Realistic Optimist

Last month, Senegalese startup Maad raised $3M . That's an achievement, given the state of the market. Maad also operates in a difficult sector: African B2B e-commerce, notorious for its tight margins. Lara Fakhry recently met and interviewed Maad's co-founder Jessica Long for the Realistic Optimist in Dakar. Some of the topics covered: - Particularity of the Senegalese retail market - How they pivoted from a data company to B2B e-commerce - What other well-funded startups in the space get wrong - Possible exit paths - Senegalese regulatory landscape - Difference between Francophone and Anglophone Africa Enjoy the read! https://lnkd.in/gZ7sQMRb

The Realistic Optimist in TechCabal today! The article digs into the Ivory Coast's startup ecosystem. A mini-Nigeria? It also explores differences between Francophone and Anglophone Africa and why the latter has, for now, dominated the African startup scene. An excellent read published in the Realistic Optimist but penned by Leslie Ossete, co-founder of leading African venture studio Mstudio. https://lnkd.in/g2ZP-vWQ

This startup provides health insurance for people earning $2/day. How does the math work out? Take the context, first. In Africa, a majority of people don't have private health insurance. This is because private healthcare is often linked to an employer, and many Africans work in the informal economy. How do you fix that? mPharma does the following: (i) Buy or franchise local pharmacies. (ii) Recuperate data on which medicines people buy the most. (iii) Identify the 14 most common diseases and precisely calculate how much it costs to treat them. (iv) Based on that cost, figure out how much you have to charge to make a premium. Reduce your costs by enacting a "generic-drug only" policy. mPharma faces multiple challenges, however: (i) People with little money would rather eat today than buy a health insurance plan they might not even need. (ii) The most enthusiastic clients are people that are already sick. But these make mPharma lose money. (iii) Inflation (in Nigeria particularly) further erodes consumers' already limited buying power. (iv) Currency depreciation erodes mPharma's buying power, as it gains money in local currency but has to buy some medicine in $USD. I recently interviewed mPharma's CEO (Gregory Rockson) to understand how mPharma works, in detail. Link to the full interview in the comments.

Swvl became the first Egyptian startup to list on the Nasdaq. But things didn't go as planned. 12 months after the IPO, its stock price had plummeted. The Nasdaq issued delisting warnings. Swvl has since stabilized itself, even turning a profit recently. But one wonders: what happened, for the crash to be so violent? The rise in interest rates is the main culprit, obviously. That's a shallow answer. What specifically about interest rates rising made Swvl's stock tumble so hard? 2 things can be extrapolated. (i) Swvl was priced, in part, based on what other companies doing similar things (comparables) were priced. When their valuations dropped due to the rise in interest rates, Swvl's valuation dropped as well, mechanically. (ii) Swvl went public via an SPAC. SPAC investors have "redemption rights". They can pull out their money. The rise in interest rates made Swvl less sexy, in part because investors could get high returns on lending instead. Some investors pulled out. This meant Swvl couldn't fund the business plan it had put forward, reducing its growth prospects. Thus reducing its sexiness. You see the vicious cycle. The Realistic Optimist recently published an interview with the former CFO of Swvl (Youssef Salem). Link in the comments. Do you have any thoughts, comments on the Swvl saga?

African VCs face local capital's lack of interest. Is venture debt a solution? Think of it: local African capital is turned off by VC because it isn't familiar with its ethos: unprofitable companies, 98% failure rate, power law, low proxies for exits... But what about venture debt? The instrument is clearer. It's debt. Lending money. Banks know how to do that. Read the case Mahmoud El-Zohairy, MBA, from Camel Ventures makes about African venture debt in this week's issue of the Realistic Optimist. For paid subscribers only. https://lnkd.in/dqShkis4

B2B startups in emerging markets have a superpower. They can sell to Western corporations while maintaining a cheap cost base. Take Turkey: the tech talent there is excellent. Turkish founders can craft products that are on par with American ones, even better. But Turkish founders have a much lower cost base. Turkish employees are cheaper than US ones. The depreciation of the Lira, Turkey's currency, has exacerbated this situation. The country suffers, but talent is even cheaper. The so-called "cost arbitrage" Turkish startups enjoy grows as a result. In this exclusive Realistic Optimist piece, two Turkish VCs (Idil Azizoğlu and Basar Yenidunya) dive into how they optimize this arbitrage. https://lnkd.in/dQBYHv3a

How has a Lebanese music app beat Spotify in MENA? Three keys: better payments, cultural proximity and regional loyalty. Excited for Lara Fakhry to post her first piece on The Realistic Optimist. Dive in for a great read. https://lnkd.in/gj3VMRpK

Jordan and Jordanians have been launching successful businesses for a while. Aramex, Maktoob... But how do you translate those early successes into a vibrant startup ecosystem? Hear what Tambi Jalouqa from Propeller (a Jordan-based VC) has to say in this exclusive Realistic Optimist piece. For paid subscribers, exclusively. https://lnkd.in/gR5UP6G5

Sovereign wealth funds and DFIs carry MENA's venture capital scene. But both of them want different things. The sovereigns are commercially-minded and focused on their region’s economic development. The DFIs have a developmental mindset and focus on underserved geographies. How do you combine both as LPs in a VC fund? Read how Tamer Azer from Shorooq Partners thinks about it, in this exclusive Realistic Optimist interview. Only for Realistic Optimist paid subscribers. https://lnkd.in/gNdeGiew

How do you build a health insurance plan for people on $2/day? When your local currency is rapidly losing value? When inflation is up to 20 year highs? Welcome to mPharma's life. Read this exclusive interview with founder Gregory Rockson on how him and his team think through these issues. https://lnkd.in/dCi6Gha5