The Next FinTech Unicorn Runs on Crypto

We’re excited to share another edition of our quarterly newsletter, where we provide curated insights on our thesis on Web 3 shaping the future of finance, our portfolio, and our speaking engagements and partnerships.

Our VC fund already has 9 early-stage portfolio companies, including recent investments Fig, Bitmama and Sava. It’s an opportune time to be an emerging manager due to our unique advantage. We’re the only women-led Web 3 VC firm focused on category leading companies building foundational financial infrastructure & applications fit for the largest crypto markets in Africa & emerging markets — a winning strategy!

The next FinTech Unicorn runs on crypto, like our portfolio companies such as Bitmama (female founded crypto exchange & payments platform) and Fig (DeFi & TradFi liquidity infrastructure for financing B2B marketplaces) that demonstrate how crypto financial rails have strong use cases in Africa and bridge TradFi & DeFi. In Africa, crypto usage has increased even in a bear market (according to Chainalysis), because it comes not from speculation but from a genuine need for millions of people & businesses to preserve and build wealth. According to McKinsey, Blockchain & crypto will be the fastest growing financial services revenue opportunity in Africa from 2020–2025. We have a robust pipeline of companies across various sectors & use cases to capitalize on this massive opportunity.

The recent months have been busy with lots to discuss in the blockchain industry, given the recent Merge. Our Founder & Managing Partner, Barbara Iyayi shared insights on DeFi & Web 3 at various conferences such as Celo’s conference in Barcelona, Moonclave crypto conference in Aspen, Kuramo Capital Sub-Saharan Africa Day, CeloConnect Salon event in NYC, and on various webinars and Amazon’s podcast. We also partnered with Celo, our fund’s limited partner, to lead workshops in Nairobi and other countries as the Celo Africa Web 3 Fund was launched to help Africa-based startups. Our Principal, Duncan Muchangi also discussed our fund’s Web 3 strategy at the Africa DeFi Summit in Ghana.

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NEW INVESTMENTS

Bitmama is a crypto exchange and payment platform, and we co-led their $2m pre-seed round. With less than 10% of digital natives in Africa using crypto, the company enables hyper simplistic access to crypto products for everyday people beyond peer-to-peer trading. Products include crypto powered debit cards for making payments anywhere, buy crypto pay later service, and crypto payment for airtime & data. The company has also introduced Changera to help users send and receive money faster and cheaper globally, which is powered by their crypto rails. Beyond Africa, Bitmama is launching in Europe & North America and positioning itself as a borderless crypto-powered financial platform for Africans globally.

Sava is a spend management platform and we participated in their $2 million pre-seed round. Spend management is a vital part of operating a business and also helps unlock access to credit for fluid business operations.

Fig is building liquidity infrastructure in emerging markets, enabling B2B marketplaces to easily raise & manage debt for on-lending to SMEs in their marketplaces. With a $5tn SME credit gap, Fig is using its credit middleware, from loan origination to real-time credit scoring, to enable businesses to get financing from TradFi and DeFi lenders. We invested in their pre-seed round.

PORTFOLIO UPDATES

Fonbnk Co-founder and CEO Christian Duffus presented at this year’s Ethereum Community Conference (EthCC) in Paris on the topic “NoFi to DeFi: Driving Financial Inclusion Through Digital Access”.

Churpy is helping businesses with mobile money reconciliation while Telcos comply with the amended Data Protection Act. Churpy has shared it’s bold vision to streamline cash management and also how it automates account receivables Receipts through SWIFT, RTGS and Pesalink.

Verto launched a forex and cross-border payments api solution. Verto also won big at the London Fintech Awards winning “FinTech Startup of the Year”. Verto partnered with Xente to offer cross-border payments to Non-Profit Organisations in Uganda. Verto has also been accepted into the DIFC Fintech Hive Accelerator program.

Tap has introduced an interstate travel service called Tapis and furthers collaboration with the government’s smart city initiative.

Credrails is now licensed as a data processor in Kenya.

INDUSTRY INSIGHTS

Growth Of The Financial Services Market in Africa

According to a report by McKinsey, the market revenue of financial services in Africa is expected to grow by 10% per year to reach approximately $230 billion by 2025, with blockchain/crypto being the fastest-growing revenue opportunity (50% CAGR).

How Cryptocurrency Meets Residents’ Economic Needs in Sub-Saharan Africa

Africa contains some of the most well-developed cryptocurrency markets of any region driven by peer-to-peer trading, commerce, remittances and payment use cases. Nigeria and Kenya rank 11th and 19th on Chainalysis Global Crypto Adoption Index respectively. Given the regulatory environment, retail-sized transfers account for 6.4% of Africa’s transaction volume, more than any other region. Interesting to note that this analysis does not take into account private wallet transactions happening through group chats on Whatsapp and Telegram apps.

When Public Markets Experience Volatility, Experts Say To Invest In Emerging Managers

Brand-name growth funds may dominate the headlines, but an industry secret is that the best return profile in venture capital has historically been produced by the newcomers and at the early stages of investing. Read more here.

COMMUNITY & EVENTS

Our Founder & Managing Partner, Barbara Iyayi shared her insights on Defi & Web 3 at recent crypto conferences.

• Celo Connect in Barcelona (April): Barbara Iyayi was a speaker on a panel about investing in emerging economies and discussed opportunities for bringing real world assets into DeFi. Panelists: Simão Cruz (Lightshift Capital), Chris Lee, TKX and Maria Alegre (Flori Ventures).
• Moonclave crypto conference in Aspen (August): Barbara Iyayi moderated a panel called Crypto: The Engine for Inclusion and discussed the opportunities to use the blockchain & Web3 to solve real world use cases that drive financial inclusion and create economic and ecological prosperity. Panelists: Alex Witt (Celo), Amy Oldenburg (Morgan Stanley), Juan Vita (Mercado Libre).
• CeloConnect Salon in NYC (September): Barbara Iyayi was a speaker on a panel on Regenerative Finance (ReFi) during NYC Climate Week and discussed opportunities in Web3 that create aligned incentives for impact. Panelists: David Rodriguez (Draft Ventures) and Phil Fogel (Flowcarbon).
• Kuramo Capital 2022 Sub-Saharan Africa Day in NYC (September): Barbara Iyayi presented our women-led VC fund to an audience of investors such as Ford Foundation, The Nature Conservancy and Kuramo Capital that are supporting female fund managers. As part of a panel discussion, Barbara explained how we are capitalizing on the FinTech / Web 3 opportunity in Africa and uniquely set up to champion female founders in the Web 3 space. Faridah Usman moderated the panel with leading female fund managers in Africa: Hema Vallabh (Five35 Ventures), Tokunboh Ishmael (Alitheia), and Tariye Gbadegesin (ARM Harith Infrastructure)

Barbara also spoke on episode 8 of the “FinTech in the Cloud” podcast hosted by Amazon. She provided a glimpse of some of the emerging crypto and defi trends in Africa and shares why she thinks Africa has the most lucrative opportunity for Fintech, DeFi, and Web3.

Our Principal, Duncan Muchangi also participated in conferences, hackathons and workshops in Africa.

• Celo Africa Web 3 Fund Launch (July): Duncan led workshops in Nairobi with over 40 startups participating. The workshops were geared towards helping founders in Africa build Web 3 startups.
• Africa Money and DeFi Summit in Ghana (September): Duncan was a speaker on a panel called “The investment landscape — What is Trending”. Panelists: Olaleye Oladimeji (Legalpreneur Consulting), Yvonne Okafor (Untapped Global), Ayobamigbe Teriba (Founders Factory Africa), Jasiel Martin-Odoom (Accion Venture Lab).