In this piece, we take a quick peak at the still limited but growing corporate-backed deal flow in Africa-based companies.
Economically speaking, Africa is an emerging region but not much is spoken about innovation coming from that continent, and much less in the context of corporate venturing, so we decided to take a closer look at corporate-backed deal flow into Africa-based businesses in this short piece.
According to our data from GCV Analytics, the number of corporate-backed rounds in Africa-based startups has seen an increase in recent times: we have tracked no less than 10 such deals since 2016 and by the end of October 2019, we have already observed 16, which is a significant surge excluding last month’s news that credit card company Visa is investing $200m in Nigeria-based payments startup Interswitch for a 20% stake in the company. Interswitch did not confirm the terms of the investment but said it gave the company unicorn status.
The same cannot necessarily be said about total estimated capital in those deals, which in many cases remains undisclosed. However, the growing number of deals is likely due to the fact that impact investing is gaining momentum among corporates.
Indeed, there has been no dearth of interesting stories on our news section involving such enterprises over the past few years.
In 2017, internet technology provider Google spun out its African internet infrastructure initiative, Project Link, into a Kenya-based company dubbed CSquared committing up to $100m to it, along with diversified conglomerate Mitsui & Co, private equity firm Convergence Partners and International Finance Corporation (IFC), the private investment arm of multilateral finance institution the World Bank.
In 2018, Tanzania-based solar power supplier Off Grid Electric secured $55m in a series D round featuring power and industrial technology manufacturer General Electric’s now (nearly) defunct unit GE Ventures.
This year, Jumia, a Germany-headquartered, Africa-focused online marketplace, operating out of Nigeria, backed by several corporate investors, went public in a $196m IPO in the US. The company issued 13.5 million American depositary shares on the New York Stock Exchange priced at $14.50 each, in the middle of the offering’s $13 to $16 range, valuing it at approximately $1.1bn. Founded in 2012, Jumia runs an e-commerce platform that operates in 14 African countries.