Interview with Mikael Hajjar
CO-FOUNDER, P1 VENTURES
Lives in: Dakar, Senegal
Whereas international enterprise capital funding, as measured by Pitchbook, is down 48% within the first half of 2023 in comparison with the earlier 12 months, Mikael Hajjar, co-founder of Africa-focused enterprise capital agency P1 Ventures argues that now could be the time to speculate. He believes in investing earlier than the hype, or when the markets are down.
P1 Ventures has backed 29 start-ups since 2020, the 12 months co-founders Mikael Hajjar and Hisham Halbouny established the corporate. They each used to run companies and later grew to become enterprise capitalists. Halbouny has expertise in healthcare and client finance, whereas Hajjar has a background in clear tech and local weather options. Just lately, P1 Ventures introduced the US$25 million first close of its second fund.
The corporate prides itself on its contrarian funding philosophy – make investments when, the place and in corporations that different traders gained’t essentially take into account. In a latest interview with Jeanette Clark, Hajjar highlighted 5 sectors the place the agency sees alternatives.
1. The place crypto and fintech converge
The final two years haven’t been nice for crypto. Hailed by many commentators as an extended “crypto winter”, the difficulty that set in throughout 2022 with the collapse of cryptocurrencies Luna and TerraUSD, culminated within the closing of the FTX change in November of final 12 months.
Regardless of the reigning scepticism, Hajjar is bullish concerning the funding his agency has made in Nairobi-based Kotani Pay. The corporate gives an answer for individuals who need to convert crypto to fiat currencies and vice versa. It operates in Kenya, Ghana and South Africa and helps eight cryptocurrencies.
Perfect for the African context, Kotani’s expertise permits customers to off-ramp from crypto by way of USSD, so no web or smartphones are required, says Hajjar. This makes the technology accessible to a wider vary of customers. Kotani additionally provides quick remittance throughout borders (minutes as a substitute of hours or days). This solves a ache level for a lot of Africans who’re working and residing in different nations and have to ship a refund house. It additionally comes at a decrease price, at solely 2% per US$200. The World Bank places the typical price for a remittance to Africa at 8.5%.
It’s at this interface of crypto and Web3 fintech that Hajjar and P1 Ventures see potential. “We’re agency believers that crypto infrastructure and blockchain … [offer] large alternative for the continent. Africa has been the house of among the early fintech improvements like M-Pesa … and we consider that Web3 provides new, disruptive leapfrog alternatives for monetary inclusion.”
Web3, based on McKinsey and Company, is the idea of a decentralised web constructed on blockchains. Primarily, it’s an extension of cryptocurrency, utilizing blockchain in new methods.
2. Making healthcare reasonably priced
Africa makes up roughly 18% of the world population and over 20% of the whole international illness burden. However in the case of the variety of medical doctors, says Hajjar, the continent solely has 2% of all of the medical doctors on this planet. For P1 Ventures, this imbalance equals alternative.
An organization within the P1 Ventures fold that’s working to seize this chance, is Reliance Well being. It began in 2015 as Kangpe, a telemedicine firm pushing its promise of “a health care provider in your pocket”. The CEO, Femi Kuti, is a medical physician who needed to make healthcare accessible and reasonably priced in Nigeria.
Reliance Well being has developed into an built-in healthcare enterprise, offering micro-insurance for medical protection, round the clock telemedicine assist, and medical providers by way of its chain of personal clinics in Lagos, Port Harcourt, and Abuja. The agency lately prolonged its attain to Egypt, establishing a presence in Cairo.
On the insurance coverage entrance, the corporate zeroes in on company purchasers, offering packages that enable employers to safe medical insurance for his or her employees at charges beginning at US$50 yearly. Notable sign-ups embrace e-commerce big Jumia and financial services platform OPay.
“It’s a very highly effective mannequin that has been scaling properly and is now increasing throughout the continent,” says Hajjar.
3. AI-driven enterprise intelligence
P1 Ventures believes that AI is the following leapfrog alternative for the continent. It’s subsequently searching for corporations which can be constructing AI-driven companies particular to the African context.
Hajjar notes a substantial demand for information in Africa. Inside this realm, conversational AI would possibly facilitate automated information assortment by way of intelligence crowdsourcing. Such instruments, he suggests, may present main client manufacturers, comparable to Coca-Cola or its African distributors, with quick insights into product availability on cabinets, pricing, and logistical bottlenecks.
One in every of P1 Ventures’ latest investments, Lengo, primarily based in Senegal, employs a hybrid technique of area brokers and AI. It hyperlinks casual retailers and fast-moving client items (FMCG) corporations by means of its software-as-a-service (SaaS) platform, providing real-time information on product gross sales and insights into client behaviour. The corporate’s tagline underscores its mission: “Cease guessing Africa”.
Lengo was based final 12 months by Max Smith, Roger Xavier Macia, and Ismaila Seck. The corporate has already mapped over 30,000 casual retail retailers in and round Dakar. Its area brokers, generally known as Lengo Eagles, roam the streets, enlisting shopkeepers who present data by answering chatbot questions and submitting pictures of in-store inventory. This information is then analysed by the Lengo workforce utilizing AI fashions, which embrace voice recognition and picture evaluation, to provide real-time analytics on FMCG items’ pricing and market efficiency.
The corporate already gives this analysed information to FMCG corporations comparable to Unilever and GB Meals (a big FMCG distributor in Africa).
4. E-commerce buyer retention in a troublesome financial local weather
P1 Ventures led a spherical of funding in Gameball. The corporate is a buyer intelligence and advertising and marketing CRM platform, based in 2020 by Egyptian businessmen Ahmed Khairy, Ahmed El Assy and Omar Alfar.
“Primarily, they’re enabling e-commerce marketplaces and client manufacturers to retain clients by means of gamification of loyalty. Everyone knows within the present surroundings with the liquidity crunch how vital it’s not to develop in any respect prices, however [rather] to retain clients and sustainably improve the basket or cart dimension of your present clients,” says Hajjar. Gameball may be built-in into Shopify platforms as a widget and is designed to assist a enterprise develop its personal neighborhood of brand name ambassadors and devoted clients, providing quite a lot of incentives, comparable to factors, cashback, rewards for referrals or procuring milestones, reductions, and credit score.
Each characteristic is adaptable primarily based on the preferences of the implementing firm, leading to a tailor-made procuring journey that resembles gameplay. Shoppers accumulate factors, progress by means of ranges, obtain awards for opinions, and extra.
Already, over 2,000 corporations from 70 nations have integrated Gameball into their operations.
5. Creating on-line gaming communities
Rising up in Mauritania, Hajjar remembers how soccer supplied a powerful social bond. “There may be this workforce spirit that sport fosters and we see one thing very related occurring [online] with soccer, due to client apps like Eksab!.” Eksab! is an Egyptian firm, providing a web-based arcade for soccer followers to take part in fantasy soccer video games and trivia contest. It has greater than 1.5 million registered customers and gamers can win money and different prizes. A person buys cash to take part in any of the day by day listed fantasy soccer or tactical video games, or in trivia competitions hosted at particular instances.
Past gaming, data dissemination is a core side of the platform. Customers frequent Eksab! to peruse content material penned by the corporate’s workforce about Egyptian gamers and soccer squads. This engagement spills over to social media platforms: on Fb, for example, the Eksab! web page boasts over 114,000 followers, and an accompanying group has 33,000 members forming a vibrant neighborhood.
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Earlier than co-founding P1 Ventures, Hajjar was concerned in angel investing. One of many first corporations he invested in was a Côte d’Ivoire-based style e-commerce enterprise that finally failed.
“The first lesson I learnt [then], and that we’ve got additionally seen within the [P1 Ventures] portfolio is the principle danger you take, is within the workforce: the founding workforce. So that’s the place we spend an intensive period of time,” he explains. Earlier than investing P1 Ventures will get references on the workforce and takes time to grasp how a lot they’ve already labored collectively, how appropriate they’re, and if they’ll be capable of energy by means of the lows.
One other pivotal consideration is a startup’s functionality to bypass the intrinsic dangers related to being confined to a selected African market or foreign money. Ideally, software-as-a-service and AI tech enterprises that may provide their merchandise globally with out logistical constraints are favoured.
P1 Ventures co-founder Mikael Hajjar’s contact data
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