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Silicon Valley-style investment doesn’t work for African startups — Quartz Africa

One of the long-running tensions in the African startup investment ecosystem has been whether the Silicon Valley funding model, which seems to have been transferred wholesale to Africa’s very diverse and different tech hubs, is right for the continent’s tech hubs at this stage in their development.

With the disproportionate influence of Silicon Valley investment on Africa’s top tech hubs in Lagos, Nairobi and Cape Town, this debate isn’t going away anytime soon. And even where there are local tech investors many have adopted the expectations of their better funded American counterparts.

A new white paper, Chasing Outliers: Why Context Matters for Early Stage Investing in Africa by East African venture advisory firm, Kinyungu Ventures, examines those tensions and tries to explain how what it terms “African market realities” and “startup characteristics” should set the ground rules that influence how Africa-focused startups and funds should behave.

African markets’ common characteristics of price sensitivity and low purchasing power clash with an expectation of Silicon Valley-style high growth and super returns while startups have much fewer options for capital to drive that growth. This leads to “mismatches” say the authors.

For example, startup founders around the world often talk about “scaling up” as they start to grow. It’s shorthand for achieving economies of scale thanks to the benefits of the internet and technology, where your unit cost to produce a widget decreases as you produce even more widgets. However, it doesn’t necessarily always work out like that in many African markets, in fact there could be diseconomies of scale due to poor infrastructure with everything from weak internet connectivity to poor road networks and low financial inclusion.

For this reason, many African startup founders focus on “trying to solve large, foundational problems that could improve the lives of countless people”; building infrastructure such as supply chains and fintech platforms; pursue mass markets across Africa; and leverage local knowledge.

The challenges with low financial inclusion and outdated banking technology and payments systems in some African countries with large consumer bases has meant huge investment has been put into startups addressing these problems.  Nigeria’s Paystack was bought by Silicon Valley’s Stripe; Visa invested in Lagos-based Flutterwave and Goldman Sachs has led investment rounds in South Africa-based fintech firm Jumo and Lagos-based logistics startup Kobo360. Fintech in particular has dominated African startup investment for several years now.

That’s why the authors, who spent a year interviewing over 100 founders and investors from 15 countries, say despite some of these mismatches and concerns on whether to invest in African markets, “a more measured perspective is that significant, profitable opportunities exist despite, and arguably because, of the challenges.”

These will be found by engaging “large, unexploited markets”; discovering huge opportunities through experimentation and stellar execution; and leveraging mobile infrastructure and nuanced local knowledge to digitize and organize analog markets.

“While African markets aren’t always able to provide the outsized returns that Silicon Valley typically looks for in high-growth companies, a more focused strategy here could unlock real gems, as has been proven by some of the startup successes the continent has seen over the years,” says Tayo Akinyemi, lead researcher on the paper.

Funding African startups

If there is one core message from the paper it’s that Africa’s startup ecosystems need to adopt norms, structures, and processes that reflect the realities of operating in Africa. Nowhere is this more essential than in the funding structure of venture capital and other investors.

The paper makes the case general partners of funds need more flexible structures to better cope with markets that are evolving as rapidly as most African ecosystems. These include using alternative instruments and structures, such as debt or permanent capital vehicles (PCVs), which work by offering an unlimited time horizon for recouping return.

Another approach could be having a more focused investment approach such as B2B investments or more mature companies for example. Ultimately, investors need to reconsider their assumptions and biases. “What is clear now is the need to respect the context in which funds and startups operate and use it as a foundation to develop appropriate fund and company building norms,” write the authors.

 Sign up to the Quartz Africa Weekly Brief here for news and analysis on African business, tech, and innovation in your inbox

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Missouri Woman Murdered Man To Avenge Brother’s Killing, Prosecutors Say

Prosecutors believe a Missouri woman charged with murdering a man wanted to avenge her teenage brother’s recent killing.

Tityana Coppage, 21, is charged with second-degree murder and armed criminal action in the fatal shooting of 36-year-old Keith Lars in Kansas City, the Jackson County prosecutor’s office said.

The shooting occurred in a parking lot at around midday on Wednesday.

According to a probable cause statement, Coppage told investigators that her family believed Lars was involved in the death of her 16-year-old brother, Jayson Ugwuh Jr., earlier this month.

Kansas City police found Lars in the back of a gray Toyota near Virginia Avenue and Admiral Boulevard, but police determined that the shooting had occurred near the 500 block of Benton Boulevard. They discovered 23 shell casings of two different types near the area.

Coppage told police that she knew Lars would be near Independence Avenue and Benton Boulevard.

Tityana Coppage, 21, is charged with second-degree murder and armed criminal action.
Jackson County Detention Center

She said she met him there and followed him to a nearby parking lot. She said after they arrived, a black SUV pulled into the lot and parked, but no-one exited the vehicle.

Coppage said Lars started shooting at the vehicle, and that she went to get out of her vehicle and was going to shoot at the SUV, but Lars told her to remain inside.

She claimed she fired her weapon out of her vehicle’s passenger window and that Lars “got in the way” at some point.

But after investigators reviewed Coppage’s cell phone, they discovered a message to someone she referred to as “Auntie” after the shooting. In the message, she requested bullets and wrote: “Lol I used to many on bro.”

A message was also sent to her late brother’s phone, in which she claimed to have “sent a N***a to my brother I owe em that body.”

Ugwuh was shot on January 10. According to Fox 4, his family believe he was shot while walking to a home with two other teenagers.

Coppage and Ugwuh’s nine-year-old brother Jayden Ugwuh was shot and killed in 2016, along with their 8-year-old cousin Montell Ross.

Fox 4 reported at the time that Jayson Ugwuh had held his brother as he lay dying. Their father told the station that six children had been sleeping inside the home when a volley of bullets pierced through the walls.

Family members said the killings had deeply affected both Coppage and Jayson Ugwuh in the years since. The family could not immediately be reached for additional comment.

Kansas City mayor Quinton Lucas said Jayson Ugwuh’s killing showed officials weren’t doing enough.

“Jayson’s life and all-too-early death shows us that we have to further aid families and close relations to victims of violence—and that we’re not doing enough,” Lucas tweeted last week.

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Will There Be A Season 2 Of ‘Tehran’ On Apple TV+?

Will there be a second season of “Tehran” on Apple TV+?

I finished the first season of the hit spy thriller late Monday, and I absolutely loved it. In fact, in terms of spy shows, it’s one of the better ones that I’ve seen in a long time. (REVIEW: ‘Westworld’ Season 3 Ends With The Possible Deaths Of Multiple Characters)

Naturally, I had to hop onto Google and find out whether or not we were likely to get a second season. The good news is that it appears it’s already a done deal.

According to Variety, Paper Entertainment CEO Julien Leroux said in late 2020, “I can say that we are working on the second season. It’s not been officially green lit, but we are working on it, so hopefully we’ll have some good news by the end of the year.”

This is music to my ears. I can’t wait to see what we get in the second season of “Tehran.” The first season ended with a hell of a cliffhanger.

Just when the audience thought we had the situation figured out, a massive bomb was dropped on all of us!

The season one finale was truly a work of art and it left fans everywhere craving for more.

Now, when would a second season arrive? Seeing as how it wasn’t even officially green lit as of late 2020, I can’t see it arriving prior to early 2022.

I could be wrong, but these things take some serious time.

If you haven’t watched “Tehran,” I suggest firing it up immediately. It’s outstanding.

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Battle of the Robots Still Favors Japan and Europe—For Now

Covid-19 has accelerated automation in factories, especially in manufacturing powerhouse China. Foreign companies have long dominated the market for industrial robots and automation tools there—but there are signs that dominance is fraying around the edges.

As the factory for the world, China is unsurprisingly far and away the largest market for industrial robots. Before the pandemic, however, the U.S.-China trade war was slowing growth. New installations of industrial robots amounted to 140,500 in 2019, a 9% decline from the previous year, but still almost three times the number for second-place Japan, according to the International Federation of Robotics. Last year was likely much better: Credit Suisse estimates that China’s industrial-robotics market grew 9.5% in 2020.

Covid-19 initially shut down factories in China, but as the country gradually got the pandemic under control, demand for automation equipment bounced back. Surging sales for consumer electronics and electric vehicles have also driven demand for automation products.

Foreign companies like Japan’s Fanuc and Europe’s ABB control nearly three-quarters of China’s industrial-robot market, according to Citi. But hopes are running high in China that the government will push more strongly for local content in the robotics and automation supply chain. Stocks of Chinese automation companies have rallied. Shares in Shenzhen Inovance Technology , for example, have tripled since the beginning of 2020. Industrial robot maker Estun Automation’s shares have also rallied.

Some Chinese automation-equipment companies won market share last year as Covid-19 disrupted supply chains for foreign rivals. Citi estimates Inovance’s China market share in servo motors, which are used to control precise movements, has jumped to more than 16% in 2020, against 11% in 2019 and 3% in 2013. The company also recorded strong growth in its electric-vehicle motor business, which shares some similarities with servo motors. The company’s net profit nearly doubled year-over-year in the first nine months of 2020.

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Dr. Fauci Issues Another Dire Warning as Biden Vows to Lead With ‘Science and Truth’

Just when you thought civil unrest and other concerns had taken COVID-19 out of the public eye for a while, Dr. Anthony Fauci pops up again. Because you were not sufficiently panicked over a more contagious strain of COVID-19 found in the U.K., he has some more news. On Meet the Press, he told host Chuck Todd that “more ominous” strains have emerged out of South Africa and Brazil.





What does that mean? He can’t tell you, because they are still being studied. So, without articulating the risks these strains could pose, he injects this warning into the national consciousness. That is flat-out irresponsible in a nation that has been dragged through nearly a year of conflicting information, dystopian mitigation measures that affect the mental and economic health of millions, and the personal destruction of anyone offering any dissenting view to Fauci’s.

Viruses mutate. This is not news. A significant body of research posits that viruses most often mutate to become more transmissible and less virulent. The 1918 influenza that killed millions of people still circulates today. According to researchers from Yale, we needn’t worry unnecessarily about virus mutations, even in COVID-19 (emphasis mine):

It is time to reshape our conception of mutations. Mutations are not indicative of outlandish and devastating new viral characteristics. Instead, they can inform our understanding of emerging outbreaks. Any claims over the consequences of mutation demand careful experimental and epidemiological evidence. Mutation is an inevitable consequence of being a virus.

Dr. Fauci offered no reason to refer to these new strains as “ominous,” or his claim that the U.K. strain is now dominant. There has been no corresponding spike in COVID-19 deaths in states that have been open since early summer. Looking at Georgia’s data, the trend is just the opposite. Despite a higher number of positive tests than in the early days of the pandemic, the deaths with COVID-19 are about half of what they were in the spring. This could be the result of an improvement in the treatment of the virus or because of a mutation to a less virulent strain. We don’t know and won’t without in-depth study.





The new panic porn comes just as President-elect Joe Biden has announced science’s primacy in his administration. He is reportedly elevating the director of science and technology policy to a cabinet-level position:

“We’re going to lead with science and truth,” Biden said at a speech introducing his new appointees in Delaware on Saturday. “We believe in both.”

The last year has been a preview of what happens when science rules all other considerations. There has been incredible pressure to do exactly what the scientists in the federal bureaucracy prescribed. Any outside points of view were quashed by the media, research institutions, and government employees. Letting only science dictate policy has had devastating results because the scientists have narrow expertise and a few goals related to it. Here are a few highlights from a list of the deleterious effects on personal health compiled by Tom Elliot from Grabien:

  • Deaths increasing among those on waiting lists whose treatment were displaced by COVID-19 lockdowns
  • Rising suicides nationwide
  • Drug overdoses in the U.S. have increased by 18%, with 40 states reporting an increase in opioid-related deaths
  • Lockdown measures for the pandemic could result in an additional 6.3 million cases of T.B. and 1.4 million deaths
  • 25% of Americans 18-24 have contemplated suicide during the pandemic
  • Delays in treatment and screening for cancer that are forecasted to lead to avoidable deaths that could rival the pandemic
  • Death tolls from non-COVID-19 causes such as diabetes, heart attacks, and treatable cancers on the rise





This does not even consider the economic damage caused by the closure of small businesses and the effects that may last years for children deprived of in-person learning. This is the fundamental problem with letting science from the narrow field of epidemiology almost completely govern the response to COVID-19, excluding all other concerns.

Science is the pursuit of knowledge and is rarely “settled.” It is also best accomplished outside the government, where the process is not as vulnerable to political and other pressures. Science is not a religion you have faith in. Rather, you believe in the validity and utility of the scientific method. This distinction matters, and the results will be tragic if the distinction is not made.

 

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How U.S. president-elect Joe Biden has pledged to change immigration

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Trump’s Republican administration tried to end DACA but was stymied in federal court. The program still faces a legal challenge in a Texas court.

Vice president-elect Kamala Harris said in an interview with Univision on Jan. 12 that the administration planned to shorten citizenship wait times and allow DACA holders, as well as recipients of Temporary Protected Status (TPS), to “automatically get green cards,” but did not explicitly say when or how these changes would happen.

Trump moved to phase out TPS, which grants deportation protection and allows work permits to people from countries hit by natural disasters or armed conflict. Earlier in his campaign, Biden promised to “immediately” grant TPS to Venezuelans already in the United States.

For years lawmakers have failed to pass a major immigration bill. Democrats may stand a better chance of passing legislation after a run-off election in Georgia handed them control of both houses of Congress.

In this file photo taken on June 15, 2020 Deferred Action for Childhood Arrivals (DACA) demonstrators stand outside the US Supreme Court in Washington, DC. Photo by JIM WATSON/AFP via Getty Images

RESTORING ASYLUM AND REFUGEES

Trump blasted what he called “loopholes” in the asylum system and implemented overlapping polices to make it more difficult to seek refuge in the United States.

One Trump program called the Migrant Protection Protocols (MPP) forced tens of thousands of asylum seekers to wait in Mexico for hearings in U.S. immigration court. Biden said during the campaign he would end the program on day one. His transition team, however, has said dismantling MPP and restoring other asylum protections will take time.

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First Lady Melania Trump Delivers Farewell Message: ‘Be Passionate In Everything You Do’