Chpter, a Kenyan e-commerce startup launched by co-founders of YC-backed Marketforce, has raised $1.2 million in a pre-seed round and will use the new funding to improve its technology stack and expand into Egypt and Nigeria.

Founded in 2022 by Tesh Mbaabu, Mesongo Sibuti, Kuria Kevin and Mark Kiarie, Chpter helps businesses convert social media from a marketing channel to a sales platform with chat, order, and payment tools. The company charges a monthly subscription and earns a transaction fee for payments processed on its platform. Some of its clients include insurer Britam, shoe store Kicks Kenya, and e-commerce platform Phoneplace. The company operates in Kenya and South Africa.

“We are investing in our tech stack to offer an end-to-end product, connecting the APIs from social media platforms such as WhatsApp and Instagram with popular e-commerce and customer relationship management systems like Shopify and Woocommerce,” Tesh Mbaabu, Chpter’s co-founder and CEO told TechCabal.

Pani, an Africa-focused investment firm co-founded by Cellulant’s former CEO, Ken Njoroge, led the funding round. Other participants include Plesion Capital, Techstars, Norrsken, Renew Capital, and ViKtoria Ventures, and angel investors, including Nala founder and CEO Benjamin Fernandes and Workpay co-founders Paul Kimani and Jackson Kibigo.

The fundraising is a vote of confidence from investors in the young startup. It was founded while its two co-founders were running Marketforce, a YC-backed Kenyan e-commerce platform once valued at over $100 million. 

Some of Chpter’s investors had previously invested in Marketforce, although Mbaabu declined to share further details. Chpter operates independently of Marketforce.

“Chpter was and is not under the MarketForce umbrella. It is going to continue operating independently. However, MF is a shareholder in it,” Mbaabu told TechCabal in May 2024. 

Chpter’s acceptance into the Norrsken Accelerator in 2023 and the Safaricom Spark Accelerator in May 2024 may have positioned it as a key startup in conversational commerce. 

Norrsken Accelerator investment remains undisclosed. Chpter joined Safaricom’s Spark Accelerator in May 2024. The telco provided three months of training and mentorship to help Chpter scale.

The funding saw a mixture of new and existing investors including AHL Venture Partners, an Africa-focused venture fund, and Everstrong Capital, an infrastructure investor constructing the Usahihi toll road connecting Kenya’s capital Nairobi and the port city of Mombasa. Beyond Capital Ventures has reinvested in a follow-up to its Series A equity commitment.

“This additional investment will accelerate the rollout of our EV energy technology and infrastructure to the mass market, bringing us closer to our goal of deploying 5 million electric motorcycles by 2033,” said Josh Whale, Ampersand CEO.

Founded in 2016 by Joshua Whale, the Kigali-based firm assembles and finances electric motorcycles. Ampersand claims that its motorcycles are 45% cheaper to operate and produce 75% fewer emissions than petrol alternatives, which currently dominate the market. The company also owns 18 charging stations in Kigali and Nairobi. 

The funding shows a growing appetite among investors for renewable energy and e-mobility investments. Africa has an estimated $4.87 billion motorcycle market, according to Statista, a data and market insight firm.

The new funding comes ahead of a Series B round to help the company ramp up its production in Kigali and Nairobi.

“As we look ahead to our upcoming Series B, we remain committed to reshaping how Africa moves by delivering affordable, low-carbon transport solutions that also drive green jobs and economic growth across the continent,” Whale said.

In June 2024, Ampersand struck a deal with Chinese electric vehicle and battery manufacturer BYD to build 40,000 electric motorcycles in Kenya and Rwanda by the end of 2026. 

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“Startups whose only value proposition was an alternative to load shedding are seeing that they have to change their business models very quickly,” one investor who asked not to be named told TechCabal. 

On Facebook Marketplace, some customers are selling their backup solar power systems for 80% less than the original price, reflecting slowing demand as the national grid becomes more reliable. One customer listed their Growatt 5kW backup solar system, which retails around R35,000 ($2,000) for R6,000 ($337).

According to a report, between January and May 2024, rooftop solar panel installations climbed by 2.7% compared to 31% in the same period in 2023.

A kilowatt hour (kWh) of electricity on the Eskom grid costs around R3.30 ($0.19), while a kWh of solar current costs around R2 ($0.11). 

While the cost of solar systems is projected to decrease by an average of 10% annually, Eskom tariffs are projected to rise by 44% in 2024, making the former a cheaper alternative for most households.

In July, Hohm Energy, a solar startup that raised an $8 million seed round, entered administration after struggling to meet debt obligations. 

Hohm Energy grew aggressively as load shedding peaked. However, when power cuts decreased in mid-2024, the company could not eliminate the sticky costs it had acquired to drive the growth of its solar offering.

Despite load shedding being a significant driver for adopting alternative energy sources, there are other factors like cheaper electricity tariffs and adopting cleaner energy sources. It means there are still opportunities for clean energy startups.

“We have actually grown at a faster rate after the high levels of load shedding because tariffs continue to increase by as much as double digits,” said Vincent Maposa, founder of Multichoice-backed Wetility “People are seeking ways to save especially in this tough macroeconomic environment.” 

Wetility’s software product allows customers to manage and monitor their power systems and usage remotely. 

“Although a decrease in load shedding has seen a decrease in solar system installations, people are still looking to get the most value for money because of inflation and other factors and that’s where Plentify comes in,” said Jon Kornik, the founder of Plentify, a load management platform.

Despite Eskom’s improving power generation capabilities, the national power company bleeds cash because of high debt and operating costs. It passes these costs to consumers in the form of higher tariffs. This means that although consumers will enjoy a better power supply, they will pay more. This will continue to provide a rationale for alternative energy startups.

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The company has entered business rescue, a process that helps financially distressed companies get help, and has laid off an undisclosed number of employees. Under South African law, business rescue lasts three months. Within that time, a business rescue practitioner must investigate the company’s affairs, convene a meeting of creditors, and advise on the company’s prospects.

“We are working with legal counsel to get a better understanding of a way forward, but Hohm is currently not trading,” Franc Gray, CEO of Hohm’s parent company, Spark Energy, told TechCabal.

CEO Tim Ohlsen left the company last week, people familiar with the matter said.

After Ohlsen’s resignation, managing director Ryan Steytler took over the company leadership and decided to put the business into business rescue. Gray alleges Steytler made the decision unilaterally and against shareholder advice.

Steytler and Ohlsen could not be reached for comments. 

Founded in 2021, Hohm Energy’s flagship product is a solar marketplace that lets customers digitally determine their solar energy requirements and access loans for rooftop solar installation. 

The platform also enabled solar installers to design, manage, and finance projects. As South Africa’s load shedding worsened, renewable energy alternatives like Hohm enjoyed more demand.

By February 2024, the company claimed to have generated over 17,000 custom solar rooftop designs worth $190M and $90M in financing applications to implement them. Ohlsen told TechCabal in February the company was on track to be profitable by the end of 2024.

Hohm rapidly increased its headcount in anticipation of growing demand for solar, said Bas Hochstenbach, managing partner of E4E Africa, one of Hohm’s investors.

However, as grid electricity improved in South Africa, Hohm’s business started to show the first signs of cracks. 

“Hohm had a lot of sticky costs and could not act quickly enough to restructure that cost base as revenue tapered off because of slowing demand for solar,” said Gray.

Hohm also had lax governance structures in its early days which impacted the efficiency of its operating model. It only formed a board in early 2024 ahead of its seed round, said one investor who asked not to be named so they could speak freely.

Gray also claimed there could have been more transparent reporting of the company’s health by Hohm’s management, which would have enabled Spark to offer sufficient help.

“At the moment, the goal is to create the best outcome for all parties concerned in a situation that is not ideal,” one investor said.

Parent company Spark plans to invest more money in the business after the rescue process, but under a new business model and management team. 

*Editor’s note: An earlier version of this article referred to Hohm’s parent company as Spark Energy Services. It has now been corrected to Spark Energy.

“At a meeting of the shareholders held on 5 August 2024, it was resolved to place the company under liquidation as per Section 393(1) (b) of the Insolvency Act and appoint KVSK Sastry as the liquidator to wind up the company,” Nicolas Guibert, Mobius director, said in a notice.

Kenya’s Insolvency Act 2015, allows companies to wind up if the board resolves “by special resolution that it be liquidated voluntarily.”

Mobius, which raised $56 million across five rounds, manufactured low-priced SUVs targeting SMEs in infrastructure, agribusiness and supplies operating in remote areas, and needed vehicles that could withstand rough terrains.

Founded in 2009 by Joel Jackson, a British national, while working in Kenya, Mobius pioneered a stripped-down SUV model “built for African roads” in 2014. The first model cost $10,000 (KES1.3 million), below the market prices of standard SUVs in Kenya.  

The startup built 50 units of its first model.  It released Mobius II and Mobius III in 2018 and 2021 respectively, as successors of the first model, but failed to capture the Kenyan car market flooded with second-hand imports from the UK, Japan and other Asian countries.

The company’s production was tied to pre-orders with a refundable deposit of $384 (KES50,000), which could mean the uptake of its models was low in the market.

Mobius began mass production in 2015 after getting the backing of Playfair Capital, a UK-based VC. It also received funding from Chandaria Industries, a Kenyan-based manufacturer, DFC, a US government development corporation and PanAfrican Investment, a private investment firm.

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This relationship is crucial because neobanks use the credibility of these agents, who have close relationships with their communities, to distribute 17 million debit cards. The agents help the fintechs meet “customers at the point of their need,” an OPay spokesperson told TechCabal. 

OPay and Moniepoint, arguably Nigeria’s two biggest neobanks, sell cards to agents for ₦100, who then sell the cards to customers for ₦1,000, a 900% profit margin. Agents also receive branded materials to advertise the cards. Moniepoint began distributing cards when it entered the retail banking space in August 2023, two years after Opay. 

“There’s no business we do with these companies that we don’t see profit,” said Mr. Duke, a POS agent in Ketu. The dynamics of this relationship—where agents make a profit on each card sale—make card distribution expensive. And while cards are costly for fintechs, they have historically been great for customer acquisition.

Agents get cards by applying online or building relationships with card distributors who offer cheaper rates than the online channel. Card distributors are contract staff employed by the neobanks to sell cards to agents. Other agents without a relationship with card distributors must visit the fintechs’ offices to get cards, which translates to a higher cost due to transportation fees. 

While some fintech customers can get their cards from their bank by applying through apps, this option is unavailable to customers who use feature phones. They rely on cards for transactions since feature phones cannot support apps for online transactions. “The card is the only channel they use to access their account,” an employee at a fintech company told TechCabal. 

“The reason people get cards from us is either that they do not have time to go to the fintech office or they cannot register the cards themselves. They need the cards to perform transactions without a smartphone,” a POS agent in Mile 12 told TechCabal. 

Nigeria has about 1.5 million POS agents scattered across the country, but only a few distribute cards due to additional capital requirements and not everyone finds success selling them.

“We sell about three cards per week; the cards do not move fast,” an agent in Ketu who has sold 69 Opay cards said. 

Card sales depend on location; agents in residential areas sell fewer cards than those in markets. Mr. Duke sells an average of 20 cards weekly, which he credits to his stall at the busy Ketu bus stop. While card sales dropped during the six-week ban on onboarding new customers imposed on fintechs by the central bank, card sales have returned to similar levels before the ban.

“Customers need the cards, and the fintechs need us to sell the cards. I don’t see this relationship ending anytime soon,” he said. 

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To build sustainable businesses, food delivery apps expand revenue streams and keep operational costs low. Startups like Chowdeck, Glovo, and HeyFood have expanded beyond restaurants to onboard malls and local markets. Beyond growing revenue, these companies keep an eye out for cost-saving opportunities.

In 2023, one food delivery platform saved over ₦40 million monthly in operational expenses by moving its drivers off the work messaging app Slack. Over 1,000 of the company’s drivers communicated with supervisors on Slack.

While it’s unclear exactly how much the company paid, the cheapest plan on Slack costs $8.75 per user monthly.  If the startup used the Pro plan, back-of-the-napkin math suggests a monthly fee of $11,000 and $136,500 annually for the 1,300 drivers it had at the time.

“We were adding new drivers by the day,” a rider supervisor at the startup told TechCabal. “I think that is why we moved the drivers off Slack.” 

Their current rider count nearly tripled, and communication costs on the same plan would have hit over $26,000 monthly and about $315,000 annually. This is a nightmare for a venture-backed startup earning naira revenue.

The company eventually moved to Zoho Cliq in mid-2023, one person familiar with the matter said. 

Zoho Cliq bills ₦864 per user, translating to a monthly cost of ₦1.1 million and ₦13.4 million annually for 1,300 drivers.

The change has gone unnoticed among drivers who use the apps to communicate with supervisors.

“Now, only rider supervisors are on Slack,” the supervisor said. 

“[On Zoho] we have channels based on regions, and it works well for communication,” said one delivery rider in the Gbagada area. His channel on Zoho Cliq has about 200 other riders.

Riders also use WhatsApp to communicate when app responses are delayed, share problems encountered during delivery, make leave requests, etc. These WhatsApp groups are according to zonal operations, just like their channels on Zoho Cliq. 

Despite these operational adjustments, the food delivery startup’s driver communication spending dwarfs that of its competitors. For instance, another competitor’s over 2,000 delivery drivers use the free social platform Telegram for communication in addition to the customer support messaging on the delivery app. 

“If we need to voice personal concerns related to work, we can also speak to our supervisors in person,” Emmanuel, the rider, told TechCabal.

Although relatively expensive compared to competing startups, the company boasts that each delivery is profitable. “We are not the cheapest food delivery service, but we are the most efficient,” an executive at the company once boasted.

“[Mavin] was looking to raise as much awareness for the album as possible,” one person close to the label told TechCabal. “A lot of young people will spend the last of their funds to buy food online and Chowdeck is the most popular [destination.]”

Fintechs like Yellow Card and Cenoa have also advertised on Chowdeck, showing that food delivery apps, whose users are typically young and tech-savvy, offer high-quality leads for advertisers. One fintech executive who has previously advertised on the platform described Chowdeck’s users as a “premium target audience.”

Feedback like that is driving the development of a “proper ad product,” said one person familiar with the matter. The conversation around a core ad product is still in the early stages, and until then, sales staff are expected to continue pitching the existing ad offering to clients.

Chowdeck declined requests for comments from TechCabal.

In 2023, Chowdeck charged ₦4 million to send push notifications (PN) to its 200,000 users, according to a rate card seen by TechCabal. Having grown its monthly users, those rates have likely increased. Other advertisement options include SMS, in-app banners, blog content, social media posts, and offline marketing such as branded rider t-shirts. 

“[Adverts on food delivery platforms] work in the same way as advertising with media companies that produce content,” Bolaji Anifowose, Head of partner marketing at Distrobird, a sales automation startup,  told TechCabal.

Like media platforms, the apps take advantage of every surface on their app or web platform to grab the users’ attention. The only difference is food delivery apps immediately have the attention of users looking to spend money. It’s the competitive edge that food delivery apps have over other media advertisers.

For years, e-commerce platforms offered in-app advertisements to make extra revenue with comparatively little operating cost.  Jumia, which previously boasted of quadrupling the sales of global consumer brand Reckitt Benckiser, on its platform, in one year, charges ₦15,000 for 37,500 impressions on 10 sponsored products. 

These ad placements have been limited to sellers and brands on the platform—restaurants and malls in the case of food delivery apps like Chowdeck. 

In emerging markets like Indonesia, leading food delivery platforms like Grab and GoFood hosted in the super app Gojek, offer ad placements. In more mature markets, food delivery platforms have reported that their ad revenues contribute significantly to revenue.

If Nigerian food delivery startups ramp up their in-app advertising to get a slice of the in-app advertising market projected to grow to $144.2 million in 2028, there is a risk of bombarding and consequently irritating those who simply want to buy food.

“The balance may be in ensuring that [Chowdeck] does not place the ad in ways that seem intrusive for the users,” Anifowose told TechCabal. 

Well, only a few people would mind eating their amala or rice with a handful of ads if the adverts come with discount codes, as some already do, that make the food cheaper.

*Additional reporting by Emmanuel Nwosu.

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Hundreds of conference participants from 13 African countries caused traffic delays on Aguiyi Ironsi Road, Maitama, and the adjoining roads leading to Transcorp Hilton Abuja on Monday morning. The participants, are a healthy mix of edtech founders, CEOs, investors, development institutions, university lecturers, students, and government officials. 

Many African tech conferences take broad outlooks and focus on big problems and regulators. It has created a gap for over 300 edtech companies that have taken time out this week to discuss the peculiar challenges of their industry. 

“This is the Web Summit of edtech startups,” said an excited founder who joined the queue of participants trying to access the main hall – a large tenth with a 600 seater capacity and an exhibition area with 24 companies.

While 600 people are far from the hundreds of thousands of attendees the Web Summit records yearly, for the edtech industry the attendance at the Mastercard Foundation Edtech Conference was a feat. 

PICTURE: Attendees get their tags at one of the registration points. 

Attendance of 600 edtech who-is-who in Africa was impressive for an inaugural conference. It brought edtech startups into the same room with two parties critical to the industry’s growth – government and investors. 8 education ministers are at the conference with panel discussions scheduled for Monday and Tuesday.

Mastercard Foundation believes that edtech can bridge the education gap and enable over 600 million young people in Africa to access quality education. Joseph Nsengimana, director, Centre for Innovative Teaching and Learning, Mastercard Foundation, said the edtech conference was important as it gets every stakeholder in the industry talking to each other towards finding solutions to the many problems that the education sector faces in Africa. These solutions would include ways to make edtech services profit-oriented while still affordable to the underserved, to attract investors. 

Edtech startups have been trying to convince investors for many years that they can help people in underserved communities get needed quality education and make money for them by doing so. Only a few investors have been convinced. In 2023, over 300 edtech startups accounted for a paltry 0.7% of total funding to tech companies in Africa. Even in 2021 when funding to the industry rose to its highest at $81 million, it was still less than 2% of total funding. 

“The challenge is that many do not see where to come in. Companies need to pick areas of specialisation in edtech which gives a clearer picture for investment,” Chimdi Neliaki, Youth Reference Committee, Office of the AU Youth Envoy.

The decline in edtech funds is also a result of issues with the scalability of the models, according to Ruth Wairimu, investment manager of Acumen Fund who spoke during an investors’ panel. The edtech models that scale are usually those that are B2B-focused and create solutions for private schools and public schools as well. The B2C edtech companies find it hard to scale because they depend on decisions from parents facing income inequalities. Nonetheless, investing in any edtech company, B2B model or B2C model, requires a different approach. 

“We need to encourage more investors to be more patient,” Wairimu said. 

But before getting more investors to fund startups, the infrastructure that powers the industry needs to be built. Tochukwu Ezeukwu, regional director of AVPA divides infrastructure into broadband and internet penetration. 

CAPTION: L-R: Rory Fynn, country director Nigeria, Mastercard Foundation, Bosun Tijani, Federal Minister of Communication, Innovation, and Digital Economy, Joseph Nsengimana, director, Mastercard Foundation, and Hon. Albert Nsengiyumva, executive secretary, Association for the Development of Education in Africa. 

“Edtech is not an end in itself. It is supposed to do something. Across many markets in Africa, there is little developed infrastructure that edtech would ride on and scale,” Ezeukwu said. 

The edtech industry may also be leaving funds on the table by working in silos while disconnected from government programmes on education, according to Bosun Tijani, Minister of Communications, Innovation, and Digital Economy. 

“The edtech industry is not taking advantage of the Universal Service Provision Fund (USPF),” Tijani said. The fund which is under the Ministry of Communications, Innovation, and Digital Economy, is to facilitate the achievement of national policy goals for universal access and universal service to information and communication technologies (ICTs) in rural, un-served, and under-served areas in Nigeria. 

It is more important to prioritize the content and how teachers use it to achieve learning outcomes in edtech solutions rather than just buying laptops for schools. This was the consensus of three-panel sessions that included the minister, Joseph Nsengimana, director, Centre for Innovative Teaching and Learning, Mastercard Foundation, Albert Nsegiyumva, executive secretary of Association for the Development of Education in Africa (ADEA), Alex Twinomugisha, Risian Kanya, deputy vice-chancellor, Baze University, and Adefunke Ekine, deputy director, Research and External Relations, Tai Solarin University of Education. 

While Prembly provides identity verification, security, and compliance, Peleza conducts background checks for businesses. Peleza has key partnerships in East Africa with mobility apps Uber and Bolt and logistics corporation FedEx. With this merger, the Prembly group will build a bigger East African business using Peleza’s industry knowledge and improve customer service offerings.

Over the last 18 months, Peleza has been using Prembly’s infrastructure.

“This merger serves as an extension of that collaboration and our longstanding partnership, providing an opportunity to expand service offerings to customers across various markets and globally,” Peleza’s founder Marita Mutemi told TechCabal.

“Merging both companies significantly increases our options and value, positioning us as the most used provider across Pan-Africa and achieving leader status in this space,” said Lanre Ogungbe, the co-founder and CEO of Prembly.

Ogungbe has been appointed the CEO of Prembly Group. Marita Mutemi, the founder and CEO of Peleza, will join the Prembly Group as CFO and double as the CEO of Prembly East Africa. “Other executives from Peleza have been reassigned and retained their leadership roles, ensuring continuity and stability,” Mutemi told TechCabal.

The merger creates a combined team of about 100 employees. Ogungbe and Marita disclosed that at least ten employees will be let go because their roles have been duplicated because of the merger. Those staff members will receive a severance package.

“The decision to name the entity Prembly Group is borne out of a mutual agreement to leverage the brand equity and established market presence of Prembly, especially given its global recognition in compliance and digital security solutions,” said Ogungbe.

There are plans to integrate the KYC/B technology platforms for both companies.

Peleza is the older of the two companies; it was founded in 2015 and has not disclosed funding from venture capital firms. Prembly was founded in 2021 and raised a $2.8 million seed round in 2022, backed by MaC Venture Capital and Soma Capital.