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November 18, 2018
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Growing pains at venture-backed Moogsoft lead to layoffs

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Eight months after bringing in a $40 million Series D, Moogsoft‘s co-founder and chief executive officer Phil Tee confirmed to TechCrunch that the IT incident management startup had shed 18 percent of its workforce, or just over 30 employees.

The layoffs took place at the end of October; shortly after, Moogsoft announced two executive hires. Among the additions was Amer Deeba, who recently resigned from Qualys after the U.S. Securities and Exchange Commission charged him with insider trading.

Founded in 2012, San Francisco-based Moogsoft provides artificial intelligence for IT operations (AIOps) to help teams work more efficiently and avoid outages. The startup has raised $90 million in equity funding to date, garnering a $220 million valuation with its latest round, according to PitchBook. It’s backed by Goldman Sachs, Wing Venture Capital, Redpoint Ventures, Dell’s corporate venture capital arm, Singtel Innov8, Northgate Capital and others. Wing VC founder and long-time Accel managing partner Peter Wagner and Redpoint partner John Walecka are among the investors currently sitting on Moogsoft’s board of directors.

Tee, the founder of two public companies (Micromuse and Riversoft) admitted the layoffs affected several teams across the company. The cuts, however, are not a sign of a struggling business, he said, but rather a right of passage for a startup seeking venture scale.

“We are a classic VC-backed startup that has sort of grown up,” Tee told TechCrunch earlier today. “In pretty much every successful company, there is a point in time where there’s an adjustment in strategy … Unfortunately, when you do that, it becomes a question of do we have the right people?”

Moogsoft doubled revenue last year and added 50 Fortune 200 companies as customers, according to a statement announcing its latest capital infusion. Tee said he’s “extremely chipper” about the road ahead and the company’s recent C-suite hires.

Moogsoft’s newest hires, CFO Raman Kapur (left) and COO Amer Deeba (right).

Moogsoft announced its latest executive hires on November 2, only one week after completing the round of layoffs, a common strategy for companies looking to cast a shadow on less-than-stellar news, like major staff cuts. Those hires include former Splunk vice president of finance Raman Kapur as Moogsoft’s first-ever chief financial officer and Amer Deeba, a long-time Qualys executive, as its chief operating officer.

Deeba spent the last 17 years at Qualys, a publicly traded provider of cloud-based security and compliance solutions. In August, he resigned amid allegations of insider trading. The SEC announced its charges against Deeba on August 30, claiming he had notified his two brothers of Qualys’ missed revenue targets before the company publicly announced its financial results in the spring of 2015.

“Deeba informed his two brothers about the miss and contacted his brothers’ brokerage firm to coordinate the sale of all of his brothers’ Qualys stock,” the SEC wrote in a statement. “When Qualys publicly announced its financial results, it reported that it had missed its previously-announced first-quarter revenue guidance and that it was revising its full-year 2015 revenue guidance downward. On the same day, Deeba sent a message to one of his brothers saying, ‘We announced the bad news today.’ The next day, Qualys’s stock price dropped 25%. Although Deeba made no profits from his conduct, Deeba’s brothers collectively avoided losses of $581,170 by selling their Qualys stock.”

Under the terms of Deeba’s settlement, he is ineligible to serve as an officer or director of any SEC-reporting company for two years and has been ordered to pay a $581,170 penalty.

Tee, for his part, said there was never any admission of guilt from Deeba and that he’s already had a positive impact on Moogsoft.

“[Deeba] is a tremendously impressive individual and he has the full confidence of myself and the board,” Tee said.

 

News Source = techcrunch.com

81% of VC firms don’t have a single black investor — BLCK VC wants to change that

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Venture capital has a diversity problem.

BLCK VC, a new organization founded by Storm Ventures associate Frederik Groce and NEA associate Sydney Sykes meant to connect, engage and advance black venture capitalists, is ready for a new era in the industry.

Their mission: Turn 200 black investors into 400 black investors by 2024.

“We think of ourselves as an organization formed by black VCs for blacks VCs to increase the representation of black investors,” Sykes told TechCrunch.

“You can look around and say ‘well, I know five black VCs,’ but you can also say this firm does not have a single black VC, they may not even have a single underrepresented minority … We want to make firms reckon with the fact that there is a racial diversity problem; there is a lack of black VCs and every firm should really care about it.”

BLCK VC has been at work since the beginning of 2018, building and expanding a network of black investors in the San Francisco area, Los Angeles and New York. They seek to provide a community for black investors, a space for honest conversations and questions, and a resource for VC firms looking to make more diverse hires. Today at AfroTech, the organization is taking the wraps off its plan to diversify the VC industry.

“There’s an incredible need to ensure there are resources in place so people don’t churn out of the community; getting people in the door is only half the battle,” Groce told TechCrunch. “This is us saying ‘hey, get involved.’ It’s time to broaden and give others access to what we are doing. It takes a village if we really want to see things start to shift.”

According to data collected by Richard Kerby, a partner at Equal Ventures, 81 percent of VC firms don’t have a single black investor. Roughly 50 percent of black investors in the industry are at the associate level, or the lowest level at a firm; only 2 percent of black investors are partners at a firm.

“It takes a village if we really want to see things start to shift,” BLCK VC co-chair Frederik Groce told TechCrunch.

The lack of representation, especially in powerful positions, has made it difficult for black aspiring investors to enter the industry, as well as for black investors to stay in VC.

“VC, more than a lot of industries, is very network driven in the way that they hire,” Sykes said. “The network started 40 or 50 years ago with a lot of white men who had the wealth at the time to invest in companies. As VC has grown, a lot of the people who started it hired people they knew, there wasn’t an effort to recruit from outside of their network. That has made VC this very homogenous industry.”

Aside from Kerby’s data and a Harvard Business School study on diversity in innovation, there is limited data available on black VCs and funding for black founders. Digitalundivided‘s research arm ProjectDiane is one of the few organizations to report on funding for black female founders, for example. According to its latest report, black women have raised just .0006 percent of all tech venture funding since 2009.

BLCK VC’s board includes Adina Tecklu, a venture investor at Canaan Partners; Brian Hollins, a growth equity investor at Goldman Sachs; Earnest Sweat, an investment manager at Prologis Ventures; and Elliott Robinson, a partner at M12 Ventures.

News Source = techcrunch.com

Local venture capital fund formation is on the rise in Africa, led by Nigeria

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Africa’s VC landscape is becoming more African with an increasing number of investment funds headquartered on the continent and run by locals, according to data from Crunchbase.

The study also tracked the emergence of homegrown corporate venture arms and more Africans in top positions at outside funds. These results derived from a year-long project to boost Crunchbase’s Africa data capture and increase awareness of its platform across the continent’s tech ecosystem.

Drawing on its database and primary source research, Crunchbase identified 51 “viable” Africa-focused VC funds globally—defining viable as formally established entities with 7-10 investments or more in African startups, from seed to series stage.

Those who made the list with 7 investments indicated they would reach 10 by early 2019.  

Of the 51 funds investing in African startups, 22 (or 43 percent) were headquartered in Africa and managed by Africans.

Of the 22 African managed and located funds, 9 (or 41 percent) were formed since 2016 and 9 are Nigerian.

Four of the 9 Nigeria located funds were formed within the last year: Microtraction, Neon Ventures, Beta Ventures, and CcHub’s Growth Capital fund.

The research prioritized organizational viability and number of investments over fund and round size. Therefore, the range in typical investment values across the group was wide, with some offering $25K seed investments, and others doing $1 to $10 million rounds at the series A and B stage.

In the group of 51 total funds, TPG’s Growth Fund led the largest round on the continent in 2018 (so far):  $47.5 million to Kenyan fintech startup Cellulant.

This has only been topped by the $52 million round to South Africa’s Jumo, but that was led by Goldman Sachs—which (by the information we have) hasn’t invested significantly in African startups, aside from Jumia.   

The Nigerian funds with the most investments were EchoVC (20) and Ventures Platform (23).

Notably active funds in the group of 51 included Singularity Investments (18 African startup investments) Ghana’s Golden Palm Investments (17) and Musha Ventures (36).

At least one corporate venture arm—Safaricom’s Spark Venture Fund—made Crunchbase’s list of 51. The research also tracked a rise in corporate venture funding and acquisition activity. MTN has invested in African startups and Standard Bank added $1 million to Founders Factory’s new African accelerator. Fintech firm Interswitch has been in the acquisition market and established its E-growth Fund to invest in startups.

Cellulant CEO Ken Njoroge indicated recently his company will likely go acquisition shopping for local startups in the near future.

During the course of Crunchbase’s research sources speaking on background flagged the pending launch of three new African corporate venture arms within the next 12 to 16 months.

In addition to tracking more funds on the continent, another emerging trend point was Africans in senior positions at those located elsewhere—including the three that raised the most capital over the last 24 months.

Former Nigerian ICT minister Omobola Johnson is a senior partner at TLcom Capital’s $40 million fund. Yemi Lalude is Managing Partner of TPG Growth’s Africa fund, which announced $2 billion in its coffers last year. And at French firm Partech—which raised $70 million for its Africa fund—Tidjane Deme is General Partner.

Crunchbase’s overall findings come as a several recent articles (and a heap of Twitter debate) have expressed concern about possible outsized influence of external actors in Africa’s tech ecosystem — primarily East Africa — and bias among VC investors toward non-African founders.

More accurate data on Sub-Saharan Africa’s VC could help better inform these discussions.

Pinning down solid stats on the region’s nascent startup scene is a budding exercise. The core growth in Sub-Saharan Africa’s tech sector has occurred over the last 5-7 years so there’s less accompanying infrastructure—i.e., analyst reporting, long-term databases, and robust media coverage—than other markets

Some VC firms have taken stabs at quantifying the value of VC investment over select timeframes. In 2017, Village Capital did a report tracking fintech funding in East Africa.

The last two years, Partech and media firm Disrupt Africa have done reports on Africa’s annual VC values. Their diverging numbers demonstrate the continued challenges to producing confident stats. Partech’s study tallied 2017 funding to African startups at $560 million, while Disrupt Africa came up with $195 million for the same year.

For its part, Crunchbase aims to create as accurate a VC representation for Africa as it does for other global markets. In addition to tracking stats on African funds, the platform has extended its  Venture Program—which allows partners to directly update their Crunchbase data and investments.

To date, Crunchbase has added 33 African focused Venture Program partners including Greenhouse Capital, TLcom Capital, Draper Darkflow, Silvertree Internet Holdings, Naspers, Orange Digital Ventures, and Accion Venture Lab.

News Source = techcrunch.com

Africa Roundup: Paga goes global and 4 startups raise $99M in VC

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Nigerian digital payments startup Paga is gearing up for international expansion with a $10 million round led by the Global Innovation Fund.

The company is exploring the release of its payments product in Ethiopia, Mexico, and the Philippines—CEO Tayo Oviosu told TechCrunch.

Paga looks to go head to head with regional and global payment players, such as PayPal,  Alipay, and Safaricom according to Oviosu.

“We are not only in a position to compete with them, we’re going beyond them,” he  said of Kenya’s  href=”https://crunchbase.com/organization/m-pesa” data-saferedirecturl=”https://www.google.com/url?q=https://crunchbase.com/organization/m-pesa&source=gmail&ust=1538690131434000&usg=AFQjCNFh9TKfy2mvIHjw_XVc1R63-ggIJg”>M-Pesa  mobile money product. “Our goal is to build a global payment ecosystem across many emerging markets.”

Launched in 2012, Paga has created a multi-channel network and platform to transfer money, pay-bills, and buy things digitally 9 million customers in Nigeria—including 6000 businesses.

Since inception, the startup has processed 57 million transactions worth $3.6 billion, according to Oviosu. He joined Cellulant CEO Ken Njoroge and Helios Investment Partners’ Fope Adelowo at Disrupt San Francisco to discuss fintech and Africa’s tech ecosystem.

South African fintech startup Jumo raised a $52 million round (led by Goldman Sachs) to bring its fintech services to Asia. The company—that offers loans to the unbanked in Africa—has opened an office in Singapore to lead the way.

The new round takes Jumo to $90 million raised from investors and also saw participation from existing backers that include Proparco — which is attached to the French Development Agency — Finnfund, Vostok Emerging Finance, Gemcorp Capital, and LeapFrog Investments.

Launched in 2014, Jumo specializes in social impact financial products. That means loans and saving options for those who sit outside of the existing banking system, and particularly small businesses.

To date, it claims to have helped nine million consumers across its six markets in Africa and originated over $700 million in loans. The company, which has some 350 staff across 10 offices in Africa, Europe and Asia, was part of Google’s Launchpad accelerator last year. Jumo is led by CEO Andrew Watkins-Ball, who has close to two decades in finance and investing.

Lagos based Paystack raised an $8 million Series A round led by Stripe.

In Nigeria the company’s payment API integrates with tens of thousands of businesses, and in two years it has grown to process 15 percent of all online payments.

In 2016, Paystack became the first startup from Nigeria to enter Y Combinator, and the incubator is doing some follow-on investing in this round.

Other strategic investors in this Series A include Visa and the Chinese online giant Tencent, parent of WeChat and a plethora of other services. Tencent also invested in Paystack’s previous round: the startup has raised $10 million to date.

Paystack integrates a wide range of payment options (wire transfers, cards, and mobile) that Nigerians (and soon, those in other countries in Africa) use both to accept and make payments. There’s more about the company’s platform and strategy in this TechCrunch feature.

South African startup Yoco raised $16 million in a new round of funding to expand its payment management and audit services for small and medium sized businesses as it angles to become one of Africa’s billion dollar businesses.

To get there the company that “builds tools and services to help SMEs get paid and manage their business” plans to tap $20 billion in commercial activity that the company’s co-founder and chief executive, Katlego Maphai estimates is waiting to move from cash payments to digital offerings.

Yoco offers a point of sale card reader that links to its proprietary payment and performance software at an entry cost of just over $100.

With this kit, cash based businesses can start accepting cards and tracking metrics such as top selling products, peak sales periods, and inventory flows.

Yoco has positioned itself as a missing link to “solving an access problem” for SMEs. Though South Africa has POS and business enterprise providers — and relatively high card (75 percent) and mobile penetration (68 percent) — the company estimates only 7 percent of South African businesses accept cards.

Yoco says it is already processing $280 million in annualized payment volume for just under 30,000 businesses.

The startup generates revenue through margins on hardware and software sales and fees of 2.95 percent per transaction on its POS devices.

Yoco will use the $16 million round on product and platform development, growing its distribution channels, and acquiring new talent.

Emerging markets credit startup Mines.io closed a $13 million Series A round led by The Rise Fund, and looks to expand in South America and Asia.

Mines provides business to consumer (B2C) “credit-as-a-service” products to large firms.

“We’re a technology company that facilitates local institutions — banks, mobile operators, retailers — to offer credit to their customers,” Mines CEO and co-founder Ekechi Nwokah told TechCrunch.

Most of Mines’ partnerships entail white-label lending products offered on mobile phones, including non-smart USSD devices.

With offices in San Mateo and Lagos, Mines uses big-data (extracted primarily from mobile users) and proprietary risk algorithms “to enable lending decisions,” Nwokah explained.

Mines started operations in Nigeria and counts payment processor Interswitch and mobile operator Airtel as current partners. In addition to talent acquisition, the startup plans to use the Series A to expand its credit-as-a-service products into new markets in South America and Southeast Asia “in the next few months,” according to its CEO.

Nwokah wouldn’t name specific countries for the startup’s pending South America and Southeast Asia expansion, but believes “this technology is scalable across geographies.”

As part of the Series A, Yemi Lalude from TPG Growth (founder of The Rise Fund) will join Mines’ board of directors.

 

Digital infrastructure company Liquid Telecom is betting big on African startups by rolling out multiple sponsorships and free internet across key access points to the continent’s tech entrepreneurs.

The Econet Wireless subsidiary is also partnering with local and global players like Afrilabs and Microsoft­­ to create a cross-border commercial network for the continent’s startup community.

“We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s  Head of Innovation Partnerships Oswald Jumira told TechCrunch.

With 13 offices on the continent, Liquid Telecom’s core business is building the infrastructure for all things digital in Africa.

The company provides voice, high-speed internet, and IP services at the carrier, enterprise, and retail level across Eastern, Central, and Southern Africa.  It operates data centers in Nairobi and Johannesburg with 6,800 square meters of rack space.

Liquid Telecom has built a 50,000 kilometer fiber network, from Cape Town to Nairobi and this year switched on the Cape to Cairo initiative—a land based fiber link from South Africa to Egypt.

Though startups don’t provide an immediate revenue windfall, the company is betting they will as future enterprise clients.

“Step one…in supporting startups has been….supporting co-working spaces and events with sponsorships and free internet,” Liquid Telecom CTO Ben Roberts told TechCrunch. “Step two is helping startups to adopt…business services.”

Liquid Telecom provides free internet to 30 hubs in seven countries and is active sponsoring startup related events.

On the infrastructure side, it’s developing commercial services for startups to plug into.

“At the early stage and middle stage, we’re offering startups connectivity, skills development, and access to capital through the hubs,” said Liquid Telecom’s Oswald Jumira.

“When they reach the more mature level, we’re focused on how we can scale them up…and be a go to market partner for them. To do that they’ll need to leverage…cloud services.”

Microsoft and Liquid Telecom announced a partnership in 2017 to offer cloud services such as Microsoft’s Azure, Dynamics 365, and Office 365 to select startups through free credits—and connected to comp packages of Liquid Telecom product offerings.

On the venture side, Liquid Telecom doesn’t have a fund but that could be in the cards.

“We haven’t yet started investing in startups, but I’d like to see that we do,” said chief technology officer Ben Roberts. “That can be the next move onwards… from having successful business partnerships.”

And finally, tickets are now available here for Startup Battlefield Africa  in Lagos this December. The first two speakers were also announced, TLcom Capital senior partner and former minister of communication technology for Nigeria Omobola Johnson and Singularity Investment’s Lexi Novitske will discuss keys to investing across Africa’s startup landscape.

More Africa Related Stories @TechCrunch

African Tech Around the Net     

News Source = techcrunch.com

Africa’s Jumo raises $52M led by Goldman to bring its fintech services to Asia

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Asia’s fintech scene is poised to get a little larger after Jumo, a company that offers loans to the unbanked in Africa, revealed plans to expand into the continent. To get the ball rolling, Jumo has opened an office in Singapore to lead the way and landed a massive $52 million investment led by banking giant Goldman Sachs to fuel the growth.

The new round takes Jumo to $90 million raised from investors. While Goldman is the lead — and standout name — the round also saw participation from existing backers that include Proparco — which is attached to the French Development Agency — Finnfund, Vostok Emerging Finance, Gemcorp Capital, and LeapFrog Investments.

Jumo launched in 2014 and it specializes in social impact financial products. That means loans and saving options for those who sit outside of the existing banking system, and particularly small businesses. To date, it claims to have helped nine million consumers across its six markets in Africa and originated over $700 million in loans. The company, which has some 350 staff across 10 offices in Africa, Europe and Asia, was part of Google’s Launchpad accelerator last year and it is led by CEO Andrew Watkins-Ball, who has close to two decades in finance and investing.

Watkins-Ball told TechCrunch that he believes Jumo’s experience working in Africa sets it up perfectly to offer similar services in markets across Asia.

“We grew up in a very tough play yard,” he said in an interview. “We built our initial success in Tanzania which is probably one of the hardest [financial] markets in the world. A lot of these environments [in Asia] look more attractive.”

Unlike the West, where challengers are trying to unseat banks, fintech startups in emerging markets work with the existing system. That isn’t some cop-out, it actually makes perfect sense. Banks simply aren’t equipped to deal with customers seeking small loans in the hundreds of U.S. dollar bracket.

Jumo CEO Andrew Watkins-Ball believes his company’s work in Africa is ideal preparation for its expansion into Asia

Financially, the returns aren’t there from these customers and it doesn’t make sense for banks to invest resources sounding out a prospective loan. Even if they wanted to, they couldn’t vet these would-be customers, though. Many emerging markets simply don’t have the formalized credit checking systems that exist in the West, while many of the unbanked (or ‘less banked’) consumers wouldn’t even show up if they did due to a range of factors.

That’s where a new approach is needed. Fintech startups essentially act like a funnel. They manage the customer acquisition and retention, develop systems to assess credit based on alternative signals and, over time, build up a customer profile that reduces credit risk. That suits banks because they don’t need to handle the nitty-gritty and, when it works well, the startups bring them larger enough volumes of small loans that are a worthwhile opportunity for financial institutions.

Just looking at recent funding deals, the model is evident in markets like India — where ZestMoney pulled in funds last month — and Southeast Asia, where Experian backed fintech startup C88.

Watkins-Ball said Jumo is aiming to do the same having already proven its model in Africa. He acknowledged that a number of startups are also tackling the problem and welcomed the increase competition and growth potential across the fintech and micro-financing space.

“We’ve offered services to millions of new customers who weren’t part of the banking ecosystems,” he explained. “Essentially we grow the addressable market for banks.”

Already, Jumo has begun offering services in Pakistan and it has plans to open up in more markets in Asia, although Watkins-Ball isn’t saying which ones or when right now. But, in addition to proving its model, he believes that Jumo has already shown it can adapt to new markets.

“The differences between countries like Ghana, Tanzania and Zambia are as great as those between India, China and Indonesia,” he told TechCrunch. “So we’ve had to learn to use our platform, which we built to be flexible, and localize in order to fit the customer.”

That’s backed up by Goldman Sachs executive director Jules Frebault, who said in a statement: “There’s an immense opportunity across Africa and beyond for Jumo to build on their successful track record developing digital marketplace infrastructure to offer mobile subscribers access to relevant financial products.”

In addition to Asian expansions, Jumo’s new capital will also go towards expanding its current selection of productions in Africa. In particular, Watkins-Ball says the company is working to partner with more banks and it plans to introduce “new generations” of saving products.

While it isn’t taking its foot off the pedal in Africa, he said Jumo will likely devote the majority of its resources to the Asia expansion plan. That’ll make Jumo a very notable addition to a fintech scene that is already showing significant potential across the Asian region.

News Source = techcrunch.com

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