It is said that around 50% of startups fail within the first five years, although this data lacks consensus. Sadly, South African proptech company HouseME became one of those companies to close its doors last week. After being heralded as an optimal solution to the landlord-tenant relationship, they opened to the public in 2016.
They effectively automated the rental agency process by connecting tenants to landlords via their platform. They charged a fee for the service, albeit a lower fee than bricks and mortar agencies.
By late 2019 they had raised a total of $3 million and were poised for large-scale growth moving into 2020 and Covid-19. However, this anticipated growth never seemed to happen.
According to their founder, Ben Shaw, after a recent “unsuccessful funding round” they’ve been forced to shut down. He also attributed Covid-19 to their closure. Lawyers are currently handling the liquidation process, and all existing leases are being handled by an agency which purchased the lease book.
Without sufficient brand awareness, even a business with a congruent value proposition to a pandemic (removing the physical middle man) can struggle.
The funding data dilemma
As the African startup scene grows year on year, the one major challenge that grows commensurately is being able to access accurate funding data. Unlike in the US where you have an authority for startup funding data such as Crunchbase, the data sources are far more disparate for African startups.
A few entities have taken on the gargantuan task of gathering and processing startup funding data. These include tech publisher Disrupt Africa, VC Partech, data research company Briter Bridges and African startup analyst Maxime Bayen. However, the challenge remains in achieving consensus.
Disrupt Africa in their 2020 Funding Report concluded that $700 million was the total amount of funding raised across the continent. In contrast Biter Bridges has last years figure at $1.3 million, and Maxime Bayen even higher at $1.6 million.
With such a large standard deviation one has to look at variables such as “undisclosed rounds” and the definition of an African startup that was used in gathering such data.
As we look ahead to rest of 2021 accelerator, AfricArena, are forecasting that the total funding by the end of the year will amount to somewhere between $2.25 billion and $2.8 billion.
Whether this is optimistic or pessimistic, or bang on the money will remain to be seen. We’ll have to wait for the funding reports to come out at the end of the year and derive a median figure from all the sources.
In the News 🚀
🇪🇬 Egyptian networking app Tays has raised a seven-figure pre-seed investment from a handful of angel investors to help it expand into new markets.
🇳🇬 Nigerian fintech startup Mono has raised a seed funding round of $2 million from Entrée Capital, TCVP, and one of their existing investors, Lateral Capital.
🇪🇬 Egyptian accelerator, Flat6Labs, has announced that it will increase the value of its Egypt fund by $10 million taking it to a total $13.2 million.