More than just great coffee ☕ 🇪🇹
Ethiopia is full of potential
Welcome to Tech Safari!
Your tour guide on African Tech 🧭
Today is Startup Saturday - where we dive into startup news in Africa - the world's most exciting continent.
Hello to the 339 new people who have joined the Safari since Tuesday! If you haven't already, sign up to join 4,657 smart folks curious about African Tech
I have a confession - by Thursday, I run out of words. Literally.
I struggle to put sentences together and write content.
I dont know if that's normal for writers or I'm the weird one. But it's okay - by Saturday morning I’m usually fine again.
Anyway, last night instead of pushing through and writing something insightful, I decided to test out an idea I had called The Safari Club.
The idea was to have an intimate WhatsApp community for people who want to go deeper into African tech, and share insights, ideas and perspectives in real-time.
I had something small and intimate in mind but it turns out people really liked the idea 😅
To make sure it’s an engaged community I'm capping it at 40 people who really want to be there. There are two ways to join:
- You can fill this out and I’ll pick the top 40 applications.
- You can refer three friends to Tech Safari for guaranteed entry. Find your referral link at the bottom of the email.
True Tech Safari fans will do both 😏 Hope to see some of you in there!
We’ve also got a few discussions coming up:
- Connect with Africa with Eche Emole (Co-founder of Afropolitan). Perfect if you want to find communities and ways to engage with African tech and culture
- Founders AMA (ask me anything) with Jasiel Martin-Odoom (Accion) and Marge Ntambi (Rare Breed). Come to this if you’re a founder and want insights on how to raise money.
Here's the tour plan for today 🧭
- More than just great coffee: Inside Ethiopia 🇪🇹
- Deal Roundup
- Events and Opportunities
- Tech Twitter
Quiz time before we start:
How much money do you think startups in Ethiopia raised between 2015-2022?
Alright, lets get this tour started!
Coffee in the morning, jazz in the evening
It’s February 2020. I’m working from blueMoon’s co-working space in Addis Ababa, Ethiopia.
Founders are coming in and out of the space. Startup 101 classes are being taught. The coffee is superb.
At the end of the day, I get a ride home with my driver Henok. He’s a driver on an app called Ride (the equivalent of Uber).
Before he started driving on Ride, he couldn’t find a job anywhere. Now he’s saving his money earned to start an e-commerce business.
I head out to dinner with a few founders and developers. We eat Injera with shekla tibs, before going to a jazz show at Fendika.
We’re all excited for the future of startups and tech starting in Ethiopia and taking over the continent.
Life is good.
The promised country?
Ethiopia is known for a lot of things - the best coffee in the world, amazing jazz music, delicious food and the most beautiful people 😏
But it was also Africa’s most promising country.
Ethiopia holds Africa’s second largest population - over 110 million people, with 70% of them under the age of 30.
And they were on a run of economic growth - averaging 9.5% growth per year for 15 years.
Infrastructure was being built, poverty was dropping, and the diaspora (like me) was coming back. The future was looking bright.
But unfortunately, all that momentum changed quickly - and none of it benefitted the tech ecosystem.
How much did you guess Ethiopian startups raised between 2015 and 2022?
Well, the answer is $14 million.
That’s a Series A round - Or a hyped Seed round if you’re an AI startup.
Here is how Ethiopia sits next to Nigeria, Egypt, South Africa and Kenya:
- Kenya: $1.28 billion
- Nigeria: $2.07 billion
- Egypt $800 million (between 2015-2021)
- South Africa: $993 million
So why is Ethiopia’s ecosystem not getting any love or attention? Two things have seriously stifled Ethiopia’s growth in the last few years.
First and most devastatingly is conflict.
Ethiopia found itself tangled in a brutal civil war that started in November 2020. It became the deadliest conflict of the 21st century, and the losses were tremendous.
Aside from the immense loss of life, displacement and damage inflicted on the Tigray region, Ethiopia’s growth streak slowed right down.
Economic growth dropped to 3.8% as the government spent over $2.5 billion on the war, and will spend $20 billion on reconstruction.
The government also cracked down on any ‘potential threats.’
Dr Eleni Gabre-Madhin - a hero in Ethiopian tech, founder of blueMoon incubator and the co-working space I would visit - claimed to be ethnically profiled when her house was searched.
A few days later, blueMoon was closed and under investigation (?) by the government.
Unsurprisingly, this has scared investors away from Ethiopia.
One of my portfolio companies had to move its HQ to Kenya because of low investor confidence in the country.
The good news is that after two years of destruction, a peace declaration was signed in November. Things are (very) slowly but surely getting better.
This leads us to the next point..
I spoke to Addis Alemayehou - Ethiopian tech ecosystem champion and friend of Tech Safari - to dig deeper.
Addis started Kazana Fund to let global investors get exposure to Ethiopia - because it’s such a difficult market to navigate.
For foreign investors, the minimum investment amount is $150,000 into Ethiopian companies.
And locally, Ethiopians who have the means to invest stick to what they know - like real estate and traditional, lower-risk businesses.
That means that for founders who want that quick family and friends round - it’s tough.
Nael, founder of Chapa, built Ethiopia’s first payment processor. And in 2022 he won the African Fintech Summit Award.
Chapa needs a Payment System Operator (PSO) and Payment Instrument Issuer (PII) license to operate.
Regulation prevents Chapa from taking foreign investment as a holder of the PSO and PII license - so Nael had to raise his pre-seed round from Ethiopia’s (limited) pool of investors.
Ethiopia’s history might colour in why its legal structures aren’t foreigner friendly.
Ethiopians love to flex that they weren’t colonised. When I was in Addis Ababa I never heard pop music - only lyrics in Amharic. We're proud people.
But with that pride, we have been slower to open up to the public.
Ethiopia came out of a communist regime in 1991, and since then has been focused on economic growth while being wary of outsiders.
Ethiopia focused on economic development with a set of five-year plans - mirroring the China's five-year economic plans.
But these plans weren't trade-friendly.
Ethiopia is still negotiating terms to join the World Trade Organisation - a process that began in 2003 - and Ethiopian laws make investment and trade hard for foreign investors.
Ethiopia’s conflict has scared investors away, and restrictive laws have made starting capital for startups difficult to reach - which stops the ecosystem from growing up.
Where to from here?
If there is one (more) trait Ethiopians have, it’s resilience.
Founders like Nael and investors like Addis are pushing through to build up the ecosystem and get more funding into the country.
And it could be taking a turn for the better.
Addis is excited about Ethiopia’s new Startup Act, which should make it easier for startups to raise money from global investors and remove the minimum threshold to invest.
Safaricom - Kenya's largest telco - is also entering Ethiopia, bringing MPesa (mobile money) with them.
But it’s going to take more of the Ethiopian government getting out of the way and global investors getting in to the country.
Ethiopia has had a rocky start, but I’m hopeful that it can catch up to the rest of Africa and produce great companies that push the population forward.
What do you think? Let me know here.
- Gameball, an Egyptian customer intelligence and marketing platform has raised $3.5 million in a seed round from 500 Global and PI Ventures.
- Jendaya, the Nigerian/British luxury e-commerce platform that connects African and African diaspora luxury brands with high-end consumers to global brands has raised $1.2 million in a pre-seed round from several angel investors and Ada VC.
- Senga, a Kenyan logistics startup that offers bulk and consolidation services to deliver fragmented loads to large supermarkets has raised an undisclosed amount from EchoVC.
- Curacel, a Nigerian insurtech that enables insurers to connect with digital distribution channels and administer claims has raised $3 million in a seed round from Tencent, Blue Point Capital, Y Combinator and many more.
- Terraa, the Moroccan foodtech that connects farmers with retailers, restaurants and service providers has raised $1.5 million in a pre-seed round led by FoodLabs.
- Buupass, a Kenyan startup - a marketplace that provides public transport operators with a bus management system has raised $1.3 million in a pre-seed round from Ajim Capital, Founders Factory and others.
Events + Opportunities
- Applications are open for the Growth Africa Accelerator Programme. Entrepreneurs from Kenya, Uganda, Ethiopia, Zambia and Ghana are encouraged to apply.
- We are hosting a Connect with Africa event with Eche Emole (Co-founder of Afropolitan) on Monday 20 February. Sign up here.
- Our third event will be a Founders AMA (ask me anything) event! Featuring Jasiel Martin- Odoom (Africa Investment Officer at Accion) and Marge Ntambi (Venture Fellow at Rare Breed) on Wednesday 1 March 2023. Sign up here.
Our favourite tweets on African tech this week
1/3 In an effort to help founders make smarter decisions when it comes time to raise venture capital financing, I pull back the curtain to discuss venture capital economics in the African context.
— 🅿️eter Oriaifo (@P_Oriaifo)
Feb 15, 2023
Great article by a great mind!
- Revenue = $66m
- Losses = $49.2m
- 2022 losses = $207m
- liquidity position = $227.8m
- Market cap = $370m
- Capital invested $1.7-2B
As an 👴🏿 who saw the first funding boom. Kids this is what happens when you try blitzscaling broken unit economics. It scales 🔥💥
— JasonNjoku (@JasonNjoku)
Feb 17, 2023
Should we do an article on Jumia next? 🤔
Love this message. Japa is an opportunity.
Let’s train Nigerians to service the world. There will be jara for us.
@dsn_ai_network is leading the charge. Imagine if we had 3 more of Bayo Adekanmbi in healthcare, education, agriculture
(please we don’t want in finance 🤣) twitter.com/bayoadekanmbi/…
— Ngozi Dozie (@ngozidozie)
Feb 16, 2023
Next week we're diving into the Japa Wave - stay tuned!
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