Tech start-up bags Sh100m in deal as investors eye apps

Five years ago an early stage start-up accelerator and incubator, Nailab, was founded and was mainly known for producing award winning mobile applications.

This was seen a step forward as some of the award winning apps put Kenya on global innovation map.

This, however, has changed with most of the start-ups in such incubation centres that include iHub, Start-up Garage, mLab, Fablab, 88mph, iLab, and GrowthHub Africa not only turning themselves into viable businesses, but are also attracting suitors.

On Monday, Weza Tele, a provider of end-to-end value added mobility solutions for fast moving consumer goods supply chain management and mobile payment integration processes announced that it had been acquired at more than Sh100 million.

The local technology start-up was acquired by AFB, a financial services company that specialises in providing credit products to consumers in Africa.

“Weza Tele has over the past four months been working on the acquisition details to ensure smooth transition of the business with AFB,” Hilda Moraa, one of the founders said in a statement.

“This is one of the largest acquisitions of a start-up so far, which is estimated to be over Sh100 million whose value is in both cash and stock.”

The AFB said the acquisition is a testimony to large innovator community that companies are keen on acquiring or merging with local start-ups that offer value add solutions developed to fit in their larger company offerings.

The Weza Tele deal follows the acquisition of Dynamic Data Systems by Safaricom.

Dynamic Data Systems were the developers of an Android based application that allows mobile money providers and subscribers to track and monitor all their transactions in a simple and easy way by providing a financial journal on their devices.

After the acquisition late last year, Safaricom rebranded the application to Safaricom M-ledger. Both Safaricom and Dynamic Data System declined to provide the acquisition value.

READ: Safaricom takes on banks with micro-loans product

Weza Tele was founded in 2011 at Nailab as a provider of end-to-end value added mobility solutions for fast moving consumer goods supply chain management and mobile payment integration processes.

Weza Tele’s flagship offering, its MyOrder enterprise, integrates platforms such as Unstructured Supplementary Service Data, Short Messaging Service (SMS) and mobile web to offer a solution that automates order management, distribution, tracking and payment validation for smaller enterprises.

Its customer base consisted of small suppliers, distributors and retailers in industries such as food, oil and gas.

Weza Tele leverages high mobile penetration by offering customers an SMS ordering facility. Using the MyOrder enterprise, retailers can place an order with vendors and distributors via a simple SMS.

This service operates on both basic feature phones as well as smartphones and is less expensive than competitors’ Android application platform.

Distributors are provided with a dashboard which segregates their products, prices, customers and orders that can be exported to an excel spread sheet with adjustable tracking fields.

This simple quote and delivery system automates the ordering process and improves the visibility between participants throughout the purchasing cycle.

“As Nailab, we have great reasons to celebrate with all our stakeholders as this acquisition not only authenticates the efforts drawn from all our partners to develop solutions with clear value propositions and exits, but also shows the potential in building solutions that pivot on much needed services within different sectors in our economy, this is true innovation,” said Sam Gichuru, Nailab chief executive and co-founder, in a statement.

“There is great reason to celebrate as we can now see the fruit of the labour that began four years ago.”

Nailab offers an entrepreneurship programme focusing on growing innovative technology driven ideas.

This is done through providing business advice, technical training and support, professional mentoring and coaching, giving access to market and fostering strategic partnerships as well as linking them to investors.

The founders of the incubator say they have so far transformed the lives of more than 100 youths in the country through the mentorship and training.

“A great example of one of our start-ups is Sematime, a bulk SMS solution provider that has over the past two years expanded their service to more than 100 institutions across Kenya,” said Mr Gichuru.

“Their customer base ranges from corporates, churches to learning institutions.”

Out of the 35 start-ups that have gone through the programme, 16 are still in business.

Six out of the 16 are operating on profit margins with an average of Sh500,000 per month as revenue.

Several start-ups have been accepted in other growth level incubators with one joining a leading incubator in the Silicon Valley in the US.

Three out of the six start-ups are currently valued at more than Sh80 million.