Hail Africa’s latest unicorn. Brought to you by... Southeast Asia
May we see more(?)
I'm glad that we have broken past the useless debates about what makes a tech business “African.” Some of this recent maturity is probably due to the fact we’re more “win starved” from the funding winter and happy to take what comes. So a win is a win, regardless of whether it is Tunisian-French win, or South African-Singaporean win. We will take it like that.
Now that we’re past the useless debates over startups’ identity, we can get to the serious stuff and search for the growth levers in African startups that carry multiple passports. Our “case study” today is the latest unicorn in Africa (and Southeast Asia), Tyme Group, parent company for Tymebank, GoTyme (joint-venture) and TymeX.
South Africa produced the first (and still largest private) African tech exit 25 years ago. Now Africa’s currently largest economy and home to the continent’s most sophisticated capital market is finally able to lay claim to a fast-growing technology business that is valued above $1 billion.
Tymebank's home, launch and proof-of-scale market was and is South Africa. Patrice Motsepe's African Rainbow Capital is still the company’s largest single shareholder. Despite having its group headquarters in Singapore, its product and technology unit in Vietnam, and a growth plan that has zeroed in on Southeast Asia for the near future, Tymebank still works hard to retain its African story.
With that said, here’s one way to think about how Tyme Group’s African operational chops and Southeast Asia strategy work together to create a $1.5 billion company.
Tymebank South Africa vs Tymebank Southeast Asia
One of Tymebank’s great strengths is that it can convincingly tell a (South) African or Asian story depending on who is listening. This uncanny ability to house multiple stories under one (digital banking) narrative and not trip over the details is not a common gift. But it is an important one. Especially if you’re a slightly risk-averse cautious neobank courting customers in Asian growth markets and investment from a Latin American digital banking giant that self describes as, “the largest digital financial services platform outside of Asia”.
The way I see it, the Africa story was financial inclusion. And per Nathaniel Clarke, CEO of GoTyme, “...the expansion story is all focused on Southeast Asia.”
We’re more alike
In South Africa and Southeast Asia, Tymebank is a retail deposit taker that is tied to retail outlets which serve as customer acquisition engines. In both locations, a clever mobile app and a free Visa debit card is at the heart of how customers interact with the digital bank, with the portable ATM units serving as a physical/public touchpoint, acquisition and onboarding support system.
The difference is not obvious at first glance. But if you stare at the painting for a bit longer the finer details begin to emerge.
…than we are unalike
In the Philippines where GoTyme is a joint-venture with the Gokongwei Group (a leading conglomerate), retail banking is prominent and often loosely coupled around existing Gokongwei brands, from supermarket shopping rewards and discounts to Earned Wage Access for workers in Gokongwei companies. But if you consider the acquisition of a salary lender early in 2024, it is evident that the path the Filippino/Southeast Asia business is taking is heavy with B2B aspirations and an ecosystem of products/partnerships that is not necessarily as moored to a sprawling chain of retail outlets as the South African bank is today.
More to the point about B2B aspirations, the planned expansion to Indonesia will more likely than not start out as a partnership with Finfra, an embedded financial services provider in order to launch merchant cash advances as an entry point to acquiring a banking licence. Merchant advances as a prelude to working with a local banking partner is also the strategy in Vietnam.
In South Africa where Tymebank’s retail operations have a longer history, its retail banking strategy is much more pronounced, even though it acquired and operates Retail Capital, an SME-lending fintech. Tymebank’s history as a retail mobile money product—the bank began as a mobile money remittance project within Deloitte supported by MTN, the South African telecoms giant—is still a significant influence. From its earliest partnerships with Grobank as the banking partner, Pick n Pay Group for cash-in, cash-out services, and MTN for customers to its acquisition by the Commonwealth Bank of Australia which later sold to Africa Rainbow Holdings, Tyme’s South Africa story was retail banking.
But retail banking in South Africa, not to talk of the rest of Africa, is a costly affair. Especially in South Africa where the dominance of the Big Four—FNB, Standard Bank, Nedbank and Absa—had only (relatively recently) been successfully challenged by Capitec bank, a hyper-focused retail bank that built its customer base from the ground up in South Africa’s townships and rural areas.
Given the sort of customers it appears Tymebank wants to appeal to—the upwardly mobile, young and digital native clientele near urban centers who shop at Boxer and Pick-n-Pay—it makes sense to expand the potential customer pool. By the admission of the executives, other than South Africa, only Egypt qualified as a potentially similar market demographic in Africa.
The other option? Go outside.
The result is that Tymebank’s road to becoming a unicorn did not run through a grand strategy for conquering Africa, or even their home turf which also doubles as the continent’s most sophisticated financial and banking market. The company’s dream to seize upon the expansive banking business opportunity in Southeast Asia was firmly in the driver seat.
Build from Africa is back in vogue
One lesson from the roughly 30-year history of technology businesses in Africa is that an Africa-founded business with a global story is a powerful concoction. From Verisign’s acquisition of Thawte Consulting—Africa’s first true tech exit—to some of the recent funding rounds, “market expansions” and product pivots we’ve seen this year, one thing is clear. African tech businesses are (again) increasingly looking outside the continent for growth.
Some quick examples to get you thinking with me.
NALA, the Tanzanian fintech darling run by the charismatic Benjamin Fernandes raised a $40 million Series A in part to help build out its B2B product, Rafiki. But also because NALA added the Philippines to its list of receiving countries and is scoping out more countries in Asia (hello Pakistan?)
Moove, the car financing startup for ride-hail taxis, which raised $100 million early in 2024 is adding the US (and five other countries) to its current 6-country strong market.
Asaak, also a vehicle financing startup, found love in Mexico and acquired a business there to expand. Asaak started in Uganda.
Swvl which unwound acquisitions and market expansions made during the highs of the venture funding bubble has found new missionary zeal for its Saudi and US business lines.
Caantin, formerly TopUp Mama, formerly Kibanda, is run by a friend and hardy entrepreneur. The startup originally sought to digitise procurement for small and large restaurants and hospitality businesses. These days Caantin offers a suite of AI customer support tools to mainly North American businesses.
Tymebank is the latest on this (admittedly) incomplete list of startups who are searching for and finding growth outside the continent. Some of them retain their African founding roots and aspects of their core product/offerings. But for some, the search for growth and profits abroad is spelt, O-V-E-R-H-A-U-L, that is to say, a radical break or pivot from what they thought would move the market… to something else with much broader (and targeted) market appeal.
By the way, this is not new. Back in 2019, Quartz Africa reported that, “African startups are making the risky bet of expanding beyond the continent for growth and profits”. At the time, Paga’s Tayo Oviosu said, “I fundamentally believe there’s no reason why technology built on the African continent cannot be used anywhere in the world.”
I fully concur. But as this trend returns and becomes a key driver (?) for startups seeking to raise growth capital it also leaves me wondering what it means for African venture capitalists, their limited partners, and founding teams? Are we entering a “seek ye the global tech kingdom” phase? I don’t know. But I won’t be too surprised. Being able to say, “We are an African business” is not as important as being able to say, “We are a business.”
In March 2000, the then Chinese president, Jiang Zemin announced the 走出去战略 "the Go Out strategy" and kickstarted a period of foreign investment and expansions by Chinese firms. Africa's tech scene is closer than ever to having our own 走出去战略 moment.
As the final dust particles from the venture funding boom settles in Africa, we will begin to see more hard-nosed "strategic expansions" that will be led less by the need to justify valuations by growing a startup’s footprint (especially in Africa). Strategic expansions will “go out” because we will find that the markets we think we were building for in Africa, are also somewhere else.
Afterall, Naspers, Africa’s most valuable company (by market capitalization) derives a lot of its value from a fortuitous investment in the Chinese giant, Tencent.