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As it delists, Rocket Internet’s ill-fated experiment with public markets is over

It was all supposed to be so different. When Rocket Internet IPO’d in 2014 it was the largest tech company floatation in Europe for seven years. A year later it had lost $46 million and its valuation had dropped by 30%. Since then the German startup factory behind internet companies such as Delivery Hero, Zalando and Jumia has languished, in part because the reason for its existence — to provide growth capital for “rocket-fueled” startups — has ebbed away, as the tech market was flooded with capital in recent years. Today the company said it was delisting its shares from the Frankfurt and Luxembourg Stock Exchanges for just that reason.

Rocket’s market value has fallen from its high of 6.7 billion euros ($8 billion) on the day of its IPO on the Frankfurt Stock Exchange to just 2.6 billion euros and is now offering investors 18.57 euros ($22.23) for each of their shares, lower than Monday’s closing price of 18.95 euros.

The company said it was “better positioned as a company not listed on a stock exchange” as this would allow it to focus on long-term bets.

In a statement, the company said: “The use of public capital markets as a financing source as essential [sic] parameter for maintaining a stock exchange listing is no longer required and adequate access to capital is secured outside the stock exchange. Outside a capital markets environment, the Company will be able to focus on a long-term development irrespective of temporary circumstances capital markets tend to put emphasis on.”

Delisting, it said, will also reduce operational complexity when setting up new companies, “freeing up administrative and management capacity and reducing costs.”

Its investment division, Global Founders Capital, and CEO Oliver Samwer, will retain their stakes of 45.11% and 4.53% respectively, meaning the virtual shareholder meeting on Sept. 24 to ask for shareholder approval to delist will largely be a formality. It has also launched a separate buyback program to secure 8.84% of its shares from the stock market. Although the decision to delist makes sense, smaller shareholders will be burned, especially as Rocket is using its own cash for the buyback.

The bets Rocket took, however, have of course paid off. For some. According to Forbes, Samwer and his brothers and co-founders Alexander and Marc are worth at least $1.2 billion each.

The Berlin -based firm became quickly known as a “clone factory” after Samwer famously conceded during his Ph.D. that Silicon Valley had got innovation wrong by coming up with new ideas, and the “innovation” would simply be to make existing models more efficient. The fact those existing models were usually dreamt up by other people never seemed to phase him.

Almost like clockwork Rocket produced clones of Amazon, Uber, Uber Eats and Airbnb. Its defense for this rapacious strategy was that it was simply adapting proven models for other markets.

Rocket would say it was merely adapting proven models for untapped local markets. Of course, the kicker was usually that the company would either scale faster globally than the original U.S.-based startup, thus forcing some kind of acquisition, or that it would have its clones IPO faster. It did however produce some big, global, companies, even if they were not particularly original, including e-commerce firm Zalando, food delivery service Delivery Hero and meal-kit provider HelloFresh .

There have been successes. Jumia, the African e-commerce company, listed in April last year and when Rocket sold its stake earlier this year, it contributed to Rocket’s net cash position of €1.9 billion at the end of April.

But it has not benefitted from the recent stock market rally for tech companies, as it is overly exposed to e-commerce rather than pandemic-proof companies like Zoom .

For nostalgia’s sake, here’s that interview I did with Oliver Samwer in 2015, just one more time.

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Africa e-tailer Jumia reports first full-year results post NYSE IPO

Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.

The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.

These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.

The results

Jumia — with online goods and service verticals in 11 countries — posted 2019 revenue growth of 24% (€160 million) over 2018. The company increased its annual active customer base in the fourth-quarter by 54% (to 6.1 million) from 4.0 million for the same period last year.

Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.

Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.

The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.

Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.

That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.    

The overall pattern of growing revenues and customers YoY has been consistent for Jumia.

But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.

CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall. 

 “As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said. 

What’s new

Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec. 

Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa. 

Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.

Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders. 

This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.

Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.

Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.

Share price

Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing. 

The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26

Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program. 

The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.

That’s 50% below the company’s IPO opening in April and 80% below its high.

For the remainder of 2020, bringing back growth in GMV and more positive metrics, such as attining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.

It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and the possible entry in Africa of China’s Alibaba. 

Source: TechCrunch

Posted on

Africa e-tailer Jumia reports first full-year results post NYSE IPO

Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.

The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.

These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.

The results

Jumia — with online goods and service verticals in 11 countries — posted 2019 revenue growth of 24% (€160 million) over 2018. The company increased its annual active customer base in the fourth-quarter by 54% (to 6.1 million) from 4.0 million for the same period last year.

Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.

Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.

The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.

Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.

That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.    

The overall pattern of growing revenues and customers YoY has been consistent for Jumia.

But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.

CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall. 

 “As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said. 

What’s new

Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec. 

Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa. 

Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.

Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders. 

This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.

Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.

Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.

Share price

Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing. 

The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26

Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program. 

The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.

That’s 50% below the company’s IPO opening in April and 80% below its high.

For the remainder of 2020, bringing back growth in GMV and more positive metrics, such as attining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.

It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and the possible entry in Africa of China’s Alibaba. 

Source: TechCrunch

Posted on

Africa e-tailer Jumia reports first full-year results post NYSE IPO

Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.

The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.

These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.

The results

Jumia — with online goods and service verticals in 11 countries — posted 2019 revenue growth of 24% (€160 million) over 2018. The company increased its annual active customer base in the fourth-quarter by 54% (to 6.1 million) from 4.0 million for the same period last year.

Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.

Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.

The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.

Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.

That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.    

The overall pattern of growing revenues and customers YoY has been consistent for Jumia.

But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.

CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall. 

 “As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said. 

What’s new

Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec. 

Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa. 

Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.

Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders. 

This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.

Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.

Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.

Share price

Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing. 

The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26

Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program. 

The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.

That’s 50% below the company’s IPO opening in April and 80% below its high.

For the remainder of 2020, bringing back growth in GMV and more positive metrics, such as attining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.

It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and the possible entry in Africa of China’s Alibaba. 

Source: TechCrunch

Posted on

Africa e-tailer Jumia reports first full-year results post NYSE IPO

Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.

The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.

These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.

The results

Jumia — with online goods and service verticals in 11 countries — posted 2019 revenue growth of 24% (€160 million) over 2018. The company increased its annual active customer base in the fourth-quarter by 54% (to 6.1 million) from 4.0 million for the same period last year.

Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.

Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.

The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.

Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.

That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.    

The overall pattern of growing revenues and customers YoY has been consistent for Jumia.

But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.

CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall. 

 “As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said. 

What’s new

Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec. 

Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa. 

Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.

Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders. 

This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.

Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.

Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.

Share price

Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing. 

The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26

Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program. 

The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.

That’s 50% below the company’s IPO opening in April and 80% below its high.

For the remainder of 2020, bringing back growth in GMV and more positive metrics, such as attining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.

It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and the possible entry in Africa of China’s Alibaba. 

Source: TechCrunch

Posted on

Africa e-tailer Jumia reports first full-year results post NYSE IPO

Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.

The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.

These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.

The results

Jumia — with online goods and service verticals in 11 countries — posted 2019 revenue growth of 24% (€160 million) over 2018. The company increased its annual active customer base in the fourth-quarter by 54% (to 6.1 million) from 4.0 million for the same period last year.

Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.

Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.

The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.

Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.

That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.    

The overall pattern of growing revenues and customers YoY has been consistent for Jumia.

But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.

CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall. 

 “As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said. 

What’s new

Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec. 

Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa. 

Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.

Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders. 

This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.

Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.

Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.

Share price

Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing. 

The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26

Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program. 

The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.

That’s 50% below the company’s IPO opening in April and 80% below its high.

For the remainder of 2020, bringing back growth in GMV and more positive metrics, such as attining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.

It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and the possible entry in Africa of China’s Alibaba. 

Source: TechCrunch

Posted on

From The Court To Cap Tables: NBA’s Andre Iguodala Talks New VC Role & How Basketball and Investing Are Similar






On the basketball court, three-time NBA champion Andre Iguodala is known for his versatility and ability to play multiple positions. Off the court, he’s also known for his investing chops.

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Over the years, Iguodala’s funded over 40 companies including Zoom, Datadog, PagerDuty and Allbirds. As an investor and a Jumia board member, he helped the company grow and go public in April 2019 with a billion-dollar IPO.

In recent weeks, Iguodala has taken on new roles in both the basketball and startup worlds. He recently joined the Miami Heat with an impressive debut. And on Feb. 5, he was tapped as a venture partner for Catalyst Fund, the venture capital arm of Comcast Corp. Catalyst’s focus will be on early-stage investments in companies founded by African American, Latinx and female entrepreneurs.

For Comcast Ventures’ Head of Funds and Managing Director Amy Banse, Iguodala’s investment experience and network, combined with his “his passion for supporting entrepreneurs from diverse backgrounds,” is a perfect fit for the firm’s Catalyst Fund.

Since its formation in 2011, the fund has backed more than 70 startups.

Catalyst Fund Principal Fatima Husain (a Muslim of Indian descent) told me the fund gives her and Iguodala a chance to help back founders who might not otherwise have access to capital and networks.

“We both come from unconventional backgrounds, and we want to be able to help founders who also come from unconventional backgrounds,” she told me. “We both truly believe talent and brilliance is equally distributed amongst individuals and that we can help get them the right level of resources.”

Catalyst Fund’s Andre Iguodala and Fatima Husain

In a telephone interview, Crunchbase News caught up with Iguodala to hear more in-depth about his and Husain’s plans for the fund, and just how the NBA star got into startup investing.

CB News: How did you get into startup investing in the first place?

Iguodala: About 8 or 9 years ago, I started seeing a large return in the tech sector in the public markets. From there, I got interested and wanted to dive deeper into learning how I could invest before companies hit the public markets. I started seeing the growth in the private space, and that eventually led to where I am now.

Things I look at are: market size, does a company have a competitive advantage, can it fight off tech giants like Microsoft, Amazon and Google? I also look at founders and their vision–where they see themselves in 10 years. I ask myself, “How can I personally add value to a company, not just from a capital standpoint?”

CB News: What’s the most interesting part about investing in startups and helping them grow?

Iguodala: For Fatima and I, it’s really exciting. Look at technology, and how it’s changed our lives from everything to scheduling a flight or getting my son’s basketball game schedule. Everything is on my phone these days, and how we move in general is so much different than just say, eight years ago. Technology is doing so much to make our lives more efficient. So when I’m looking at that, this is an exciting time to be in this space. Not only for capital gains, but what you’re adding by having involvement in people’s day-to-day lives over the next 20, 30 or 40 years.

CB News: How does being a pro basketball player help you when it comes to making startup investments?

Iguodala: I just joined a new team, the Miami Heat, in basketball, and one here at Catalyst. With the Heat, I was hyper focused my first couple of times on the court. While every team runs the same plays, each one has different terminologies for them. So I’ve been watching and learning on the fly, and having to figure out things fast.

It’s similar in the tech space. There’s different terminology and different acronyms for different industries and teams. Different companies have different vibes, some are more laid back and others are more buttoned-up. I have had to learn how to add value to different cultures within companies in the same way as I have with different teams.

There’s lots of egos on both sides. I thought it was just in the sports world, but I see it too in tech in other VCs, entrepreneurs or the best engineers. So I’ve had to learn how to deal with different personalities in both sports and investing. I’ve also learned to adapt and learn about different industries, from consumer to enterprise brands for example.

CB News: As someone with an unconventional “non-traditional VC” background, what skills or perspective do you have that make you a better investor and startup consultant than someone who may not have this diverse background?

Iguodala: I’m really excited because what we’re doing with the Catalyst Fund and what we represent is investing in underrepresented communities, and determining how we can put them in our ecosystem and help them grow in a responsible and sustainable way.

Being a minority, you have to have a grander scope in terms of the people you deal with on a daily basis. Many of us have that back against the wall mentality, and a passion and grit.

Every morning I wake up with a chip on my shoulder, and know I have to wake up with that passion and juice to go and prove myself. I’ve learned that I have to sacrifice, work hard and step up when it’s my turn. I’m ready to help other unconventional founders, and founders who are underrepresented in funding in the tech space, in their own journey.

Blog Roll Illustration: Li-Anne Dias







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Jumia, DHL, and Alibaba will face off in African ecommerce 2.0

The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom.

Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition.

To date, scaling e-commerce in Africa has straddled the line of challenge and opportunity, perhaps more than any other market in the world. Across major African economies, many of the requisites for online retail — internet access, digital payment adoption, and 3PL delivery options — have been severely lacking.

Still, startups jumped into this market for the chance to digitize a share of Africa’s fast growing consumer spending, expected to top $2 billion by 2025.

African e-commerce 2.0 will include some old and new players, play out across more countries, place more priority on internet services, and see the entry of China.

But before highlighting several things to look out for in the future of digital-retail on the continent, a look back is beneficial.

Jumia vs. Konga

The early years for development of African online shopping largely played out in Nigeria (and to some extent South Africa). Anyone who visited Nigeria from 2012 to 2016 likely saw evidence of one of the continent’s early e-commerce showdowns. Nigeria had its own Coke vs. Pepsi-like duel — a race between ventures Konga and Jumia to out-advertise and out-discount each other in a quest to scale online shopping in Africa’s largest economy and most populous nation.

Traveling in Lagos traffic, large billboards for each startup faced off across the skyline, as their delivery motorcycles buzzed between stopped cars.

Covering each company early on, it appeared a battle of VC attrition. The challenge: who could continue to raise enough capital to absorb the losses of simultaneously capturing and creating an e-commerce market in notoriously difficult conditions.

In addition to the aforementioned challenges, Nigeria also had (and continues to have) shoddy electricity.

Both Konga — founded by Nigerian Sim Shagaya — and Jumia — originally founded by two Nigerians and two Frenchman — were forced to burn capital building fulfillment operations most e-commerce startups source to third parties.

That included their own delivery and payment services (KongaPay and JumiaPay). In addition to sales of goods from mobile-phones to diapers, both startups also began experimenting with verticals for internet based services, such as food-delivery and classifieds.

While Jumia and Konga were competing in Nigeria, there was another VC driven race for e-commerce playing out in South Africa — the continent’s second largest and most advanced economy.

E-tailers Takealot and Kalahari had been jockeying for market share since 2011 after raising capital in the hundreds of millions of dollars from investors Naspers and U.S. fund Tiger Global Management.

So how did things turn out in West and Southern Africa? In 2014, the lead investor of a flailing Kalahari — Naspers — facilitated a merger with Takealot (that was more of an acquisition). They nixed the Kalahari brand in 2016 and bought out Takelot’s largest investor, Tiger Global, in 2018. Takealot is now South Africa’s leading e-commerce site by market share, but only operates in one country.

In Nigeria, by 2016 Jumia had outpaced its rival Konga in Alexa ratings (6 vs 14), while out-raising Konga (with backing of Goldman Sachs) to become Africa’s first VC backed, startup unicorn. By early 2018, Konga was purchased in a distressed acquisition and faded away as a competitor to Jumia.

Jumia went on to expand online goods and services verticals into 14 Africa countries (though it recently exited a few) and in April 2019 raised over $200 million in an NYSE IPO — the first on a major exchange for a VC-backed startup operating in Africa.

Jumia’s had bumpy road since going public — losing significant share-value after a short-sell attack earlier in 2019 — but the continent’s leading e-commerce company still has heap of capital and generates $100 million in revenues (even with losses).

Source: TechCrunch

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2019 Africa Roundup: Jumia IPOs, China goes digital, Nigeria becomes fintech capital

2019 brought more global attention to Africa’s tech scene than perhaps any previous year.

A high profile IPO, visits by both Jacks (Ma and Dorsey), and big Chinese startup investment energized that.

The last 12 months served as a grande finale to 10 years that saw triple digit increases in startup formation and VC on the continent.

Here’s an overview of the 2019 market events that captured attention and capped off a decade of rapid growth in African tech.

IPOs

The story of the year is the April IPO on the NYSE of Pan-African e-commerce company Jumia. This was the first listing of a VC backed tech company operating in Africa on a major global exchange —  which brought its own unpredictability.

Founded in 2012, Jumia pioneered much of its infrastructure to sell goods to consumers online in Africa.

With Nigeria as its base market, the Rocket Internet backed company created accompanying delivery and payments services and went on to expand online verticals into 14 Africa countries (though it recently exited a few). Jumia now sells everything from mobile-phones to diapers and offers online services such as food-delivery and classifieds.

Seven years after its operational launch, Jumia’s stock debut kicked off with fanfare in 2019, only to be followed by volatility.

The online retailer gained investor confidence out of the gate, more than doubling its $14.95 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left,  whose firm Citron Research issued a report accusing the company of fraud. The American activist investor’s case was bolstered, in part, by a debate that played out across Africa’s tech ecosystem on Jumia’s legitimacy as an African startup, given its (primarily) European senior management.

The entire affair was further complicated during Jumia’s second quarter earnings call when the company disclosed a fraud perpetrated by some of its employees and sales agents. Jumia’s CEO Sacha Poignonnec emphasized the matter was closed, financially marginal and not the same as Andrew Left’s short-sell claims.

Whatever the balance, Jumia’s 2019 ups and downs cast a cloud over its stock with investors. Since the company’s third-quarter earnings-call, Jumia’s NYSE share-price has lingered at around $6 — less than half of its original $14.95 opening, and roughly 80% lower than its high.

Even with Jumia’s post-IPO rocky road, the continent’s leading e-commerce company still has heap of capital and is on pace to generate over $100 million in revenues in 2019 (albeit with big losses).

The company plans reduce costs by generating more revenue from higher-margin internet services, such as payments and classifieds.

There’s a fairly simple equation for Jumia to rebuild shareholder confidence in 2020: avoid scandals, increase revenues over losses. And now that the company’s publicly traded — with financial reporting requirements — there’ll be four earnings calls a year to evaluate Jumia’s progress. 

Jumia may not be the continent’s standout IPO for much longer. Events in 2019 point to Interswitch becoming the second African digital company to list on a global exchange in 2020.  The Nigerian fintech firm confirmed to TechCrunch in November it had reached a billion-dollar unicorn valuation, after a (reported) $200 million investment by Visa. 

Founded in 2002 by Mitchell Elegbe, Interswitch created much of the initial infrastructure to digitize Nigeria’s (then) predominantly cash-based economy. Interswitch has been teasing a public listing since 2016, but delayed it for various reasons. With the company’s billion-dollar valuation in 2019, that pause is likely to end.

“An [Interswitch] IPO is still very much in the cards; likely sometime in the first half of 2020,” a source with knowledge of the situation told TechCrunch. 

China-Africa goes digital

2019 was the year when Chinese actors pivoted to African tech. China is known for its strategic relationship with Africa based (largely) on trade and infrastructure. Over the last 10 years, the country has been less engaged in the continent’s digital-scene.

china africa techThat was until a torrent of investment and partnerships this past year.

July saw Chinese-owned Opera raise $50 million in venture spending to support its growing West African digital commercial network, which includes browser, payments and ride-hail services.

In August, San Francisco and Lagos-based fintech startup Flutterwave partnered with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

In September, China’s Transsion  — the largest smartphone seller in Africa — listed in an IPO on Shanghai’s new STAR Market. The company raised ≈ $394 million, some of which it is directing toward venture funding and operational expansion in Africa.

The last quarter of 2019 brought a November surprise from China in African tech. Over 15 Chinese investors placed over $240 million in three rounds. Transsion backed consumer payments startup PalmPay raised a $40 million seed, stating its goal to become “Africa’s largest financial services platform.”

Chinese investors also backed Opera-owned OPay’s $120 million raise and East-African trucking logistics company Lori Systems’ (reported) $30 million Series B.

In the new year, TechCrunch will continue to cover the business arc of this surge in Chinese tech investment in Africa. There’ll surely be a number of fresh macro news-points to develop, given the debate (and critique) of China’s role in Africa.

Nigeria and fintech

On debate, the case could be made that 2019 was the year when Nigeria become Africa’s unofficial capital for fintech investment and digital finance startups.

Kenya has held this title hereto, with the local success and global acclaim of its M-Pesa mobile-money product. But more founders and VCs are opting for Nigeria as the epicenter for digital finance growth on the continent.Nigeria naira

A rough tally of 2019 TechCrunch coverage — including previously mentioned rounds — pegs fintech related investment in the West African country at around $400 million over the last 12 months. That’s equivalent to roughly one-third of all startup VC raised for the entire continent in 2018, according to Partech stats.

From OPay to PalmPay to Visa — startups, big finance companies and investors are making Nigeria home-base for their digital finance operations and outward expansion in Africa.

The founder of early-stage payment startup ChipperCash, Ham Serunjogi, explained the imperative to operate in the West African country. “Nigeria is the largest economy and most populous country in Africa. Its fintech industry is one of the most advanced in Africa, up there with Kenya  and South Africa,” he told TechCrunch in May.

When all the 2019 VC numbers are counted, it will be worth matching up Nigeria to Kenya to see how the countries compared for fintech specific investment over the last year.

Acquisitions

Tech acquisitions continue to be somewhat rare in Africa, but there were several to note in 2019. Two of the continent’s powerhouse tech incubators joined forces in September, when Nigerian innovation center and seed-fund CcHub acquired Nairobi based iHub, for an undisclosed amount.

CChub ihub Acquisition

The acquisition brought together Africa’s most powerful tech hubs by membership networks, volume of programs, startups incubated and global visibility. It also elevated CcHub’s Bosun Tijani standing across Africa’s tech ecosystem, as the CEO of the new joint-entity, which also has a VC arm.

CcHub CEO Bosun Tijani1

CcHub/iHub CEO Bosun Tijani

In other acquisition activity, French television company Canal+ acquired the ROK film studio from Nigerian VOD company IROKOtv, for an undisclosed amount. The deal put ROK founder and producer Mary Njoku in charge of a new organization with larger scope and resources.

Many outside Africa aren’t aware that Nigeria’s Nollywood is the Hollywood of the continent and one of the largest film industries (by production volume) in the world. Canal+ told TechCrunch it looks to bring Mary and the Nollywood production ethos to produce content in French speaking African countries.

Other notable 2019 African tech takeovers included Kenyan internet company BRCK’s acquisition of internet provider Surf, Nigerian digital-lending startup OneFi’s Amplify buy and Merck KGaa’s purchase of Kenya-based online healthtech company ConnectMed.

Moto ride-hail mania

In 2019, Africa’s motorcycle ride-hail market — worth an estimated $4 billion — saw a flurry of investment and expansion by startups looking to scale on-demand taxi services. Uber and Bolt got into the motorcycle taxi business in Africa in 2018.

Ampersand Africa e motorcycle

Ampersand in Rwanda

A number of local and foreign startups have continued to grow in key countries, such as Nigeria, Uganda and Kenya.

A battle for funding and market-share emerged in Nigeria in 2019, between key moto ride-hail startups Max.ng, Gokada, and Opera owned ORide.

The on-demand motorcycle market in Africa has attracted foreign investment and moved toward EV development. In May, MAX.ng raised a $7 million Series A round with participation from Yamaha and is using a portion to pilot renewable energy powered e-motorcycles in Africa.

In August, the government of Rwanda announced a national policy to phase out gas-motorcycle taxis altogether in favor of e-motos, in partnership with early-stage EV startup Ampersand.

New funds

The year 2019 saw several new funding initiatives for Africa’s startups. Senegalese VC investor Marieme Diop helped spearhead Dakar Network Angels, a seed-fund for startups in French-speaking Africa — or 24 of the continent’s 54 countries.

Africinvest teamed up with Cathay Innovation to announce the Cathay Africinvest Innovation Fund, a $100+ million capital pool aimed at Series A to C-stage startup investments in fintech, logistics, AI, agtech and edutech.

Accion Venture Lab launched a $24 million fintech fund open to African startups.

And Naspers offered more details on who can pitch to its 1.4 billion rand (≈$100 million) Naspers Foundry fund and made its first investment in online cleaning services company SweepSouth.

Closed up shop

Like any tech ecosystem, not every startup in Africa killed it or even continued to tread water in 2019. Two e-commerce companies — DealDey in Nigeria and Afrimarket in Ivory Coast — closed up digital shop.

Southern Africa’s Econet Media shut down its Kwese TV digital entertainment business in August.

And South Africa based, Pan-African focused cryptocurrency payment startup Wala ceased operations in June. Founder Tricia Martinez named the continent’s poor infrastructure as one of the culprits to shutting down. A possible signal to the startup’s demise could have been its 2017 ICO, where Wala netted only 4% of its $30 million token-offering.

Africa’s startups go global

2019 saw more startups expand products and business models developed in Africa to new markets abroad. In March, Flexclub — a South African venture that matches investors and drivers to cars for ride-hailing services — announced its expansion to Mexico in a partnership with Uber.

In May, ExtraCrunch profiled three African founded fintech startups — Flutterwave, Migo and ChipperCash — developing their business models strategically in Africa toward plans to offer their products in other regions.

By December, Migo (formerly branded Mines) had announced its expansion to Brazil on a $20 million Series B raise.

2020 and beyond

As we look to what could come in the new year and decade for African tech, it’s telling to look back. Ten years ago, there were a lot of “if” questions on whether the continent’s ecosystem could produce certain events: billion dollar startup valuations, IPOs on major exchanges, global expansion, investment from the world’s top VCs.

All those questionable events of the past have become reality in African tech, even if some of them are still in low abundance.

There’s no crystal ball for any innovation ecosystem — not the least Africa’s — but there are several things I’ll be on the lookout for in 2020 and beyond.

Two In the near term, start with what Twitter/Square CEO Jack Dorsey may do around Bitcoin and cryptocurrency on his return to Africa (lookout for an upcoming TechCrunch feature on this).

I’ll also follow the next-phase of e-commerce in Africa, which could pit Jumia more competitively against DHL’s Africa eShop, Opera and China’s Alibaba (which hasn’t yet entered Africa in full).

On a longer-term basis, a development to follow is how the continent’s first wave of millionaire and billionaire tech-founders could disrupt dynamics around politics, power, and philanthropy in Africa —  hopefully for the better.

More notable 2019 Africa-related coverage @TechCrunch

Source: TechCrunch