As if the world needed more surprises, this week marked the (re)discovery of Ernest Shackleton’s ship off Antarctica, exactly 100 years to the day of Shakelton's death! What’s even more remarkable, despite being about 10,000 feet underwater, the Endurance was almost completely intact. In a heroic expedition marked by adversity and perseverance, this week's event is an epic last chapter.
Shackleton's story also reminds us of the difficulties - and incredible potential rewards - of pushing past well-known frontiers. Though quite the opposite from a climatic perspective, Africa's tech ecosystem is serving a similar reminder to the international investor community. The overwhelming talent, growth, and opportunity throughout the continent have left investors scrambling to better understand market dynamics and become involved as quickly as possible. This trend is evidenced by enormous increase in global investment volumes, as over $5b in venture capital funding entered the continent last year and seven new unicorns were born (joining the ranks of Jumia, Interswitch and Fawry). Before 2021, just eight African startups had raised $100m+ rounds; last year, the number nearly doubled.
The region remains fragmented and difficult to navigate. On top of that, interrupted engagement with certain external financial partners has recently brought to light the question of biases against operators on the continent. As understanding of the unique market dynamics improves and funding becomes better distributed (including from a gender perspective) companies will be better positioned to bring a variety of experiences and resources to further develop the tech ecosystem. Those companies that are able to succeed in these markets, especially in the fintech space, have the potential to both increase financial resilience among users and attract progressively more global venture funding.
This flurry of deal flow and investor attention is augmented by strong macro tailwinds. As the world’s fastest growing continent, Africa is estimated to account for 1/3rd of the global population by the end of the 21st century. Young, digitally native citizens that remain cash-constrained have created a wealth of opportunity for fintech connoisseurs. And speaking of dreaming, the big question remains for 2022...will an African nation finally be able to break Ghana’s 2010 curse and make it past the quarterfinals of the World Cup?
It's Time For Africa
2021 marks a record breaking year for African venture funding - African fintech startups received over half of the total VC funding in 2021, while Nigeria topped African VC investment destination, followed by South Africa, Egypt, and Kenya. Read more
Report reveals only 3% of all the investments made into African startups between 2013 and 2021 went to female-led startups - Although investments into Africa’s burgeoning tech ecosystem have been on the rise recently, 76% of the total funding during the 8-year period went to startups led by all-male teams. Read more
Mercury, a San Francisco-based digital bank for startups, blocked African founders' accounts without prior communication - The implications of this incident are bad for the affected startups, and has also put a dent on Mercury’s reputation on the continent. Read more
AWS, Vodacom, and Intel launch South Africa based program - The laboratory, located in Johannesburg, will serve as a Proof of Concept setup for customers to test their applications and environment for performance on AWS Outposts, and will focus on delivering faster scalability and creating opportunities. Read more
African e-commerce company, Jumia, releases best quarterly report to date - Total orders on Jumia reached 30m last year, while the number of customers who placed at least one order increased to 8m, from 6.8m in 2020. The company fulfilled 3m more orders in the last three months of 2021 than in the same period two years. Read mor
Biden signs order on cryptocurrency as its use explodes - President Joe Biden signed an executive order this week on government oversight of cryptocurrency that urges the Federal Reserve to explore whether the central bank should jump in and create its own digital currency. Treasury Secretary Janet Yellen said the effort would “promote a fairer, more inclusive, and more efficient financial system” while countering illicit finance and preventing risks to financial stability and national security. Read more
Facebook Libra: the inside story of how the company’s cryptocurrency dream died - It had the blue-chip partners, the tech, and the right players. None of which could save it - The FT takes a look at how "Diem" died. Read more
Goldman Sachs shutters Russia business, first major Wall Street bank to leave after Ukraine war - Most big U.S. banks had modest operations in Russia, a geographically large nation with a relatively small economy. Citigroup had the biggest exposure as of year-end 2021 at $9.8b, according to filings. Goldman was estimated to have $940m in total exposure, including $650m in credit, or less than 10 basis points of its total assets, according to Bank of America analysts. Read more
Public buys Otis, bringing fractional ownership of alternative assets to its platform - The mix of product and corporate decisions appears to be working for Public, at least in terms of leading indicators. According to co-CEO Leif Abraham, Public now has 3m users. The company also announced this morning that it has purchased Otis, a startup that allows consumers to buy and trade fractional shares in individual alternative assets. Read more
Fraud is flourishing on Zelle. The banks say it’s not their problem - Consumers love payment apps like Zelle because they’re free, fast and convenient - last year, people sent $490b through Zelle, compared with $230b through Venmo, its closest rival. However, Zelle’s immediacy has also made it a favorite of fraudsters, and banks have been reluctant to make fraud victims whole — despite owning the system. Read more
Russian banks turn to China to sidestep cutoff from payments systems - Sberbank, Russia’s largest bank by assets, Alfa Bank and Tinkoff Bank said Sunday they were working on the possibility of issuing cards powered by China’s UnionPay. Another Russian lender, Gazprombank, said customers can do cross-border transactions by getting cards that use UnionPay or Japan’s JCB system. Read more
Cryptocurrency exchange FTX to start European operations - The company said FTX Europe will offer the parent’s products and services to European Union clients via a partnership with a “licensed investment firm” it didn’t name. FTX Europe will be headquartered in Switzerland, with approval to operate from the Cypriot financial regulator CySEC. Read more
Visa, Mastercard prepare to raise credit-card fees - The fee increases—delayed during the past two years because of the pandemic—are scheduled to kick in next month. Interchange fees account for most of the increase. Merchants pay these fees, which are set by the card networks, when shoppers use their cards and the fees go to the bank that issued the card. Read more
Payments giant Stripe launches support for crypto, NFTs - Stripe’s new crypto tools and application programming interfaces (APIs) enable businesses to accept fiat deposits for crypto and payout to users in local fiat currencies. The company also offers know your customer (KYC) solutions and other fraud prevention tools to crypto firms. Read more
FCA orders closure of all UK crypto ATMs - The UK's Financial Authority says that any cryptocurrency ATMs operating in the UK are doing so illegally and that they must be shut down. Read more
FinTech Collective Newsletter
Curated News with Context
Delivered every Saturday, the weekly newsletter, produced by our team, provides a tightly edited rundown of global fintech news, along with a bit of our original analysis.