ago, the way people interacted with money was vastly different. But with the rapid growth of fintechs across the continent, money habits have changed and continue to. Josh Chibueze, co-founder and CMO at Piggyvest, in his keynote speech at Moonshot by TechCabal on October 12, shared some of the impact that fintechs have had and how they’re changing the habits of people who spend. 

“Before fintechs, it was hard to save and manage money. People used to open several bank accounts just to have different savings accounts. Fintech has changed our interaction with money, and a lot of impact has been made.” 

According to Chibueze, the advent of fintechs has hacked three key things: accessibility, control and flexibility with money. More people can now save in bits and access quick credit loans. Fintechs have revolutionised the banking industry in Nigeria and Africa, providing channels that reduce income inequality and poverty. Piggyvest, for instance, has paid back over $1.1 trillion since it launched in 2016. Fintechs have also done the work of helping to bank the unbanked and helped to improve social donations across the world.

However, the industry is not without challenges. Fintechs have to deal with regulatory issues from governmental bodies and authorities, fraud and also have to efficiently manage customer expectations and maintain their trust. Chibueze believes that collaboration is the future of fintech and one way to overcome these challenges.

“People often say that fintechs will overthrow traditional banks. I don’t think so. Collaboration is the way forward and will lead to exponential results. We all have a common problem, and we need to collaborate to solve these problems and create an inclusive financial future for everyone,” he said.

Another thing we can look forward to in the future of fintech is hyperfocusing. Chibueze believes that soon, we’ll see fintechs honing in on specific problems that the banking and financial industries face. 

Access to credit is rife with challenges in many parts of Africa. While fintechs have built credit solutions to bridge the credit gap, challenges still remain: many lenders buck at loan repayments. Yvonne Johnson, Co-founder/CEO of Indicina believes that the right customer education can help bridge this gap and build trust among borrowers and creditors. 

She made this observation while speaking on building trust among lenders at Moonshot, a flagship conference by TechCabal, which has gathered players and builders in the African tech space to network, collaborate, share insights, and celebrate innovation on the continent. 

Johnson is of the opinion that many Africans do not properly understand credit solutions which is a result of the financial literacy gap in the continent. African countries score the worst in terms of financial literacy in the world. Data from the S&P’s Global Financial Literacy survey suggest that financial literacy levels on the continent are lesser when compared to European counterparts. South Africa and Nigeria both have financial literacy levels of 42% and 26% while European countries have a range of 65%–75%. 

While access to credit is rife with challenges, it remains an important arsenal for every economy. Being able to borrow money at affordable interest rates is how households can build wealth, take advantage of opportunities, and take a bet on a business idea.

While SMEs take on loans to fund their businesses, Daniel Osineye, founder/CTO, Evolve Credit, suggested that credit solutions should be designed in a way that considers the business. “Don’t give out loans and expect the user to pay back in an unreasonable time frame. You have to be able to match the repayment circle of your business with the technology; you have to put them in the loop,” he said. 

Johnson echoed Osineye’s sentiment. According to her, lenders should try not to give out predatory loans.  While concluding the panel session, Dayo Ademola, managing director, Branch Nigeria, asserts that credit remains the most important piece of the financial ecosystem.

For most African startups, achieving the right level of scale means being present in multiple countries. But expansion comes with a lot of challenges; a startup must consider the legal and regulatory requirements, the market size, and finding product market fit for each country. 

Speaking at a panel session at Moonshot by TechCabal on Wednesday, October 11, the chief operating officers of Flutterwave, Paystack, and Autocheck, startups in multiple African countries, shared how their startups were able to expand. 

One thing a startup must get right before expanding from their home country is a paying customer base. Mayokun Fadeyibi, the COO of Autocheck Marketplace, said that a startup should have found a product market fit in a country before considering expansion. She added that an operator should also have “self-awareness” and a good grasp of the metrics of the business and that by scaling their technology as they scale the business, startups could avoid a common pitfall that might hinder their expansion drive. 

Bode Afobarin, the COO at Flutterwave, said that for Flutterwave’s expansion, the company developed a playbook covering business development, regulatory requirements, and information the startup had gathered since its inception. Likening the effect of the playbook to how Catholic churches are similar despite location, she advised all startups to create something similar. Last month, Axel Peyriere, the CEO of Auto24, an Ivorian startup that expanded into four countries simultaneously, told TechCabal that he leveraged his company’s documentation process to start the expansion process months before and that he was already preparing to launch in more countries because of this documentation.

One issue with expansion is finding a cost-effective approach to entering multiple markets. Amandine Lobelle, the COO at Paystack, advised startups to make tradeoffs and find a balance between expansion and cutting costs. She added that because of the year’s funding challenge, startups should not take the “growth at all costs” approach. 

Investing in any business comes with its own risks and rewards, and the African tech space is no different. Per Statista, the average startup failure rate in Africa stood at 54% in 2020. However, no investor takes a bet on a business expecting losses or risks, according to Olumide Soyombo, a partner at Voltron Capital. 

Soyombo made the assertion at the ongoing Moonshot conference, a flagship conference by TechCabal which has gathered players and builders in the African tech space to network, collaborate, share insights, and celebrate innovation on the continent. 

“When I am investing, I am optimising for the upside not down sides,” Soyombo said during a panel on “Thinking about risk and reward in Africa.”

It is important to note that the investing landscape of African startups has transformed over the past decade from very few players to a plethora of venture capital funds. A Disrupt Africa 2022 report alluded to this growth, noting that total annual funding for African tech startups has increased by over 1,000% since 2015.

Founder & MD at Ingressive Capital, Maya Horgan Famodu, another contributor on the panel, admits that the African tech startup ecosystem had changed since 2014 when she began to invest in the sector. “This is my 10th anniversary in tech since I started out in 2014—straight out of college,” she added.

The risks

Nonetheless, the risks in the tech ecosystem are as many as they come. The tech landscape can be quite daunting. The sector seems to be in a recovery mode this year as it opened with sober tales of a funding downturn. This has been exacerbated with the currency devaluation, corporate governance issues, and economic reforms which have stretched the Nigerian masses. 

The rewards

Two other panellists, senior associate, Verod-Kepple Africa Ventures, Oliva Gao, and Dolapo Morgan of Ventures Platform said that rewards abound in investing. However, Morgan said it is vital that when funds are raised via Venture Capital, they are returned at a 10 times rate.  To achieve that, Morgan explained that the startup receiving the fund must be solving a huge problem that can earn it a lot of revenue. 

One of the major goals of establishing a startup is to see it exit. Paystack’s acquisition by a US-based global payment company Stripe has demonstrated what is possible. However, the reality of that billion-dollar exit is quite grim. Morgan states that exits won’t look like Silicon Valley billion-dollar ones. “Sometimes, exits can take three years for a company to mature to a $100 million to $300 million exit,” Morgan said.