Africa Roundup: Nigerian fintech gets $360M, mints unicorn, draws Chinese VC

INSUBCONTINENT EXCLUSIVE:
November 2019 could mark when Nigeria (arguably) became Africa’s unofficial capital for fintech investment and digital finance
startups.The month saw $360 million invested in Nigerian-focused payment ventures
That is equivalent to roughly one-third of all the startup VC raised for the entire continent in 2018, according to Partech stats.A notable
trend-within-the-trend is that more than half — or $170 million — of the funding to Nigerian fintech ventures in November came from
Chinese investors
This marks a pivot (to tech) in China’s engagement with Africa
We’ll get to that.Before the big Chinese-backed rounds, one of Nigeria’s earliest fintech companies, Interswitch, confirmed its $1
billion valuation after Visa took a minority stake in the company
Interswitch would not disclose the amount to TechCrunch, but Sky News reporting pegged it at $200 million for 20%.Founded in 2002
by Mitchell Elegbe, Interswitch pioneered the infrastructure to digitize Nigeria’s then predominantly paper-ledger and cash-based
economy.The company now provides much of the tech-wiring for Nigeria’s online banking system that serves Africa’s largest economy and
population
Interswitch offers a number of personal and business finance products, including its Verve payment cards and Quickteller payment app.The
financial services firm has expanded its physical presence to Uganda, Gambia and Kenya
The Nigerian company also sells its products in 23 African countries and launched a partnership in August for Verve cardholders to make
payments on Discover’s global network.Visa and Interswitch touted the equity investment as a strategic collaboration between the two
companies, without a lot of detail on what that will mean.One point TechCrunch did lock down is Interswitch’s (long-awaited) and imminent
IPO
A source close to the matter said the company will list on a major exchange by mid-2020.For the near to medium-term, Interswitch could stand
as Africa’s sole tech-unicorn, as e-commerce venture Jumia’s volatile share-price and declining market-cap — since an April IPO —
have dropped the company’s valuation below $1 billion.Circling back to China, November was the month that signaled Chinese actors are all
in on African tech.In two separate rounds, Chinese investors put $220 million into OPay and PalmPay — two fledgling startups with plans to
scale in Nigeria and the broader continent.PalmPay, a consumer-oriented payments product, went live last month with a $40 million seed
round (one of the largest in Africa in 2019) led by Africa’s biggest mobile-phone seller — China’s Transsion.The startup was upfront
about its ambitions, stating in a company release its goals to become “Africa’s largest financial services platform.”To that end,
PalmPay conveniently entered a strategic partnership with its lead investor
The startup’s payment app will come pre-installed on Transsion’s mobile device brands, such as Tecno, in Africa — for an estimated
reach of 20 million phones.PalmPay also launched in Ghana in November and its U.K
and Africa-based CEO, Greg Reeve, confirmed plans to expand to additional African countries in 2020.OPay’s $120 million Series B was
announced several days after the PalmPay news and came only months after the mobile-based fintech venture raised $50 million.Founded by
Chinese-owned consumer internet company Opera — and backed by nine Chinese investors — OPay is the payment utility for a suite of Opera
-developed internet-based commercial products in Nigeria
These include ride-hail apps ORide and OCar and food delivery service OFood.With its latest Series A, OPay announced it would expand in
Kenya, South Africa and Ghana.Though it wasn’t fintech, Chinese investors also backed a (reported) $30 million Series B for East African
trucking logistics company Lori Systems in November.With OPay, PalmPay and Lori Systems, startups in Africa have raised a combined $240
million from 15 Chinese investors in a span of months.There are a number of things to note and watch out for here, as TechCrunch reporting
has illuminated (and will continue to do in follow-on coverage).These moves mark a next chapter in China’s engagement in Africa and could
raise some new issues
Hereto, the country’s interaction with Africa’s tech ecosystem has been relatively light compared to China’s deal-making on
infrastructure and commodities.There continues to be plenty of debate (and critique) of China’s role in Africa
This new digital phase will certainly add a fresh component to all that
One thing to track will be data-privacy and national-security concerns that may emerge around Chinese actors investing heavily in African
mobile consumer platforms.We’ve seen lines (allegedly) blur on these matters between Chinese state and private-sector actors with
companies such as Huawei.As OPay and PalmPay expand, they may need to do some reassuring of African regulators as countries (such as Kenya)
establish more formal consumer protection protocols for digital platforms.One more thing to follow on OPay’s funding and planned expansion
is the extent to which it puts Opera (and its entire suite of consumer internet products) in competition with multiple actors in Africa’s
startup ecosystem
Opera’s Africa ventures could go head to head with Uber, Jumia and M-Pesa — the mobile money-product that put Kenya out front on
digital finance in Africa before Nigeria.Shifting back to American engagement in African tech, Twitter and Square CEO Jack Dorsey was on
the continent in November
No sooner than he’d finished his first trip, Dorsey announced plans to move to Africa in 2020, for three to six months, saying on Twitter,
“Africa will define the future (especially the bitcoin one!).”We still don’t know much about what this last trip — or his future
foray — mean in terms of concrete partnerships, investment or market moves in Africa from Dorsey and his companies. He visited Nigeria,
Ghana, South Africa and Ethiopia and met with leaders at Nigeria’s CcHub (Bosun Tijani), Ethiopia’s Ice Addis (Markos Lemma) and did
some meetings with fintech founders in Lagos (Paga’s Tayo Oviosu).I know pretty well most of the organizations and people Dorsey talked to
and nothing has shaken out yet in terms of partnership or investment news from his recent trip.On what could come out of Dorsey’s 2020
move to Africa, per his tweet and news highlighted in this roundup, a good bet would be it will have something to do with fintech and
Square.More Africa-related stories @TechCrunchAfrican tech around the ‘net