Outliers #007

The case for crypto in Africa

Back when Stew was growing up in Zimbabwe, there were periods where goods were repriced daily as inflation sat in the millions. Now, as emerging regions are seeing increased instability, crypto is already providing an answer to a problem so many faced in the past. Plus, Brazil's incredibly advanced banking network and an interesting view on "financial privilege".

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The most interesting global Seed to Series A deals from outside the US this week:

  1. Gokomodo - US$26m - Jakarta, Indonesia - Agtech
    Operating in the agtech space, the company helps digitise the supply chains for farmers and vendors in Indonesia.
  2. Edupia - US$14m - Hanoi, Vietnam - Edtech
    With 5 million students already on the platform, Edupia is bringing tutoring centres online with more accessible, high quality classes and teachers.
  3. NowNow - US$13m - Ekiti, Nigeria - Fintech
    In a worldwide trend, NowNow is taking banking services typically delivered in a branch, like transfers, insurance and bill payment, and putting them in an app.
  4. Jobbatical - US$11.5m - Tallinn, Estonia - HRtech
    The Estonian based startup helps automate the traditionally paper and time heavy processes involved in relocating high-value employees.
  5. GroMo - US$11m - Haryana, India - Fintech
    A former Y Combinator startup, GroMo is building a financial super app to distribute financial products from insurance to loans to credit cards.

A VC's Insight

Crypto in Africa

Managing Partner Stew Glynn reflects on his experience during Zimbabwe's period of hyperinflation in the 2000s. With prices reset daily, there were few ways out for those holding Zimbabwean dollars. Now, Stew considers the demonstrated utility of crypto in times of instability as inflation starts to rear its head globally.

When I grew up in Zimbabwe, we lived through one of the worst recorded periods of inflation in history, reaching its peak in 2008. Imagine a rate of 230 million percent, per year. This was the reality for Zimbabwe witnessing hyperinflation between 2000 - 2010. Many other African countries have also witnessed harsh inflation at over 50% over the years such as DRC, Ghana, & South Sudan.

This very real experience lays the foundation for my belief in crypto’s incredible value in Africa.

Source: CityGlobe Tour

It’s hard to describe what inflation like this means in practical terms, yet some of the examples that I remember from this period include:

Zimbabwe was an extreme case of hyperinflation, that became part of day-to-day life and a hard mindset to shake. The Zimbabwean Central Bank looked to reset the Zimbabwean dollar to parity on multiple occasions by pegging it to the USD. Yet the value never held, and almost always within weeks of re-introducing the local currency as ZWD$1 to USD$1, they would reprint further local currency. As such, the value of the Zimbabwean dollar would erode as quickly as the government could print new bills of higher denominations.

My father claims to be the ‘richest man in the world’, he has one thousand clean notes of 100 Trillion Dollar notes. At its final point, the Zimbabwean dollar had lost its value as a currency and Zimbabwe stopped printing its own currency in April 2009, moving over to becoming fully dependent on USD including as its cash currency.

Why do I talk about this?

Effectively, it’s one of the core reasons why I believe in the use case of crypto in Africa being one of the best use cases of real utility for crypto. In Africa (and other emerging markets) there is an opportunity for enablers to emerge that help transfer across borders and hold real value.

Why does it makes sense:

What limits the adoption of crypto today?

There are many challenges that limit adoption.

  1. Crypto is still in its infancy - This is emerging technology: it is volatile. Apparent ‘stablecoins’ have proven not to be so stable as was learnt with Luna/UST and others. Plus general government distrust can make them skeptical of enabling further adoption. There is higher levels of P2P adoption than western markets due to general regulation and infrastructure making it more difficult
  2. Africa is still unbanked and less sophisticated - There is a general appetite for the use case of crypto as seen by the volumes of dollars transacted, however, there is a huge portion of Africans on the continent that are not financially literate, have never had bank accounts (”unbanked”), don’t have access to the internet as yet, plus struggle to understand the complexity of the crypto ecosystem.
  3. On and off ramps - There still needs to be governance and control, the networks need to ensure there are relevant protections and compliance. Aspects like anti-money laundering and KYC is harder to prove and approve in many African countries. Without the underlying financial infrastructure and tooling including on and off ramps into fiat currency plus regulation.

Of course, this is also where opportunity lies and why the space can grow so large, considering its already rapid adoption.

How is it going?

Populations in Africa are very quickly finding value in crypto. As mentioned above, in economies with instability, crypto and stablecoins can provide an incredibly valuable way out of local currency. Consumers look to buy stablecoins to protect against the volatility of their own currencies. The allure of crypto is proving to have strong demand throughout Africa, often mirroring behaviour that happens informally already.

A report from ChainAnalysis found that some of the highest grassroots adoptions in the world are seen in Africa, with Kenya, Nigeria, South Africa, and Tanzania making it to the top 20 of our Global Crypto Adoption Index.

Macro lens

We refer to the incredible data sourced and presented by @Latinometrics once more this week as we look into LatAm financial systems. The 5 biggest banks in the regions are all in Brazil. Despite having a GDPpc outside the top 80 worldwide, Brazil’s financial system is as developed as any developed nation. 40% of the country has a credit card (top 20 in the world) and 80% have a bank account. The system is underpinned by the Pix payment rails. Created by the Central Bank, Pix allows for instant payments between accounts. Since launching November 2020, 71% of the population had used the rails by the end of 2021. The system is incredibly mature and well developed.

Why is this significant? It shows that the country has the infrastructure to handle both financial innovation but also to allow for more advanced sectors in the economy to develop. For example, e-commerce can scale more rapidly when consumers can make instant transactions. A well-functioning financial system also offers more stability as consumers  have faith in the security of their money.


Linked heavily to Stew’s piece above, this chart from Block.xyz (formerly Square) by Alex Gladstein really shines a light on the real world utility of crypto in many regions of the world. The countries most optimistic for Bitcoin’s future are those like Nigeria, India and Argentina, who are all experiencing forms of accelerating inflation and less-stable government systems. The most skeptical populations belong to the most stable countries.

Your author this week

Stew Glynn - Managing Partner at TEN13, Stew was born and raised in Zimbabwe. A unique view on the region and its opportunity has led to emerging markets appreciation by the team.

Alex Barrat - New to the VC world, joining the TEN13 deal team, Alex spent his early career at VC-funded scale up Stake. As one of the first ten hires, he left the team of 130 almost 5 years later. All pitches welcome. Submit your deck here.