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Healthcare Startups Raised $38B in a Year; Total Investments Jumped to $135.5B

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Global investments in healthcare startups set a new record in 2020, as investors flocked to this sector due to the pandemic.

According to data presented by StockApps, healthcare startups raised over $38bn in funding rounds since mid-March 2020, with the total value of investments into this hub reaching $135.5bn last week.

Almost $12B of Investments in Q1 2021, the Highest Quarterly Figure So Far

In 2015, healthcare startups worldwide raised $5.4bn in funding rounds, with the cumulative value of investments reaching $24.4bn that year, revealed the CrunchBase data. This figure surged by more than 68% during the next two years, reaching $45.2bn in the fourth quarter of 2017.

Statistics show that 2018 delivered $20.2bn of investments into healthcare startups, with the cumulative funding value rising to $65.4bn that year. In 2019, the cumulative funding value jumped by $24.7bn to $90.1bn. However, the year 2020 set a new record, despite the global slowdown in venture capital funding amid the COVID-19 crisis.

The Crunchbase data revealed the first quarter of 2020 delivered $7.4bn worth of investments into healthcare startups, a 68% increase year-on-year. After a slight drop to $7.2bn in the second quarter, quarterly investments jumped to $10bn between June and September 2020. By the end of the year, the cumulative funding value rose by another $9.1bn and hit $123.8bn.

The strong investment activity continued in 2021, with almost $12bn worth new funding rounds since January, the highest quarterly figure so far.

North America represents the leading region with $85.5bn of investments in healthcare startups. The US companies raised more than 97% of that amount, with California and San Francisco as the leading hubs. Asian startups hit $83.5bn in total funding, ranking as the second-leading region globally. European healthcare startups follow with $15.9bn worth funding rounds.

Three Largest Funding Rounds Worth $2.3bn

The CrunchBase data also revealed the three largest healthcare startup funding rounds in the last year hit $2.3bn value.

In May 2020, MGI Tech, a gene-sequencing equipment unit of Chinese genome giant BGI Group, announced the completion of a $1 billion series B funding round led by IDG Capital and CPE, the biggest investment in the last year.

Three months later, JD Health, the healthcare unit of Chinese e-commerce giant JD.com, raised more than $830 million from Hillhouse Capital in Series B funding, the second-largest investment in 2020. The company announced it would use this capital to further strengthen its pharmacy supply chain capabilities and explore additional healthcare services opportunities in the broader healthcare sector.

Last week, ElevateBio, a cell and gene therapy technology company focused on powering transformative cell and gene therapies, announced it had raised $525 million in Series C funding, the third-largest investment in the last year. This new funding led by Matrix Capital Management will help the company increase its manufacturing capacity and advance its cell and gene therapies.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Fund Raising

API Fintech Okra Raises $3.5M To Expand Its Data Infrastructure Across Nigeria

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Okra Cofounders

Today, Nigeria’s API fintech Start-up, Okra the first to gain mainstream attention, is announcing that it has closed a seed round of $3.5 million. This was after it closed a $1 million pre-seed in 2020.

U.S.-based Susa Ventures led this latest tranche of investment. Other investors include TLcom Capital (the sole investor from its $1 million pre-seed round in 2020), newly joined Accenture Ventures, and some angel investors. In total, Okra has raised $4.5 million in two rounds and the company will use the investment to expand its data infrastructure across Nigeria.

Okra describes itself as an API “super-connector” that creates a secure portal and process to exchange real-time financial information between customers, applications and banks.

Okra was founded in June 2019 by Fara Ashiru Jituboh and David Peterside. Since its launch in January 2020, Okra has aggressively pushed by connecting to all banks in Nigeria and even claims to have a 99.9 percent guaranteed uptime.

Its business model provides integrations to developers and businesses into existing banking services and takes commissions off subsequent transactions. These integrations include accounts authorization, balance, identity, income, payments and transactions. Per partners (developers and businesses), they are well over 100 with some big names like Access Bank, Aella, Interswitch and uLesson.

Ashiru Jituboh tells TechCrunch that besides making APIs, Okra is in the business of selling “digital first-experiences and transformation”.

“We are building an open finance infrastructure that enables developers and businesses to offer digital-first experiences and financial products,” she said. “We’re at a point where businesses are realizing that digital transformation is one of the most conversation happening in most boardrooms. So for us, we’re essentially just making tools and services needed to achieve digital transformation at scale with our APIs.”

The company says it has recorded an average month-on-month API call growth of 281 percent. Okra has also analyzed more than 20 million transactions; last month, it analyzed 27.5 percent of this figure at over 5.5 million transaction lines.

“I think it’s a good indicator that we’re on the right trajectory in terms of traction,” COO Peterside added.

According to Peterside, Okra is preparing for unforeseen circumstances by taking the initiative and engaging with the regulators in its space. Since 2018 when the EU released the General Data Protection Regulation (GDPR) to deal with data protection and violations resulting from it, most African countries have mirrored these laws for their region. In Nigeria, there’s the Nigeria Data Protection Regulation (NDPR), and due to its similarities with the GDPR, Peterside believes Okra has nothing to worry about — at least for now.

“In terms of what the law says, I think the fine print is clear not just in Nigeria but globally, so how we operate as a business is straightforward. But in terms of what we think, the regulators whether they make the necessary decisions… we can’t really speak about that but generally, the laws and global standards are clear,” he said.

If the company succeeds in keeping harmful regulations at bay, it can grow at whatever pace it wants. However, a bane that might threaten this pace is hiring, according to the CEO. “The one challenge I’ll say we face has to be hiring,” Ashiru Jituboh said.

“We want to ensure that we’re solving our customers’ problems as fast as possible and give the clients the support they need. We want to make sure our hiring speed is the same as the speed of our growth and I think being able to raise capital is one of the solvers of that problem… making sure we’re bringing great talent and building a great team,” she added.

Ashiru Jituboh understands the need for great engineering talent because of her engineering-heavy background. Before starting Okra with Peterside, she worked with JP Morgan, Fidelity Investments and Daimler Mercedes Benz. At Okra, she doubles as the chief executive and CTO, staking a claim as one of the most promising founders in Africa’s male-dominated fintech scene.

Omobola Johnson, a senior partner at TLcom Capital, maintains that these qualities and Okra’s proposition made the company its first fintech investment. It was more than enough to convince the firm to follow up in this round.

“We’re thrilled to partner with Okra as they enable developers across the African continent to transform digital financial services,” general partner at Susa, Seth Berman said. “We’re blown away by the quality of Okra’s team, the pace of development and the excitement from the customers building on their API.”

As part of a Fortune Global 500 company, Accenture Ventures has invested in more than 30 startups. However, Okra is the first Black-founded startup in its portfolio. Tom Lounibos, the firm’s president and managing director, said the reason behind the investment stems from partnering with Okra to bring open finance to Africa, the caliber of founders and their technology.

“For us, if we’re building an API infrastructure for the continent, we thought Accenture would be a really good partner because we’re essentially building an API which is a technology-based infrastructure,” said the CEO.

Besides, the investors will be pivotal to the company’s hiring and imminent pan-African expansion plans to Kenya and South Africa, where Okra is currently in beta.

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Nigerian Fintech Appzone Raises $10M for Expansion and Proprietary Technology

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APPzones

Africa’s fintech space has gained proper attention over the past few years in investments but it is not news that startups still battle with offering high-quality products. However, they seem to be doing quite well compared with traditional banks that face challenges like legacy cost structures and a major lack of operational efficiency.

Appzone is a fintech software provider. It is one of the few companies that builds proprietary solutions for these financial institutions and their banking and payments services. Today, the company is announcing that it has closed $10 million in Series A investment.

Typically, African financial institutions rely on using foreign technology solutions to solve their problems. But issues around pricing, flexibility to innovate, and a lack of local tech support always come up. This is where Appzone has found its sweet spot. The company based in Lagos, Nigeria, was founded by Emeka EmetaromObi Emetarom, and Wale Onawunmi in 2008.

Appzone clearly plays a different game from other African fintechs. One clear differentiator is that the company functions as an enabler (at payment rails and the core infrastructure) within banking and payments.

It commenced as a services firm to provide commercial banks with custom software development services. In 2011, the company launched its first core banking product targeting microfinance institutions. The following year, Appzone launched its first product (branchless banking) for commercial banks. It went live with its mobile and internet banking service in 2016 and launched an instant card issuance product in 2017. In 2020, the company launched services catered to end-to-end automation of lending operations for banks and blockchain switching.

“We started Appzone with the intention to build out innovative local solutions for banking and payments on the continent,” CEO Obi Emetarom told TechCrunch. “The focus was to leverage our ability as an enabler to create proprietary technology for both segments.”

Appzone platforms are used by 18 commercial banks and over 450 microfinance banks in Africa. Together, they amass a yearly transaction value and yearly loan disbursement of $2 billion and $300million.

Since its inception, the Google for Startups Accelerator alumnus claims to have led Africa’s fintech sector in some global firsts from the continent. First, the company says it created the world’s first decentralised payment processing network. Second, the first core banking and omnichannel software on the cloud. Third, the first multi-bank direct debit service based on single global mandates.

Emetarom likes to describe Appzone as a fintech product ecosystem with an emphasis on proprietary technology. So far, we’ve touched on two layers of this ecosystem—the digital core banking service providing software that runs financial institutions’ entire operations and interbank processing, which integrates these institutions into a decentralized network powered by blockchain.

Coinciding with this investment is the introduction and scaling of a third layer that focuses on end-user applications. Appzone, having built both banking and fintech layers, wants to connect individuals and businesses to their services. This is where most new-age fintech startups operate, and although Appzone is coming late to the party, it has a bit of an edge, the CEO believes.

“Most of these companies operating in end-user applications have to depend on services from core banking and interbank processing to be able to get their own offerings out there. For us, I think we have an advantage in terms of costs and flexibility because we are already operating in both layers,” Emeratom said in relation to what he thinks of competition.

The company is coming out to blitz scale its products and services after working in stealth mode for more than a decade. One way it wants to carry this out will be to take its pan-African expansion sternly even though a large part of its 450 clients are based in Nigeria. Other countries with a presence include the Democratic Republic of Congo, Ghana, Gambia, Guinea, Tanzania, and Senegal. Before now, Appzone lacked the resources to push into these markets aggressively even though they showed promise. But having closed its Series A, the plan is to drive growth in these countries and expand across more African countries.

Another means Appzone plans to achieve scale is by growing its engineering team — a department it takes pride in. These engineers make up half of Appzone’s 150 employees and there are plans to double down on this number. Like most Nigerian startups these days, Appzone is big on senior engineers. Still, while it might present a problem to other companies, Emetarom says the company has no issue training promising junior talent to grow in expertise.

“Our proprietary tech allows us to innovate at a fraction of a cost, and they are built by essentially the best local talent available. Because those systems are really complex and the level of innovation required is on another level, we literally seek out the to 1% of talent in Nigeria,” he remarked. “We know that even though the expertise isn’t there, we can accelerate acquiring that expertise when we train the very best talents. The more we train our engineers, the faster they grow in terms of expertise, and they will be able to deliver at the same level of world-class quality we expect.“

Back to the round, a noteworthy event is that most investors who took part are based in Nigeria despite its size. CardinalStone Capital Advisers, a Lagos-based investment firm, led the Series A investment. Other investors based in the country include V8 Capital, Constant Capital, and Itanna Capital Ventures. New York-based but Africa-focused firm Lateral Investment Partners also participated.

Before now, Appzone closed a $2 million from South African Business Connexion (BCX) in 2014. Four years later, it raised $2.5 million in convertible debt and bought back shares from BCX in the process. But overall, the company says it has raised $15 million in equity funding.

Speaking on the investment, Yomi Jemibewon, the co-founder and managing director of Cardinal Stone Capital Advisers, said the firm’s investment in Appzone is further proof of Africa’s potential as the future hub of world-class technology.

“Appzone is building a disruptive fintech ecosystem that will be the backbone of Africa’s finance industry with products across payments, infrastructure and software as a service. The impact of Appzone’s work is multifold — the company’s products deepen financial inclusion across the continent whilst providing best-fit and low-cost solutions to financial institutions. Its emphasis on premium talent also helps stem brain drain, rewarding Africa’s best brains with best in class employment opportunities,” he added.

Appzone’s funding continues the fast-paced investment activities witnessed by Africa’s fintech space after a slow January. In the last two months, more than eight fintech startups have secured million-dollar rounds. This includes very large rounds by South African digital bank TymeBank ($109 million) in February and African payments company, Flutterwave ($170 million) in March.

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Verdant Capital Raises USD 9.9 M Series A Equity Capital for Tugende, a Leading Technology Enabled MSME Lender in East Africa

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Edmund Higenbottam, MD of Verdant Capital - Investorsking.com

The transaction is the most recent for the award-winning fintech and financial inclusion investment banking franchise of Verdant Capital.

Partech Africa, a member of the Partech Group, a leading global technology venture capital fund, and Enza Capital invested in the USD 3.6 million extension round – agreed and structured in 2020 – bringing the total Series A volume to USD 9.9 million. This adds to the first close which was led by Mobility 54, the Africa-focused venture capital entity backed by the Toyota Group as well as USD 12 million of debt financing raised over the last 18 months, through institutional investors from the UK, Germany, Switzerland, the Netherlands and South Africa. Verdant Capital serves as Tugende’s financial advisor and arranger for its equity and debt capital raises.

The MSME credit gap across sub-Saharan Africa amounts to more than USD 331 billion per year, with a gap of USD 37 billion in East Africa alone. The growth of innovative and technology enabled business models, such as Tugende’s, are helping fill the credit gap left by traditional banks. The capital raises for Tugende strengthen its balance sheet and allow the expansion of its loan portfolio. Having built its leading position financing boda bodas (motorcycle taxis) in Uganda, Tugende launched its Kenyan operations in late 2019, kick-starting its regional expansion, while continuing to add new asset products for other types of informal sector clients. The equity investments and partnerships with leading equity firms will also accelerate Tugende’s technology development and organisational growth.

Tugende uses asset finance, technology, and a high touch customer support model to help micro, small and medium enterprises (MSMEs) own income-generating assets. Tugende has served over 43,000 clients with more than 16,000 having achieved ownership of at least one asset. Its core asset finance packages include medical and life insurance, training, safety equipment and digital credit profiles in addition to affordable asset finance. Tugende has broadened the productive assets it finances to include fishing boat engines, cars, refrigerators and other income generating equipment and is also currently piloting financing for e-mobility assets. All payments are digital and Tugende provides proprietary credit scores automatically to all clients to help them monitor their performance and unlock new opportunities like discounts and new products.

Tugende’s Series A transaction cements Verdant Capital’s track record in raising capital for high impact emerging financial technology leaders and bringing these businesses to a broad range of global investors. In recognition of Verdant Capital’s strong capital raising volumes in the last 12 months across East, West and South Africa, Verdant Capital was awarded Best Fintech Capital Raising Team in Africa, by cfi.co in its Q1 2021 business and finance awards. In the recent cfi.co awards, ESG and impact investing themes were writ large with BBVA and Credit Mutual, from Spain and France, respectively, winning accolades for Responsible Investment Management and Neuberger Berman’s award for its North American ESG investment platform.

Verdant Capital won the award following a period of record deal volumes in Africa, with some USD 500 million of capital raising and M&A in the Fintech sector in 2020. Verdant Capital successfully completed transactions in the sector with a total value of USD 40 million in 2020. The capital raises included businesses such as Tugende, Retail Capital, a South African SME-credit tech player, and Planet42, a South African car-subscription business.  Based on the growth in its own pipeline, Verdant Capital expects sector-wide deal volumes in 2021 to exceed the levels set in 2020.

Verdant Capital’s ability to showcase its clients to a global audience is further enhanced by its proprietary annual global investor conference, Video Africa. The second edition hosted in March was attended by 45 leading specialist investors from 22 countries, showcasing 18 of the firm’s leading fintech and financial services clients from across Africa.

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