Birth of a Unicorn, Africa Internet Group raises largest VC round in Africa to date

Africa Internet Group (AIG) has closed a $326 million financing round led by MTN, Rocket Internet and Goldman Sachs. The round includes a previously announced $83 million commitment from AXA, and would potentially form the continent’s first unicorn company as a result.

Jumia, AIG’s main subsidiary, currently present in 11 African markets, provides the platform for local African businesses to sell products to the fast-growing base of African consumers, and in particular to the rapidly emerging middle class. Other activities of AIG include Kaymu, a leading online shopping community, as well as leading marketplaces in food delivery (Hellofood), travel (Jovago) and leading classifieds operations in real estate (Lamudi), jobs (Everjobs) and cars (Carmudi).

The new funds will significantly strengthen the balance sheet of AIG, enabling the company to further its investments into Jumia in particular. The investment off-sets rumors Jumia was possibly winding down operations when they recently laid off 300 of their 1,000 staff over the course of 2015. This was otherwise a significant downsizing of the company that followed a $33 million loss posted in 2014. Most likely the recent changes at the company were necessary to better position the business for growth, and where this new capital adds confidence in Africa’s mid to long term e-commerce opportunity.

IMG_0227 Colin Coleman, Head of Goldman Sachs investment banking Sub-Sahara Africa, discusses rising vs. uprising narrative at the Oxford Business Africa Forum 2016.

Nigeria is of particular focus where the e-commerce sector has been growing strongly over the past three years and is expected to contribute up to 10 per cent (valued at N2.5 trillion) of GDP by 2018. Further illustrating investor interest in Nigeria, competing investment firm Naspers reported its own $100 million investment in Konga, a key Jumia competitor, as only one of several deals that highlights their strategic interest in the market. These larger investments by Rocket and Naspers also follow the progress of companies listed on the VC4Africa platform, and where increased investor interest was recorded in the 2015 Venture Finance in Africa report. The data compiled by VC4Africa tracked 104 investments where Nigeria as a market represented the most new deals closed.

The largest single financing round provided to an African tech company to date, the AIG investment is a significant milestone for the African venture capital industry. As a result, key players will continue to raise their stakes in Africa’s leading e-commerce marketplaces focused on serving Nigeria as their most important market.