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May 26, 2019
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African e-commerce startup Jumia’s shares open at $14.50 in NYSE IPO

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Pan-African e-commerce company Jumia listed on the New York Stock Exchange today, with shares beginning trading at $14.50 under ticker symbol JMIA. This comes four weeks after CEO Sacha Poignonnec confirmed the IPO to TechCrunch and Jumia filed SEC documents.

With the public offering, Jumia becomes the first startup from Africa to list on a major global exchange.

In an updated SEC filing, Jumia indicated it is offering 13,500,000 ADR shares, for an opening price spread of $13 to $16 per share, representing 17.6 percent of all company shares. The IPO could raise up to $216 million for the internet venture.

Since the original announcement (and reflected in the latest SEC docs), Mastercard Europe pre-purchased $50 million in Jumia ordinary shares.

The IPO creates another milestone for Jumia. The company became the first African startup unicorn in 2016, achieving a $1 billion valuation after a funding round that included Goldman Sachs, AXA and MTN.

There’s a lot to breakdown on Jumia’s going public. The company is often dubbed the “Amazon of Africa,” and like Amazon, Jumia comes with its own mixed buzz. Jumia’s SEC F-1 prospectus offers us more insight into the venture, and perhaps any startup from Africa, thus far.

About Jumia

Founded in Lagos in 2012 with Rocket Internet  backing, Jumia now operates multiple online verticals in 14 African countries. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.

Jumia’s original co-founders included Nigerian tech entrepreneurs Tunde Kehinde and Raphael, but both departed in 2015 to form other startups in fintech and logistics.

Starting in Nigeria, the company created many of the components for its digital sales operations. This includes its JumiaPay payment platform and a delivery service of trucks and motorbikes that have become ubiquitous with the Lagos landscape. Jumia has extended this infrastructure as an e-commerce fulfillment product called Jumia Services.

Jumia has also opened itself up to Africa’s traders by allowing local merchants to harness Jumia to sell online. The company has over 80,000 active sellers on the platform using the company’s payment, delivery, and data-analytics services, Jumia Nigeria CEO Juliet Anammah told TechCrunch a previously.

The most popular goods on Jumia’s shopping site include smartphones, washing machines, fashion items, women’s hair care products, and 32-inch TVs, according to Anammah.

Jumia an African startup?

Like Amazon, Jumia brings its own mix of supporters and critics. On the critical side, there are questions of whether it’s actually an African startup. The parent for Jumia Group is incorporated in Germany and current CEOs Jeremy Hodara and Sacha Poignonnec are French.

On the flipside, original Jumia co-founders (Kehinde and Afeodor) are African. The company is headquartered (and also incorporated) in Africa (Lagos), operates exclusively in Africa, pays taxes on the continent, employs 5,128 people in Africa (page 125 of K-1), and the CEO of its largest country operation (Nigeria) Juliet Anammah is Nigerian.

The Africa authenticity debate often shifts into questions of a Jumia diversity deficit, which is of course important from Silicon Valley to Nairobi. The company’s senior management and board is a mix of Africans and expats. Golden State Warriors basketball player and tech investor Andre Iguodala joined Jumia’s board this spring with a priority on “diversity and making sure the African culture is in the company,” he told TechCrunch.

Can Jumia turn a profit?

The Jumia authenticity and diversity debates will no doubt roll on. But the biggest question—the driver behind the VC, the IPO, the founders, and the people buying Jumia’s shares—is whether the startup can generate profits and ROI.

Obviously some of the world’s top venture investors, such as Jumia backers Goldman, AXA, and Mastercard, think so. But for Jumia skeptics, there are the big losses. The company has generated years and years of losses, including negative EBITDA of €172 million in 2018 compared to revenues of €139 that same year.

To be fair to Jumia, most startups (e-commerce startups in particular) rack up losses for years before getting into the black. And operating in a greenfield sector in Africa—where it had to create much of the surrounding infrastructure to do B2C online sales—has presented higher costs for Jumia than e-commerce startups elsewhere.

On the prospects for Jumia’s profitability, two things to watch will be Jumia’s fulfillment expenses and a shift to more revenue from its non-goods-delivery services, which offer lower unit costs and higher-margins. Per Jumia’s SEC F-1 index (see above) freight and shipping make up over half of its fulfillment expenses.

So Jumia has not turned a profit but its revenues have increased steadily, up 11 percent to €93.8M (roughly $106.2 million) in 2017 and up again to €130M (or $147 million) in 2018. If the company boosts customer acquisition and lowers fulfillment costs—which could come from more internet services revenue and platform investment with IPO capital—it could close the gap between revenues and losses. This reflects the equation for most e-commerce startups. With the IPO Jumia will have to publish its first full public financials in 2019, which will provide a better picture of profitability prospects.

Jumia’s IPO and African e-commerce?

There’s is, of course, a bigger play in Jumia’s IPO. One connected to global e-commerce and the future of online retail in Africa.

Jumia going public comes as Africa’s e-commerce landscape has seen its share of ups and downs, notably several failures in DealDey shutting down and the distressed acquisition of Nigerian e-commerce hopeful Konga.com.

As for the big global names, Alibaba has talked about Africa expansion, but for the moment has not entered in full.

Amazon  offers limited e-commerce sales on the continent, but more notably, has started offering AWS services in Africa.

And this week, DHL came on the scene launching its Africa eShop platform with 200 global retailers on board, in partnership with MallforAfrica’s Link Commerce fulfillment service.

Competition to capture Africa’s digitizing consumer markets—expected to spend $2 billion online by 2025, according to McKinsey—could get fierce, with more global entries, acquisitions, and competition on fulfillment services all part of the mix.

And finally, the outcome of Jumia’s IPO carries weight even for its competitors. “Many things, like business decisions and VC investments across Africa’s e-commerce sector are on on hold,” an African e-commerce exec told TechCrunch on background.

“Everyone’s waiting to see what happens with Jumia’s IPO and how they perform,” the exec said.

So the share-price connected to NYSE ticker sign JMIA could reflect not just investor confidence in Jumia, but investor confidence in African e-commerce overall.

African e-commerce startup Jumia files for IPO on NYSE

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Pan-African e-commerce company Jumia filed for an IPO on the New York Stock Exchange today, per SEC documents and confirmation from CEO Sacha Poignonnec to TechCrunch.

The valuation, share price and timeline for public stock sales will be determined over the coming weeks for the Nigeria-headquartered company.

With a smooth filing process, Jumia will become the first African tech startup to list on a major global exchange.

Poignonnec would not pinpoint a date for the actual IPO, but noted the minimum SEC timeline for beginning sales activities (such as road shows) is 15 days after submitting first documents. Lead adviser on the listing is Morgan Stanley .

There have been numerous press reports on an anticipated Jumia IPO, but none of them confirmed by Jumia execs or an actual SEC, S-1 filing until today.

Jumia’s move to go public comes as several notable consumer digital sales startups have faltered in Nigeria — Africa’s most populous nation, largest economy and unofficial bellwether for e-commerce startup development on the continent. Konga.com, an early Jumia competitor in the race to wire African online retail, was sold in a distressed acquisition in 2018.

With the imminent IPO capital, Jumia will double down on its current strategy and regional focus.

“You’ll see in the prospectus that last year Jumia had 4 million consumers in countries that cover the vast majority of Africa. We’re really focused on growing our existing business, leadership position, number of sellers and consumer adoption in those markets,” Poignonnec said.

The pending IPO creates another milestone for Jumia. The venture became the first African startup unicorn in 2016, achieving a $1 billion valuation after a $326 funding round that included Goldman Sachs, AXA and MTN.

Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries, spanning Ghana, Kenya, Ivory Coast, Morocco and Egypt. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.

Starting in Nigeria, the company created many of the components for its digital sales operations. This includes its JumiaPay payment platform and a delivery service of trucks and motorbikes that have become ubiquitous with the Lagos landscape.

Jumia has also opened itself up to traders and SMEs by allowing local merchants to harness Jumia to sell online. “There are over 81,000 active sellers on our platform. There’s a dedicated sellers page where they can sign-up and have access to our payment and delivery network, data, and analytic services,” Jumia Nigeria CEO Juliet Anammah told TechCrunch.

The most popular goods on Jumia’s shopping mall site include smartphones (priced in the $80 to $100 range), washing machines, fashion items, women’s hair care products and 32-inch TVs, according to Anammah.

E-commerce ventures, particularly in Nigeria, have captured the attention of VC investors looking to tap into Africa’s growing consumer markets. McKinsey & Company projects consumer spending on the continent to reach $2.1 trillion by 2025, with African e-commerce accounting for up to 10 percent of retail sales.

Jumia has not yet turned a profit, but a snapshot of the company’s performance from shareholder Rocket Internet’s latest annual report shows an improving revenue profile. The company generated €93.8 million in revenues in 2017, up 11 percent from 2016, though its losses widened (with a negative EBITDA of €120 million). Rocket Internet is set to release full 2018 results (with updated Jumia figures) April 4, 2019.

Jumia’s move to list on the NYSE comes during an up and down period for B2C digital commerce in Nigeria. The distressed acquisition of Konga.com, backed by roughly $100 million in VC, created losses for investors, such as South African media, internet and investment company Naspers .

In late 2018, Nigerian online sales platform DealDey shut down. And TechCrunch reported this week that consumer-focused venture Gloo.ng has dropped B2C e-commerce altogether to pivot to e-procurement. The CEO cited better unit economics from B2B sales.

As demonstrated in other global startup markets, consumer-focused online retail can be a game of capital attrition to outpace competitors and reach critical mass before turning a profit. With its unicorn status and pending windfall from an NYSE listing, Jumia could be better positioned than any venture to win on e-commerce at scale in Africa.

Nigeria’s Gloo.ng drops consumer e-commerce, pivots to e-procurement

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Nigerian startup Gloo.ng is dropping consumer online retail and pivoting to B2B e-procurement with Gloopro as its new name.

The Lagos based venture has called it quits on e-commerce grocery services, shifting to a product that supplies large and medium corporates with everything from desks to toilet paper.

Gloopro’s new platform will generate revenues on a monthly fee structure and a percentage on goods delivered, according to Gloopro CEO D. O. Olusanya.

Gloopro, which raised around $1 million in seed capital as Gloo.ng, is also in the process of raising its Series A round. The startup looks to expand outside of Nigeria on that raise, “before the end of next year,” Olusanya told TechCrunch.

Gloopro’s move away from B2C comes as several notable consumer digital sales startups have failed to launch in Nigeria—Africa’s most populous nation with the continent’s highest number of online shoppers, per a recent UNCTAD report.

The country is home to the continent’s first e-commerce startup unicorn, Jumia, and serves as an unofficial bellwether for e-commerce startup activity in Africa.

Gloo.ng’s shift to B2B electronic commerce was prompted by Nigeria’s 2016 economic slump and a customer request, according Olusanya.

“When the recession hit it affected all consumer e-commerce negatively. We saw it was going to take a longer time to get to sustainability and profitability,” he told TechCrunch.

Then an existing client, Unilever, requested an e-procurement solution in 2017. “We observed that the unit economics of that business was far better than consumer e-commerce,” said Olusanya.

Gloopro dubs itself as a “secure cloud based enterprise e-procurement and commerce platform…[for]…corporate purchasing,” per a company description.

“The old brand Gloo.ng, is going to be rested and shut down completely. The corporate name will be PayMente Limited with the brand name Gloopro,” Olusanya said.

From the Gloopro interface customers can order, pay for, and coordinate delivery of office supplies across multiple locations. The product also produces procurement analytics and allows companies to designate users and permissions.

 

Olusanya touts the product’s benefits at improving transparency and efficiency in the purchasing process.

“It makes procurement transparent and secure. A lot of companies in Nigeria still use paper invoices and there are some shenanigans,” he said.

Gloopro began offering the service in beta and building a customer base prior to winding down its Gloo.ng grocery service.

In addition to Unilever, Gloopro clients include Uber Nigeria, Cars45, and industrial equipment company LaFarge. Cars45 CEO Etop Ikpe and a spokesperson for Uber Nigeria confirmed their client status to TechCrunch.

Gloopro CEO D. O. Olusanya believes the company can compete with other global e-procurement providers, such as SAP Ariba and GT-Nexus by “leveraging our sourcing and last-mile delivery experience in Nigeria” and expertise working around local requirements in Africa.

Gloopro expects to hit $4 million in revenue by the end of the year and the company could reach $100 million over the course of its international expansion into countries like South Africa, Kenya, Morocco, Egypt, and the Ivory Coast, according to Olusanya. A seed investor briefed on Gloo.ng’s estimates confirmed the company’s revenue expectations with TechCrunch.

Gloo.ng’s pivot to Gloopro and e-procurement comes during an up and down period for B2C online retail in Nigeria, home of Africa’s largest economy.

Last year, e-commerce startup Konga.com, backed by roughly $100 million in VC, was sold in a distressed acquisition, at a loss to investors, including Naspers. In late 2018, Nigerian online sales platform DealDey shutdown.

On the possible upside, several outlets reported this year that Jumia—Africa’s largest e-commerce site and first unicorn headquartered in Nigeria—is pursuing an IPO. But that information is unconfirmed based on a February 8, Bloomberg story without named sources. Jumia has declined to comment.

 

 

Africa Roundup: Local VC funds surge, Naspers ramps up and fintech diversifies

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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 Crunchbase data summarized in this TechCrunch feature.

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.

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 Nigerian funds with the most investments were EchoVC (20) and Ventures Platform (27).

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).

The Crunchbase study also tracked more Africans in top positions at outside funds and  the rise of homegrown corporate venture arms.

One of those entities with a corporate venture arm, Naspers, announced a massive $100 million fund named Naspers Foundry to support South African tech startups. This is part of a $300 million (1.4 billion Rand) commitment by the South African media and investment company to support South Africa’s tech sector overall. Naspers Foundry will launch in 2019.

The initiatives lend more weight to Naspers’ venture activities in Africa as the company has received greater attention for investments off the continent (namely Europe, India and China), as covered in this TechCrunch story.

“Naspers Foundry will help talented and ambitious South African technology entrepreneurs to develop and grow their businesses,” said a company release.

“Technology innovation is transforming the world,” said Naspers chief executive Bob van Dijk. “The Naspers Foundry aims to both encourage and back South African entrepreneurs to create businesses which ensure South Africa benefits from this technology innovation.”

After the $100 million earmarked for the Foundry, Naspers will invest ≈ $200 million over the next three years to “the development of its existing technology businesses, including OLX,  Takealot, and Mr D Food…” according to a release.

In context, the scale of this announcement is fairly massive for Africa. According to recently summarized Crunchbase data, the $100 million Naspers Foundry commitment dwarfs any known African corporate venture activity by roughly 95x.

The $300 million commitment to South Africa’s tech ecosystem signals a strong commitment by Naspers to its home market. Naspers wasn’t ready to comment on if or when it could extend this commitment outside of South Africa (TechCrunch did inquire).

If Naspers does increase its startup and ecosystem funding to wider Africa— given its size compared to others—that would be a primo development for the continent’s tech sector.

If mobile money was the first phase in the development of digital finance in Africa, the next phase is non-payment financial apps in agtech, insurance, mobile-lending, and investech, according to a report by Village Capital covered here at TechCrunch.

In “Beyond Payments: The Next Generation of Fintech Startups in Sub-Saharan Africa,” the venture capital firm and their reporting partner, PayPal, identify 12 companies it determined were “building solutions in fintech subsectors outside of payments.”

Village Capital’s work gives a snapshot of these four sub-sectors — agricultural finance, insurtech, alternative credit scoring and savings and wealth — including players, opportunities and challenges, recent raises and early-stage startups to watch.

The report highlights recent raises by savings startup PiggybankNG and Nigerian agtech firm FarmCrowdy. Village Capital sees the biggest opportunities for insurtech startups in five countries: South Africa, Morocco, Egypt, Kenya and Nigeria.

In alternative credit scoring and lending it sees blockchain as a driver of innovation in reducing “both transaction costs and intermediation costs, helping entrepreneurs bypass expensive verification systems and third parties.”

The Founders Factory expanded its corporate-backed accelerator to Africa, opening an office in Johannesburg with the support of some global and local partners.

This is Founders Factory’s first international expansion and the goal is “to scale 100 startups across Sub-Saharan Africa in five years,” according the accelerator’s communications head, Amy Grimshaw.

Founders Fund co-founder Roo Rogers will lead the new Africa office. Standard Bank is the first backer, investing “several million funds over five years,” according to Grimshaw.

The Johannesburg accelerator will grow existing businesses through a bespoke six-month program, while an incubator will build completely new businesses focused on addressing key issues on the continent.

Founder Funds will hire over 40 full-time specialists locally, covering all aspects needed to scale its startups including product development, UX/UI, engineering, investment, business development and, growth marketing. This TechCrunch feature has more from Founders Fund management on the outlook for the new South Africa accelerator.

More Africa Related Stories @TechCrunch

How a Ugandan prince and a crypto startup are planning an African revolution

Marieme Diop and Shikoh Gitau to speak at Startup Battlefield Africa

Flutterwave and Ventures Platform CEOs will join us at Startup Battlefield Africa

African Tech Around the Net

A lot is happening at Flutterwave right now—[E departs] 

Amazon Web Services to open data centres in Cape Town in 2020

Vodacom Business expands its fixed connectivity network in Africa

SA’s Sun Exchange raises $500k from Alphabit

IBM, AfriLabs partner to expand digital skills across 123 hubs in 34 countries

Victor Asemota to lead VC firm Alta Global Ventures’s business in Africa

Bank, local hub launch $1-million fund for Somali startups

African financial technology startups move beyond payment services

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If mobile money was the first phase in the development of digital finance in Africa, the next phase of digital financial services on the continent will focus on lending, insurance and wealth management

In “Beyond Payments: The Next Generation of Fintech Startups in Sub-Saharan Africa,” the venture capital firm Village Global, and their reporting partner, PayPal, tip their hat to M-Pesa and mobile money in Africa, but say that there’s a wave of innovation still to come.

The investment firm identified f 12 companies it determined were “building solutions in fintech subsectors outside of payments.”

In partnership with PayPal, Village Capital has set up Fintech: Africa 2018, a program in that seeks to find and support startups bringing other “critical services” to Africa’s unbanked populations.

“We can’t do enough to highlight what the next generation of fintech startups will and should be driving….whether it’s in agriculture—helping farmers have access to the financial system—through alternative credit scoring and lending—so people can actually get access to loans or insurance—or building savings and wealth,” Village Capital Managing Director and report co-author Allie Burns told TechCrunch.

Village Capital’s work gives a snapshot of these four sub-sectors—agricultural finance, insurtech, alternative credit scoring, and savings and wealth—including players, opportunities and challenges, recent raises, and early-stage startups to watch.

In alternative credit scoring and lending it sees blockchain as a driver of innovation in reducing “both transaction costs and intermediation costs, helping entrepreneurs bypass expensive verification systems and third parties.”

The report highlights recent raises by savings startup PiggybankNG and Nigerian agtech firm Farmcrowdy. Village Capital sees the biggest opportunities for insurtech startups in five countries: South Africa, Morocco, Egypt, Kenya and Nigeria.

On non-payments fintech startups overall, Village Capital chose a cohort of 12 for its 2018 program. They included F-Pesa — a Kenyan foreign exchange app­ — and Nigerian installment e-commerce app CredPal. All 12 participated in three Village Capital and PayPal sponsored workshops to introduce them to mentors and investors. Two of the cohort (identity venture Youverify and Ugandan cloud focused microfinance company Ensibuuko) received funding offers from Village Capital.

PayPal’s involvement in Village Capital’s Fintech Africa program “is really about…our commitment to financial health and the democratization of finance,” PayPal head of social innovation Sean Milliken told TechCrunch.

PayPal provided financial resources for the Fintech Africa program and study and participated in the development of the curriculum “toward those participating ventures getting investment ready,” said PayPal’s Director of Corporate Affairs Tyler Spalding. They didn’t invest though: “our funds were not actually deployed in an investment capacity,” he added.

PayPal has increased its presence and payment activity in Africa over the last several years through a number of partnerships—including one to transfer funds through Safaricom’s M-Pesa product—and plans to deliver more remittances into Nigeria and South Africa through its Xoom subsidiary.

Village Capital is still mulling the possibility running another round of its Fintech Africa program in 2019. To date the fund has invested in 14 Sub-Saharan African startups.

Whether its payment or non-payment applications, the number of startups in Africa’s fintech space and the breadth of their activities continue to grow.

Big developments TecCrunch has covered this year have mostly been on the digital payments side including Paga’s global expansion and plans to take on providers such as PayPal and Safaricom. Then there have been big raises by payments focused Paga ($10), Cellulant ($47M), and Mines ($13) and by lending platform Jumo ($52) and South African business enterprise services startup Yoco.

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