The Africa SMME Tech Report
Issue No. 7. Africa-Middle East small business tech news for 18 June 2021. This edition features Kune Foods, Pargo, MarketForce, Digiduka, Paystack, Bolt, Tabby, Duda, Wix, and more...
Foodtech Spotlight’s on Nairobi with Kune Food’s $1M Seed Round
It’s the same story, oft-repeated. Each time with a new wrinkle. Entrepreneur discovers a need that cannot be met. Then launches a business to fill the gap.
Such was the case with French entrepreneur Robin Reecht. About six months ago he arrived in Nairobi to do a stint of remote working and found it nearly impossible to get great food delivered to him affordably.
From this emerged Kune Food, a foodtech startup formed in 2020 with a market test rolled out earlier this year. The company pledges to deliver “great food for less than $4” and deliver it quickly. In fact, according to the company’s website, the current average delivery time is 30 minutes.
For those who’ve battled Nairobi’s epic traffic, this pledge may strike you as borderline miraculous. Though the choice of electric motorbikes as the mode of delivery no doubt makes this pledge a bit easier to fulfill.
This week the company announced a $1 million seed round to fuel its growth. We reached out to the Kune executive team and were awaiting a reply at press time.
The $1 million comes from an international group of investors that includes Launch Africa Ventures (Mauritius), Century Oak Capital GmbH (Liechtenstein), and Consonance (Nigeria, Mauritius). We presume some individual investors are included in the mix. The company’s LinkedIn says the investors hail from “South Africa, Nigeria, Kenya, Europe, and the U.S.”
The company hasn’t fully launched for delivery to homes. Thus far it has completed a test that delivered 500 meals in a month to a single office tower.
The company’s pitch to consumers is that, according to Disrupt Africa, its meals “promise to be at least half, if not three times, less than the typical price of restaurants and fast food.”
The company has built its own “factory” (presumable a ghost kitchen) in Central Nairobi with the capacity to produce 5,000 meals a day. The company plans to roll it out for real in August. Its customer mix is expected to include consumer, corporate and retail customers.
The company appears poised to lean heavily on social and influencer marketing to grow. It’s LinkedIn says the company has, “Built a Kitchen Studio to take great video content with celebrities and charismatic Chefs.”
This all sounds very exciting. But we do have a few questions.
How does Kune Food plan to build its brand? And how much of its seed round will be consumed by marketing?
What kind of cuisine does it plan to serve at such low prices?
Will it offers its “factory” as a cloud kitchen to other brands?
Will it roll out one or many food brands?
What process or technology innovations will allow it to keep its pricing so low?
Once we have an opportunity to talk to the Kune folks, we’ll get back with some more details about this interesting new company.
Pargo Out to Fix South Africa's Delivery Challenges
This remains a major challenge without a well-developed delivery infrasturction, particularly in outlying areas. The partnership involves using Pargo’s growing network of pickup points to get mobile phone orders safely into the hands of buyers.
Pargo is a “smart logistics” platform founded in 2015 by Dutch co-founders Lars Veul and Derk Hoekert. The two partners share the CEO role.
Pargo’s mission is to simplify the last mile by using designated pickup points. Where offered, consumers select the Pargo option and are then kept apprised of delivery status via email and SMS.
In 2017, the company raised ZAR 15 million (roughly US$1 million) from SAAD Investment Holdings, the Beijing-based VC firm Tsing Capital, and Johan Dekker, the co-founder of Pay-U. The company has not reported any fundraising since.
MarketForce Buys Digiduka to Chase ‘$700B Opportunity’
YCombinator funded startup MarketForce has acquired Digiduka, a Kenyan startup that provides an app to help informal retail businesses manage inventory, accept mobile payments, pay bills, and more. No terms were disclosed.
Digiduka also provides a platform enabling small merchants to earn extra cash from reselling digital services such as airtime, electricity tokens, and bill payments.
Part of its mission is to help small merchants reduce their use of cash. Digiduka was among the eight African startups selected for the Facebook Accelerator: Commerce program in 2020.
“Our team is excited to join forces with MarketForce and go after this US$700 billion market opportunity together," said Digiduka co-founder and CEO Roy Njoka.
We presume the opportunity he refers to involves digitally enabling Africa’s vast informal sector.
Nairobi-based MarketForce is a retail distribution platform also targeting small, informal businesses. It does this through its “RejaReja” marketplace.
The marketplace helps informal shops source, order and pay for inventory via interactive SMS and mobile app, and get it delivered within hours. This saves informal shops the time and money it would cost them if they had to close shop and go out to search for fresh stock.
RejaReja was launched roughly 10 months ago. In that time it has served more than 12,000 informal retailers in Kenya. And it has fulfilled more than 75,000 orders.
Digiduka also launched its service within the past year. The company has acquired more than 6,800 merchants in Kenyan towns. Digiduka is on track to triple its user base and process more than S$ 5 million in transactions through its platform in 2021.
The acquisition is about strength in numbers. The two small startups reasoned that by combining their offerings they may reach scale faster than they would separately.
Here’s what MarketForce’s CEO said about the deal in a company blog post.
“Our teams share a vision and values, to a large extent. Therefore, acquiring Digiduka instead of competing with them just makes sense. It’s all about two solid teams coming together to create a massive impact in African retail. This is a case where one plus one is equal to five,” said Tesh Mbaabu, MarketForce Cofounder and CEO.
Quick Takes — The Week in SMME Tech
Paystack Now WooCommerce Preferred Payments Provider.Paystack is now integrated more closely into the WooCommerce seller workflow. WooCommerce sellers can now select Paystack as their payment option in the WooCommerce Dashboard. Previously, this required separately download and installing the Paystack plugin for WooCommerce.
Bolt Planning African Dark Stores. The logistics company Bolt (e-scooters, ride-sharing, grocery delivery, etc.) is filling jobs throughout African and Europe in advance of what appears to be a major rollout of dark stores on the two continents. Dark stores are essentially micro-fulfillment warehouses for online grocery delivery services. This should get the attention of Africa-based operators like Zulzi, which is currently raising money to expand its operation.
Big Money in BNPL. The Swedish buy now, pay later platform Klarna has raised a fresh $639 million in growth capital, following on the heels of a $1 billion raise in March. The company’s valuation rose from $31 billion to $45.6 billion over that short span. Is BNPL now just a race among a small number of massive global players (Klarna, Afrim, Afterpay, etc.)? Or can regional players, of which there are many in Africa-Middle East, survive? Should very small BNPL players sell now, while they can, as Spotti recently did?
Tabby Rolls Out Loyalty Plan. Once such regional player, the UAE’s Tabby, has launched a loyalty programme, no doubt designed to drive more repeat use of its BNPL solution. One and done purchase, vs having consumers use the service over and over, is a challenge facing all BNPL platforms. Tabby, which operates in UAE and Saudi, was founded in 2019 and raised $23 million in December 2020. The new loyalty programme gives customers actual physical cash that they can either use to fund new purchases, settle future payments or just put in their bank accounts. No doubt funding new purchases is the programme’s prime objective.
Duda Raises $50 Million. The Israeli-American website builder has raised a $50 million Series D round, bringing its lifetime total to US$100 million. The plan is to enhance the platform, scale up sales, and take on WordPress.
Wix Rolls Out POS Platform. The Israeli website builder Wix released its physical point of sale offering, upping the ante on its efforts to be a serious eCommerce rival to Shopify. The company has also acquired Modalyst in order to add a native dropshipping solution to its eCommerce offering.
Shop Pay Extended to Facebook, Google. Speaking of Shopify, the eCommerce platform has extended its reach into the small business world. This week Shopify announced that it will offer Shop Pay, its one-click checkout service, to merchants using Facebook or Google’s respective marketplaces.
The BIG5D Podcast: Recent Episodes
The BIG5D Podcast features engaging interviews with the business leaders building the small business digital transformation toolset in Africa-Middle East.
To discuss being a guest or sponsor, please contact us at Charles@bigfivedigital.org.
Episode 18: Mohamed Al Fayed, grubtech
In Episode 18, the BIG5D Podcast welcomes grubtech Co-founder and CEO Mohamed Al Fayed. Grubtech is emerging as a key infrastructure player in the UAE’s exploding ghost kitchen scene. Our conversation with Mohamed goes pretty deep into the mechanics of ghost kitchens. This is a must-listen for anyone interested in foodtech.
Episode 17: Tori Samples, Leaf Global Fintech
Episode 17 features an interview with Tori Samples. She is the co-founder and CTO of Leaf Global Fintech. Founded in 2017, Leaf is leveraging blockchain technology to offer a digital wallet to underserved populations in Africa. Notably, refugees, migrant workers, and small traders operating across borders. The Ugandan company also operates in Kenya and Rwanda.
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The company was formed in 2015 by two Danes, Martin Majlund (the current CEO) and Christian Gruback, and two Kenyans, Isaac Hunja and James Mwai. The prototype was tested in 2016 and the platform formally launched in 2017. In 2018, the company announced a $1.8 million seed round.
Sky.Garden’s A-Round investors tend to support businesses that address real challenges in emerging markets…
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