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Seed fund cashes in on Kenyan online start-ups

Mdundo CEO and co-founder Martin Nielsen. Mdundo is one of the tech start-ups set to get capital injection. FILE
Mdundo CEO and co-founder Martin Nielsen. Mdundo is one of the tech start-ups set to get capital injection. FILE 

88mph, a Nairobi-based firm that invests in start-ups, has attracted nearly half a million dollars in capital injection for three of its Kenyan investments.

The company said Mdundo, a mobile platform for downloading music by local artistes, BookNow, an online bus booking site, and Movas, an emergency airtime business, are set to get funding of at least Sh34.3 million from a mix of local and foreign investors.

Details on how much stakes the investors will buy and their identities will be known once the deals are finalised, programme director for 88mph in Nairobi Nikolai Barnwell said in an interview.

“(We) cannot disclose how much has been committed or by whom until official closure. I can say that it looks like the 88mph companies have collectively secured commitments of $400,000 (Sh34 million) already from a mix of local and international investors. All is equity. But we look forward to announcing the deals in the coming weeks as they close,” Mr Barnwell told the Business Daily.

Negotiations for cash injections into 88mph are ongoing, said Mr Barnwell. Yum, an online food ordering service, Tourist Link, a social marketplace which matches travellers with local travel services and mBet, an online sports betting bookmaker, in Uganda, are in talks with investors.

The start-ups were chosen from 400 entries submitted at an investment forum by 88mph held last month in Nairobi.

Gamsole, a mobile game developer, and Ghafla, a popular celebrity news site, are other investors of the South African firm. 88mph made a $25,000 equity acquisition in Ghafla in September 2011.

The firm says its criteria is to invest up to $100,000 (Sh8.7 million) in start-ups that can design products that will take advantage of the rapid uptake of mobile phones, Internet use and have the ability to be scaled in other markets.

“What we do understand is that African mobile/web is hands down one of the fastest growing markets in the world and 88mph has reached out to entrepreneurs that build products and services for hundreds of millions mobile/web users that are rapidly popping up on the continent,” said Mr Barnwell.

Data from the Communications Commission of Kenya (CCK), the industry regulator, shows that as at September 2013 the number of Internet users stood at 19.16 million from 14.6 million a year earlier, a 32 percentage points increase.

The CCK said that the jump in users has been, in part, due to increased roll out of fibre optic network and competition among service providers.

International investors are buying into such start-ups on the reality that more Kenyans are beginning to buy goods and services over the Internet.

Ringier, a Swiss media conglomerate, has invested in Ringier Kenya which runs rupu.co.ke, pigiame.co.ke, and rupushops.co.ke platforms.

Similar to 88mph, the firm said that it expects that these investments will pay off in Kenya and major markets in Africa as more users access the Internet.

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