Coffee Chat with Andrea Censoni
Our new guest for the #FinTechInterviews series is Andrea Censoni, Associate and Dealflow Manager at Dpixel, a society founded in 2006 which works with early-stage technological startups in Italy.
Andrea (30 years old, ed.) studied Economics and International Management in Bologna and Modena and, after having gained some experience in Ireland, Czech Republic and Germany, went on to take a Master’s degree and wrote a research paper thesis about startups’ competition in Italy.
He has worked at Dpixel since 2016, alongside investment funds specialized in investing in innovative, technological, and digital startups. In 2017, he created a non-profit project called Startup Africa Roadtrip with the mission of sharing professional competences with the East African startup ecosystem.
Hi Andrea, thank you for having this interview with us.
Focusing on your later venture as Co-founder of Startup Africa Roadtrip, how was your project born and why did you choose to focus on the African market?
I have always been interested in non-profit initiatives and I had the desire to go to Africa as a volunteer. Then, after discovering an ongoing movement called “Silicon Savannah”, which started in 2006 in Eastern Africa, I decided to travel to Uganda, launching Africa Roadtrip right after.
We explored the local business ecosystem, getting in contact with startup incubators, business accelerators, business angels, and technological startups. We realized it could be a great opportunity to share the competences needed to address the weaknesses of this immature startup ecosystem.
I want to underline how our project is not a philanthropic action, but a mutually enriching experience. Today, we organize several activities and bootcamps with local startups in Kenya and Uganda and, with the help of a team of volunteers, we set up a competition that attracted 180 startups from all over the continent. Twenty of them were selected to work with us in August 2019 and five teams were meant to come to Italy in March 2020, if it had not been for the Covid-19 pandemic.
What happens when the African teams come to Italy? Do you support them in finding investments?
The trip that was supposed to happen in March foresaw 3 phases:
- An opening call for startups operating in certain specific sectors that could meet Italian corporations and startups
- The selection of 20 projects, the organization of bootcamp activities and a pre-acceleration process
- Support until the roadshow, which was meant to be the meeting place with the Italian ecosystem
The aim of our project is to improve the degree of investibility in African startups. The ones we work with are almost entirely in their early stages, and they operate in environments in which there are few venture funds and business angels. We do not put them in contact with Italian institutional investors, although such kind of opportunities may arise, but we offer them competences and mindset, in order to prepare them for the meeting with venture capital investors.
Is Africa still lagging in terms of investments from European countries?
It depends on the type of investment you consider. We focus on technological startups and, in this sector, Europe looks at Africa from a “philanthropic” perspective. This means that all the investments are related to primary education, infrastructure, and health. There is still a lack of awareness of the opportunities offered by African startups. Moreover, venture capital funds’ strategies usually allow for action only in Italy and Europe.
What do you think are the reasons behind it?
As we only focus on the startup sector, I would say that in Europe we do not usually look at Africa because we do not have the “Silicon Valley” perspective. The Italian startup ecosystem has accelerated in the last 2–3 years, but in 2017 only about 200 million euros were invested in startups. Last year we almost reached 1.5 billion. We still have a biased vision of the African continent and people are always impressed when we show them “the startup side” of Africa.
You may also be interested in checking out the documentary explaining the Startup Africa Roadtrip project and the official website!
Are there African countries that are more advanced from a FinTech perspective?
Yes, there are. Partech does annual researches on the amount invested in African technological startups. We can observe an exponentially increasing trend. In 2015, the amount invested in the whole continent (composed by 54 countries) was of around 270 million dollars. This amount increased in 2017 (slightly more than 500 million) and in 2018 it almost reached 1 billion. These numbers look very small if we compare them to Italy, for instance, especially if we consider the different size of the two areas. To give you an idea, last year 156,2 billion dollars were invested in technological startups in the US alone.
Another interesting point is that African startup investors seem to be more aware of the importance of the seed phase. In 2019, 150 million dollars (out of 2 billion) were invested in startups in the seed phase, with an increase of roughly 20% with respect to 2018.
Lastly, 5 African countries attract the largest share of investments, namely Nigeria, South Africa, Kenya, Egypt and Morocco. 37% of these 2 billion dollars was invested in Nigerian startups and around 26% in South Africa, meaning that these two countries together cover more than half of the amount invested in the whole continent.
Why do you think that is the case? Is there a different focus on startups by local institutions?
The startup ecosystem of the African continent can be compared to the Italian one in the early 2000s. What makes Africa attractive is the very low average age (around 18), the presence of excellent universities and a technological infrastructure that has developed mainly along the east coast. Nevertheless, there is certainly a lack of regulations for the startup ecosystem: among all the 54 African countries, the only ones that have adopted specific legislations today are Tunisia, Uganda, Kenya, South Africa. Then, I believe a critical aspect is the lack of capital. Today, to raise money, startups often rely on banks that offer high interest rates; in 2017 they were around 25%.
Do you think that the low predisposition of foreign investors to bring capital is due to greater risk?
The African continent has a bright future ahead if it will manage to leverage its young population, plenty of resources and cultivable land. Plus, a growing middle class and an increasing spending power are characterizing some countries. There are many conditions for which an investor encounters a greater investment risk but certainly there are more opportunities than threats.
An interesting trend that has been observed during the pandemic is the emergence of M&A among FinTech startups. The uncertainty will lead to a reduction in the birth of new startups meaning corporates will have the possibility to enter a new market in a strategic manner. Acquiring an African startup is less expensive than entering the African market directly with a totally new structure.
Another interesting topic is certainly the increasing of joint ventures between startups operating in the same field to cooperate and obtain reciprocal advantages. Because, sometimes, it’s better to divide a larger slice in two rather than compete for a single smaller slice.
What do you think of M-PESA and its role in stimulating the entire FinTech sector? Which startups are having most success?
M-PESA was born to manage microloans. By observing users’ data, it was found that 54% of the population had access to the mobile phone (in 2006/2007) meaning that it could have been used as a powerful tool to pay and exchange credits.
However, the percentage of the population who has a bank account and who is insured is extremely low, around 2% and there are consumer segments excluded from the banking sector: women, SMEs and the agricultural sector.
Many startups were thus born to try to reduce this gap and Snapscan and Cellulant are two examples of innovative payment services’ startups who have based their business on mobile payment systems.
The importance gained by this FinTech’s segment can also be seen in Stripe’s acquisition of Paystach for 200 million dollars. Kippercash, on the other hand, has recently closed a 30 million series B with the personal venture fund of Jeff Bezos.
What are the areas of interest of the startups involved in your programs and at what rate of growth are they registering?
We work with startups in: Agribusiness & AgriTech, Digital Health, mobility and sustainable energy and ICT systems tools. For example, HerHealth, one of the startups that won was very closely tied to Digital Health and consisted of an app that allowed women to take advantage of an online consultation service. Indeed, we need to consider that most of the population lives in rural areas where there is often lack of medical personnel.
The other winning startup, Gorilla’s Conservation Coffee instead, focused on the agribusiness. The idea is to recreate a sort of local farmers cooperative that allows coffee producers in Uganda to get higher profits on sales. At the same time, part of the revenues are used for the preservation of Ugandan gorillas. The various coffee producers were able to link up with Lavazza and ILLY, giving birth to a Win-Win collaboration.
As we always do, we like to conclude by asking our guest to give to us and our readers some advice about a career in FinTech. What do you fell to tell us?
Explore! Take off for unique experiences and learn about what is happening on the African ground. There is no better thing than directly testing what is going on by dealing with different cultures, in different contexts than ours.
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