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Catalyst Fund gets $15M from JP Morgan, UK Aid to back 30 EM fintech startups

The Catalyst Fund has gained $15 million in new support from JP Morgan and UK Aid and will back 30 fintech startups in Africa, Asia, and Latin America over the next three years.

The Boston based accelerator provides mentorship and non-equity funding to early-stage tech ventures focused on driving financial inclusion in emerging and frontier markets.

That means connecting people who may not have access to basic financial services — like a bank account, credit or lending options — to those products.

Catalyst Fund will choose an annual cohort of 10 fintech startups in five designated countries: Kenya, Nigeria, South Africa, India and Mexico. Those selected will gain grant-funds and go through a six-month accelerator program. The details of that and how to apply are found here.

“We’re offering grants of up to $100,000 to early-stage companies, plus venture building support…and really…putting these companies on a path to product market fit,” Catalyst Fund Director Maelis Carraro told TechCrunch.

Program participants gain exposure to the fund’s investor networks and investor advisory committee, that include Accion and 500 Startups. With the $15 million Catalyst Fund will also make some additions to its network of global partners that support the accelerator program. Names will be forthcoming, but Carraro, was able to disclose that India’s Yes Bank and University of Cambridge are among them.

Catalyst fund has already accelerated 25 startups through its program. Companies, such as African payments venture ChipperCash and SokoWatch — an East African B2B e-commerce startup for informal retailers — have gone on to raise seven-figure rounds and expand to new markets.

Those are kinds of business moves Catalyst Fund aims to spur with its program. The accelerator was founded in 2016, backed by JP Morgan and the Bill & Melinda Gates Foundation.

Catalyst Fund is now supported and managed by Rockefeller Philanthropy Advisors and global tech consulting firm BFA.

African fintech startups have dominated the accelerator’s companies, comprising 56% of the portfolio into 2019.

That trend continued with Catalyst Fund’s most recent cohort, where five of six fintech ventures — Pesakit, Kwara, Cowrywise, Meerkat and Spoon — are African and one, agtech credit startup Farmart, operates in India.

The draw to Africa is because the continent demonstrates some of the greatest need for Catalyst Fund’s financial inclusion mission.

By several estimates, Africa is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

Collectively, these numbers have led to the bulk of Africa’s VC funding going to thousands of fintech startups attempting to scale payment solutions on the continent.

Digital finance in Africa has also caught the attention of notable outside names. Twitter/Square CEO Jack Dorsey recently took an interest in Africa’s cryptocurrency potential and Wall Street giant Goldman Sachs has invested in fintech startups on the continent.

This lends to the question of JP Morgan’s interests vis-a-vis Catalyst Fund and Africa’s financial sector.

For now, JP Morgan doesn’t have plans to invest directly in Africa startups and is taking a long-view in its support of the accelerator, according to Colleen Briggs — JP Morgan’s Head of Community Innovation

“We find financial health and financial inclusion is a…cornerstone for inclusive growth…For us if you care about a stable economy, you have to start with financial inclusion,” said Briggs, who also oversees the Catalyst Fund.

This take aligns with JP Morgan’s 2019 announcement of a $125 million, philanthropic, five-year global commitment to improve financial health in the U.S. and globally.

More recently, JP Morgan Chase posted some of the strongest financial results on Wall Street, with Q4 profits of $2.9 billion. It’ll be worth following if the company shifts its income-generating prowess to business and venture funding activities in Catalyst Fund markets such as Nigeria, India and Mexico.

MallforAfrica goes global, Kobo360 and Sokowatch raise VC, France explains its $76M fund

Jake Bright
Contributor

Jake Bright is a writer and author in New York City. He is co-author of The Next Africa.

B2B e-commerce company Sokowatch closed a $2 million seed investment led by 4DX Ventures. Others to join the round were Village Global, Lynett Capital, Golden Palm Investments, and Outlierz  Ventures.

The Kenya based company aims to shake up the supply chain market for Africa’s informal retailers.

Sokowatch’s platform connects Africa’s informal retail stores directly to local and multi-national suppliers—such as Unilever and Proctor and Gamble—by digitizing orders, delivery, and payments with the aim of reducing costs and increasing profit margins.

“With both manufacturers and the small shops, we’re becoming the connective layer between them, where previously you had multiple layers of middle-men from distributors, sub-distributors, to wholesalers,” Sokowatch founder and CEO Daniel Yu told TechCrunch.

“The cost of sourcing goods right now…we estimate we’re cutting that cost by about 20 percent [for] these shopkeepers,” he said

“There are millions of informal stores across Africa’s cities selling hundreds of billions worth of consumer goods every year,” said Yu.

These stores can use Sokowatch’s app on mobile phones to buy wares directly from large suppliers, arrange for transport, and make payments online. “Ordering on SMS or Android gets you free delivery of products to your store, on average, in about two hours,” said Yu.

Sokowatch generates revenues by earning “a margin on the goods that we’re selling to shopkeepers,” said Yu. On the supplier side, they also benefit from “aggregating demand…and getting bulk deals on the products that we distribute.”

The company recently launched a line of credit product to extend working capital loans to platform clients. With the $2 million round, Sokowatch—which currently operates in Kenya and Tanzania—plans to “expand to new markets in East Africa, as well as pilot additional value add services to the shops,” said Yu.

MallforAfrica and DHL launched MarketPlaceAfrica.com: a global e-commerce site for select African artisans to sell wares to buyers in any of DHL’s 220 delivery countries.

The site will prioritize fashion items — clothing, bags, jewelry, footwear and personal care — and crafts, such as pictures and carvings. MallforAfrica is vetting sellers for MarketPlace Africa online and through the Africa Made Product Standards association (AMPS), to verify made-in-Africa status and merchandise quality.

“We’re starting off in Nigeria and then we’ll open in Kenya, Rwanda and the rest of Africa, utilizing DHL’s massive network,” MallforAfrica CEO Chris Folayan told TechCrunch about where the goods will be sourced. “People all around the world can buy from African artisans online, that’s the goal,” Folayan told TechCrunch.

Current listed designer products include handbags from Chinwe Ezenwa and Tash women’s outfits by Tasha Goodwin.

In addition to DHL for shipping, MarketPlace Africa will utilize MallforAfrica’s e-commerce infrastructure. The startup was founded in 2011 to solve challenges global consumer goods companies face when entering Africa.

French President Emmanuel Macron  href=”https://pctechmag.com/2018/05/french-president-emmanuel-macron-launches-a-usd76m-africa-startup-fund/”>unveiled a $76 million African startup fund at VivaTech 2018 and TechCrunch paid a visit to the French Development Agency (AFD) — who will administer the new fund — to get details on how it will work.

The $76 million (or €65 million) will divvy up into three parts, AFD Digital Task Team Leader Christine Ha told TechCrunch.

“There are €10 million [$11.7 million] for technical assistance to support the African ecosystem… €5 million will be available as interest-free loans to high-potential, pre-seed startups…and…€50 million [$58 million] will be for equity-based investments in series A to C startups,” explained Ha during a meeting in Paris.

The technical assistance will distribute in the form of grants to accelerators, hubs, incubators and coding programs. The pre-seed startup loans will issue in amounts up to $100,000 “as early, early funding to allow entrepreneurs to prototype, launch and experiment,” said Ha.

The $58 million in VC startup funding will be administered through Proparco, a development finance institution — or DFI — partially owned by the AFD. “Proparco will take equity stakes, and will be a limited partner when investing in VC funds,” said Ha.

Startups from all African countries can apply for a piece of the $58 million by contacting any of Proparco’s Africa offices.

The $11.7 million technical assistance and $5.8 million loan portions of France’s new fund will be available starting in 2019. On implementation, AFD is still “reviewing several options…such as relying on local actors through [France’s] Digital Africa platform,” said Ha. President Macron followed up the Africa fund announcement with a trip to Nigeria last month.

Nigerian logistics startup Kobo360 was accepted into Y Combinator’s 2018 class and gained some working capital in the form of $1.2 million in pre-seed funding led by Western Technology Investment.

The startup — with an Uber like app that connects Nigerian truckers to companies with freight needs — will use the funds to pay drivers online immediately after successful hauls.

Kobo360 is also launching the Kobo Wealth Investment Network, or KoboWIN — a crowd-invest, vehicle financing program. Through it, Kobo drivers can finance new trucks through citizen investors and pay them back directly (with interest) over a 60-month period.

On Kobo360’s utility, “We give drivers the demand and technology to power their businesses,” CEO Obi Ozor told TechCrunch. “An average trucker will make $3,500 a month with our app. That’s middle class territory in Nigeria.”

Kobo360 has served 324 businesses, aggregated a fleet of 5480 drivers and moved 37.6 million kilograms of cargo since 2017, per company stats. Top clients include Honeywell, Olam, Unilever, and DHL.

Ozor thinks the startup’s asset-free, digital platform and business model can outpace traditional long-haul 3PL providers in Nigeria by handling more volume at cheaper prices.

“Logistics in Nigeria have been priced based on the assumption drivers are going to run empty on the way back…When we now match freight with return trips, prices crash.”

Kobo360 will expand in Togo, Ghana, Cote D’Ivoire and Senegal.

[PHOTO: BFX.LAGOS] And finally, applications are open for TechCrunch’s Startup Battlefield Africa, to be held in Lagos, Nigeria, December 11. Early-stage African startups have until September 3 to apply here.

More Africa Related Stories @TechCrunch

More Africa Related Stories @TechCrunch

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