Untapped Insights
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Untapped Insights

November 2022 Newsletter: Some Fundraising Reflections…

This newsletter was originally sent to The Untapped Network on Tuesday, November 8th. To subscribe for future updates please click here.

Our Kenyan team represented at the Stanchart 10KM Marathon in Nairobi this past Sunday! Go team!!!
Our Kenya office now hosts more than 25 people.

Good morning, good afternoon, and good evening!

TL;DR…

💰 We added a new metric to our real-time tracking: Economic Rate of Return (ERR) to track how much revenue each dollar of our investment drives in local revenue. Result: each $1 invested in assets yields $3.72 of revenue in the local economy EVERY YEAR.

📈 Revenues grew an average of 8.1% month-over-month over the last 6 months, hitting $314K this last month.

🏍 We broke the 10K mark on assets financed and added over 2,000 entrepreneurs/ assets in the last 2 months since the last update, reaching over 11,253 entrepreneurs supported while maintaining a yield of 24.99% annualized yield.

🇳🇬🇬🇭 We see some volatility with certain currencies in our portfolio (Naira, Cedi) and will continue implementing mechanisms to mitigate the risk.

💻 Our investment platform is currently accepting investments from accredited investors. We’ve built a reliable, high yield, high impact alternative to traditional investment vehicles — create an account and start investing today!

We launched our institutional fundraising round in September, and it’s been great to speak to so many who align with us on the imperative to create a better global financial system, i.e., a modern, data-driven financial system that serves the majority. As a self-identified cynic, I often cringe when I talk about our bigger ambitions, a little self-conscious of my delusions of grandeur. That’s changing, and I’ve found that many share our belief that today’s financial system excludes many and is the source of discontent and populism that pervades global politics. I’ve also concluded that it’s realistic — even inevitable — that a modern alternative replaces today’s imbalanced system.

Untapped aims to “create shared prosperity by unlocking economic opportunity in untapped markets.” To do that, we are creating a modern, data-driven alternative to the old way of doing finance — financial institutions, especially in emerging markets, use a 500-year-old underwriting model optimized for 15th-century Europe where the only way to borrow $100 is to already have $150. We use data and technology to complement traditional underwriting and make sure more SMEs can access suitable financing to grow their businesses — unlocking $3.72 of revenue every year in the local economy for every $1.00 we provide in financing. Our aspiration is to spearhead a wholly new capital marketplace connecting investors and SMEs.

Our results show that the model works, and I’ve met many investors that share this purpose and believe in our vision to the point where Untapped is well on our way to close this equity round early. I’ve never been good at fundraising, but when it’s something you really believe in and want to share with the world… It’s almost fun!

Updates by the numbers…

$314,856: Revenues for the month of October. Revenue in the last 6 months has grown by an average of 8.1% month-to-month growth.

11,253: Number of assets we are currently financing — we added over 2,000 entrepreneurs/assets in the last 2 months since the last update.

$3.72 or 272% annual Economic Rate of Return: How much each dollar of our asset financing generates in local revenues every 12 months. These revenues are collected by operators, Operating Partners, and Untapped to pay Note holders.

The Good…

The response from equity investors has been very positive. We are on track to finish our $5M equity round early. Still, we are reserving $1M for current Noteholders and equity investors to participate in this round.

We’ve added “impact” to our regular reporting. We define impact as the amount of revenue in the local economy is generated by our asset financing dollars. Because we track asset revenues, we can calculate these with real data. Current figures are in line with the calculations we tracked last year, that each $1 of asset financing unlocks a tremendous amount of value in the local economy — to be exact, $3.72 of local revenue EVERY YEAR for every $1 we invest.

Our Operating Partner, Gigmile, is currently raising! Gigmile is the services and financial infrastructure for mobility-based gig workers in Africa. They are democratising access to asset financing, working capital, and critical services which mobility-based gig workers require to succeed in Africa’s rising Gig Economy. If you or someone you know might be interested in their current round, please reach out to Kayode (CEO) at kayode@gigmile.com.

The Bad…

The macro-environment in Africa — esp. in Nigeria and Ghana — is looking dicier. The Nigerian Naira continues to depreciate and the Ghanian Cedi has also dropped significantly. Fortunately, we built hedges and buffers into scale up deals in these currencies, and while we don’t foresee the situation to lead to defaults with our Operating Partners, it will likely be a drag on our USD yields in the coming months.

Fortunately, the troubled currencies represent less than 15% of our portfolio and this highlights again why diversification is so important for safely investing in Africa. Diversification mitigates problems in one market as they are balanced by the returns from other markets. Because we give Note holders exposure to a share of a diversified portfolio vs. a single sector, country, or region, the overall risk is reduced for the same level of return.

What I’m reading…

A Roam electric mass -transit bus in Kenya. Image c/o Innovation Village

Venture Capital is Ripe for Disruption

“This is a market ripe for disruption. As venture funds continue to target larger and larger outcomes, there is a ton of opportunity left on the table that no one is seizing. You could invest in businesses that have an 80% chance of being worth $300M, rather than a 1% chance of being worth $80B.

This strategy is an obvious opportunity to make a ton of money. Start by serving the underfunded, slowly move upmarket, and then, suddenly, you’ve disrupted the entire industry.” Read more by Evan Armstrong

Why African currencies are struggling

“Indeed, all African countries face a difficult external environment. Weak growth in China and even weaker growth in developed markets means that demand for African exports is likely to remain subdued for the foreseeable future. For African policymakers seeking to manage currency risks, there is no easy way out of the cycle of crisis….” Read more on African Business

Roam Rolls Out the First-Ever Electric Mass-Transit Bus Operation in Kenya

“This one-year project aims to address the unique challenges of public transport by providing a reliable, sustainable, efficient, and modern mass transit solution.” Read more on Innovation Village

Til next month, keep well!
- Jim

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Untapped Global

Untapped creates opportunity by connecting frontier market innovators to global investors.