BD Insider 173: Names of African startups in YC S23 confirmed

Last week, the Central Bank of Nigeria (CBN) instructed banks to lift the post-no-debit (PND) restriction on the bank accounts of 440 individuals and companies, including Nigerian fintechs Bamboo, Risevest, Chaka and Trove.

Two years ago, the CBN froze the accounts of the aforementioned companies citing “illegal foreign exchange transactions which were weakening the naira” and involvement in crypto transactions.

Although the bank—now under new leadership—did not disclose the reason for lifting the ban, experts say it will enable FX in the country since these companies enable Nigerian residents to invest in dollarised securities.

We will be watching to see how this works out. As usual, we will always keep you updated.

In today’s letter, we cover:

• the highest-risk African countries for fraud
• BasiGo electric buses launch in Rwanda
• the three African startups in the Y Combinator 2023 summer cohort

And other noteworthy information like:

• the latest African tech startup deals
• a conversation on KYC and fraud in Africa
• opportunities, interesting reads and more

The Big Three

#1. Smile ID report lists Kenya ahead of Nigeria as the highest-risk African country for fraud

The numbers: This year, fraud attempts in Kenya grew by 7%, while it only grew by 5% in Nigeria. For a country almost four times the size of Kenya and with a global reputation for cybersecurity scams, one would expect its fraud attempts to be of greater proportion. But that’s not what Smile ID’s report reveals. Nonetheless, both countries’ fraud numbers grew over the review period, from January to June 2023.

“Fraud rates move up and down across countries as growth and user behaviour changes in response to new products, services or changes in regulations,” says Smile ID. “As more businesses across Africa adopt biometrics for identity verification and fraud prevention, more fraud is being caught.”

Elsewhere: These findings are not peculiar to the Smile ID report. According to data from the Nigeria Deposit Insurance Corporation (NDIC), Nigerian banks lost ₦472 million to POS and mobile fraud in the first quarter of 2023.

NDIC says the number of POS and mobile fraud cases increased by 19.51% in the first quarter of 2023, likely due to the growing popularity of these payment methods in the country.

Per NDIC, staff involvement in fraud in Nigeria increased by 89.47%.

Kenya is not left out.

Recently, pan-African e-commerce company Jumia revealed that one of the employees at its Kenyan division embezzled about $150,000 by manipulating vendor payment records. This happened between 2021 to 2022.

#2. BasiGo expands electric buses offering to Rwanda

On the road: Now in the second year of its operation, Kenyan electric vehicle startup BasiGo has made its second entry into the African market.

The company has expanded its operations into Rwanda via a partnership with AC Mobility, Rwanda’s provider of automated fare collection systems for public transport.

The partnership will deliver electric buses to Kigali transport operators by October of this year through BasiGo’s innovative Pay-As-You-Drive financing model. At the end of 2024, BasiGo and AC Mobility aim to deliver 200 electric buses to bus operators in the East African country.

Why it matters: “This partnership of public transport technology providers in the region will accelerate decarbonization of the sector in Rwanda while also alleviating the current public transport shortage,” says Clare Akamanzi, CEO of Rwanda Development Board (RDB).

Know more: BasiGo has led the introduction of electric buses in Nairobi’s public transport fleet.  The company has sold 19 electric buses to public transport operators in Nairobi and has secured reservations for over 100 additional buses. BasiGo electric buses have driven over 460,000 kilometres and carried over 580,000 passengers, according to a statement seen by Bendada.com. However, we have not independently verified these claims.

BasiGo has also deployed Kenya’s first DC fast charging stations for electric buses. Last year, BasiGo secured $4.3 million in seed funding to accelerate clean-energy mass transit vehicles in Kenya.

In Nigeria, the Lagos state government announced in May that it has partnered with Oando and EV manufacturer, Yutong to put 12,000 electric buses on Lagos roads by 2030. The first set of the buses have been delivered but operations are yet to commence.

#3. Y Combinator selects three African startups for its 2023 summer batch

The news: On July 4, we exclusively reported that Y Combinator (YC) selected only three African startups for its 2023 summer batch. At the time, only Eden Care, a Rwandan health-focused insurtech was publicly disclosed by YC.

However, a source familiar with the cohort told Bendada.com that there were two other African startups in the batch apart from Eden Care, one from Nigeria and another from the Democratic Republic of Congo (DRC).

July 14, DRC-based fintech Vaultpay was disclosed as the second company. And now, the YC Directory has indicated that Chow Central, a Lagos-based virtual restaurant chain provided is the third African startup in the cohort that is made up of about 159 startups globally.

Downturn: With this number, YC’s investment into Africa has plunged 81% YoY. In 2022, the accelerator invested in 32 African startups through its winter and summer batches, only six startups on the continent were backed by the accelerator this year in both batches.

“We are not correlated with the rest of the world when it comes to hype cycles but when funding stops or slows down outside, it hits us harder and it is a good thing. We get back to reality and know our differences,” Victor Asemota, an African tech investor told Bendada.com. “Nobody is building stuff now because their investors want those things. We are now back to what the market wants.”

Zoom out: Outside of YC, funding from other notable global accelerators in Africa has declined this year. For instance, only six African startups were selected for its biannual accelerator, the lowest record since 2018. Similarly, Google Black Founders Fund recorded a 58% decline in the number of startups the Fund invested in this year on the continent, compared to the previous cohorts.

Experts say that with the launch of new African-focused accelerators including ARM Labs Lagos Techstars Accelerator which invested in 12 startups for its inaugural cohort and has since opened applications for another cohort, more early-stage startups solving important problems will still get funding.

BD Talks: User onboarding and fraud in Africa

With 75 million KYC checks done, Smile ID is out with its third report on the State of KYC, customer onboarding and fraud in Africa. According to the report, ID fraud attempts in Kenya are growing, likewise in Nigeria.

This Thursday, Ben will be discussing the report findings and the user onboarding and fraud landscape in Africa with Mark Straub, CEO of Smile ID and Wiza Jalakasi, Director of Ebanx Africa Market Development.

State of Funding in Africa

Last week, Safaricom shareholders approved the establishment of two venture investment subsidiaries to invest in Kenyan startups. “We will be looking to invest in and support early-stage companies, especially in emerging technologies such as analytics, Machine Learning, Artificial Intelligence, and the Internet of Things. We will be launching the call for applications in the coming weeks,” Safaricom CEO Peter Ndegwa says.

Contrary to our initial reporting in letter 169, Safaricom has clarified that the two subsidiaries are different from Spark Venture Fund, its eight-year-old venture fund that has invested in at least six Kenyan startups including Sendy and iProcure.

This fund will increase investments in the Kenyan startup ecosystem. It remains unclear if Safaricom will invest outside of the East African country.

Find below a summary of last week’s funding announcements.

Noteworthy

Here are other important stories in the media:

• How startups can leverage AI to transform education in Africa: Despite facing systemic challenges, Cee makes a case on how African startups can provide personalised learning, remote education, and teacher support powered by AI.
• 6 African countries imposed internet restrictions in the first half of 2023: The first half of 2023 saw twice as many African countries imposing restrictions compared to the first half of 2022, according to an analysis by Surshark.
• 6 metrics African startups must track to attract investors in 2023: Metrics empower investors to identify African startups with growth potential. Understanding them is vital for securing venture capital funding in 2023.
• Nigeria trails South Africa and Kenya in Africa’s B2B payment revolution: Kenya leads the way in payment automation, with 83.4% of Kenyans stating that their payment system was either semi-automated or fully automated, compared to Nigeria (79.9%), South Africa (71.69%) and Ghana (67.23%).
• Kenya reports cyber attacks causing government system outages: Cyber attackers targeted a digital platform used by Kenya’s government to deliver services, the country’s technology minister said, highlighting the vulnerabilities of the system, Semafor Africa reports.

Opportunities

Jobs

We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.

Product & Design

• Vendease — Head of Product, Nigeria
• Kuda — Senior Product Manager, Nigeria
• Ivorypay — Product Manager, Nigeria

Data & Engineering

• Monzo — Data Scientist, London
• Klasha — Software Engineer, Remote
• Stitch — Full-Stack Engineer, South Africa

Admin & Growth

• LemFi — Social Media Lead, Nigeria
• Duplo — Growth Marketing Specialist, Remote
• Vendease — VP Peoples Operation, Nigeria

Congratulations! You’ve reached the end of another episode of BD Insider.

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Thank you for trusting us to bring you news about the African tech ecosystem.

Much love,

Johnstone and Ben