BD Insider, Letter 153: African startups' exposure to SVB

In BD Insider, Letter 153, we examine the latest about SVB collapse and how it affects African startups, uLesson's tertiary education arm and why Safaricom is being sued by its customers.

BD Insider, Letter 153: African startups' exposure to SVB
Silicon Valley Bank

Ahead of Nigeria's gubernatorial and state assembly elections this weekend, a civic tech company and other CSOs have launched Election Watch, an online platform that allows electorates to upload signed results sheets from their polling units to be compared with the INEC results viewing portal (IReV).

You can also track the polls online via the platforms that we curated.

In letter 152, we examine:

  • the latest about SVB collapse and how it affects African startups
  • uLesson shuts down kids' coding platform, again
  • why Safaricom is being sued by its customers

and other noteworthy information like:

  • the latest African Tech Startup Deals
  • opportunities, interesting reads and more

3️⃣ The big three!

The fall of SVB will impact some African startups

The news: Local financial regulator—California Department of Financial Protection and Innovation—abruptly shuttered Silicon Valley Bank (SVB) last Friday due to "inadequate liquidity and insolvency".

SVB had approximately $209.0 billion in total assets and about $175.4 billion in total deposits, in December 2022. Following a bank run, "the amount of deposits in excess of the insurance limits was undetermined," the Federal Deposit Insurance Corporation (FDIC), stated.

FDIC has been appointed as the interim receiver and has since protected insured deposits with Deposit Insurance National Bank of Santa Clara. According to FDIC, all insured depositors will receive their deposits today, meanwhile, uninsured depositors will receive "an advance dividend within the next week".  

Why it matters: SVB is a 40-year-old financial institution that catered to the tech industry and that was the 16th largest US bank before its sudden collapse. The company's stock tumbled 60% on Thursday and plunged another 70% on Friday before trading of its shares was halted.

"30% of Y Combinator companies exposed through SVB can’t make payroll in the next 30 days," YC's president, Garry Tan, tweeted. The Silicon Valley-based accelerator is on the cap table of over 90 African companies, per BD Funding Tracker.

In 2021, SVB led a $100 million investment into Chipper Cash, whose valuation dropped by 37.5%—from $2 billion to $1.25 billion last year. The company has since conducted several layoff rounds and was also affected by FTX's liquidity crises.

"We had a very limited amount of money (only about $1 million) held in our SVB account at the time the bank was taken over by the California regulator," according to Chipper CEO, Ham Serunjogi. "SVB made their investment in Chipper in 2021 and we received those funds as soon as that round closed...and SVB owns a very small part of Chipper; [about] 2%," Chipper says it is amongst the depositors that will receive their funds from FDIC today.

Pan-African VC firm, Future Africa says "its funds have minimal exposure to SVB". Meanwhile, Nigeria-based startups like Risevest and Vesti said they have zero exposure to the bank.

The rescue: According to a joint statement from Federal Reserve, FDIC, and US Treasury, on Sunday evening, "depositors will have access to all of their money". Meanwhile, HSBC has acquired SVB UK in a rescue deal confirmed this morning in a statement from the UK Treasury.

Prior to the aforementioned, over 5000 CEOs and founders—including Flutterwave's Olugbenga Agboola and Reliance Health's Femi Kuti—signed a petition requesting that "small business depositors at Silicon Valley Bank should be made whole".

Zoom in: Some commentators say that this will propel African entrepreneurs to find alternatives to the US financial system. "It will force us to be independent," says Chika Uwazie, co-founder of Afropolitan, a digital nation for Africans.

In 2022, Mercury, an American neobank for small businesses blocked the accounts of several African startups. Even though the exact reason for the restriction was not stated, Mercury said in a mail to affected companies that their "accounts have been flagged for review by [its] compliance team" for what it described as a "check-up".

Incorporating in business-friendly locations like Delaware in the US is often a requirement for African startups who want to access venture funding from foreign investors. Most of these startups use SVB, Mercury and Brex to set up US-domiciled bank accounts to receive payments and investments from international partners.

uLesson closes kids' coding school, set to launch an online university

The news: Starting March 1, African edtech startup, uLesson closed its 1:1 private tutoring sessions in coding for kids—between the ages of 4 to 18, uLesson Coding School, this is the second time the company will be rolling back this product that was previously called DevKids.

"Despite our best efforts and your hard work, changes in company direction and focus have made it necessary for us to discontinue the product," uLesson stated in internal memo that was obtained by, last week. "This means that we won't be taking any new or renewing learners from now henceforth...Our focus will be on minimizing disruption and ensuring that every active learner of the product is provided quality service till the end of their subscriptions."

All the tutors—who were on a contract agreement—on this product will be laid off, according to a source familiar with the issue. The company is yet to respond to our request for comment on the issue.

On the flip side, uLesson has launched Miva Open University, a tertiary education arm to offer distance e-learning opportunities to Africans—after four years of providing online K-12 education across the continent.

Why Miva?: "Yearly, over one million students are denied entrance into [Nigerian] universities due to limited spaces and other reasons. However, I believe that education should be widely available, effective and enjoyable. This is why we are building Miva University," Sim Shagaya, co-founder and CEO of uLesson & Miva University, said in a promotional video seen by

The university will be a fully-licensed degree awarding institution, according to Iheanyi Akwitti, Senior Vice President, Academics at Miva. The university's website indicates that it will offer undergraduate courses in computing; computer science, cyber security, data science and software engineering. It also has a school of management and social science featuring degrees in business management, economics, accounting and public policy and administration.

"Our mission is to provide accessible, high-quality education that helps our students succeed in the digital marketplace," Shagaya said.

The Nigeria-based edtech company which has raised at least $25.7 million since its launch in 2017 will be competing against existing players like AltSchool Africa.

Why Safaricom is getting sued by its customers

The news: Kenya's biggest telecom, Safaricom for using customers' funds to lend out as overdrafts via Fuliza loans on M-Pesa and rising cases of SIM swap fraud targeting Fuliza limits, per Quartz Africa.

Insights: A class action suit filed by three Kenyan M-Pesa users argues that Safaricom is contravening section 2 (1) of the East African country's Banking Act by using customers' funds for profit-making financial lending services without consent, despite it not being registered as a bank.

Despite its partnership with Kenyan commercial banks—KCB and NCBA to offer these lending services, Safaricom has not paid interest to its more than 32 million M-Pesa account holders, according to the suit.

The three complainants are seeking $2.38 billion in damages from the telco and Vodafone Group, for what they describe as fraudulent misrepresentation, material non-disclosure of facts, illegal and unlawful investment of M-Pesa account holders' funds, predatory lending practices, and charging exorbitant interest rates.

Last week, at least four Kenyans among them a widow—whose husband allegedly "took loans using his mobile phone from the grave"—have joined a class action suit filed against Safaricom and Communications Authority of Kenya (CA) after falling victim to a SIM card swap fraud.

Safaricom lost over $4 million in SIM card fraud on its lending platform, Fuliza loans in 2022. According to Kenya's Directorate of Criminal Investigations (DCI), over 123,000 new mobile phone numbers opted into Safaricom's Fuliza and took up loans in January 2022.

DCI disclosed this last month after suspects related to the crime were arrested.

Zoom out: Launched in 2019, Fuliza is an overdraft mobile money product. Safaricom claims that the product was instrumental at the height of the COVID pandemic as many customers and businesses switched to cashless transactions.

Effective October 2022, Safaricom waived Fuliza's daily maintenance fee for customers that repay in three days. Meanwhile, customers who repay after three days also received a 50% price reduction on the daily maintenance fee.

Reduced Fuliza loan rates 

According to a report published by Kenya's central bank in collaboration with the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening Trust (FSD) Kenya, more than 18% of Kenyans use Fuliza.

📊 Andela in numbers

Since its launch in 2014, Andela has raised at least $381 million, as at its last disclosed funding, a Series E, the company was valued at $1.5 billion.

Last week, the African unicorn acquired Qualified, a technical skills assessment platform, for an undisclosed figure.

Andela's funding history by BD Funding Tracker

💰 State of funding in Africa

Last week, Google announced that fifteen startups from eight African countries—Kenya, Nigeria, Rwanda, South Africa, Ghana, Tanzania, Cameroon and Congo—have been selected for the inaugural cohort of the Google for Startups Accelerator for African female-led startups.

Meanwhile, no African startups raised venture capital last week, according to BD Funding Tracker. So far, over $710.6 million has been raised this year across 67 rounds.

However, Lagos-based VC firm, EchoVC launched an $8 million fund for African blockchain startups. The firm has previously deployed over $41 million into 36 companies across the continent.

📚 Noteworthy

Here are other important stories in the media:

  • How these African female founders navigate co-founder relationships: Research shows that 65% of all startups will fail because of co-founder tension, these African female founders; Juliet Odumosu and Ijeoma Akwiwu, talk about how they manage co-founder relationships.
  • Mayokun Fadeyibi, SVP at Autochek talks about the importance of equal representation and the M&A landscape in Africa: “Equal gender representation should be the norm,” Mayokun, said. As a c-suite executive in a male-dominated sector, she influenced over six mergers and acquisitions (M&As) at Autochek.
  • How to renew Nigeria international passport abroad: Dara details the application process on how to renew your Nigerian international passport if you are outside the country.
  • Inside the implementation of the Nigeria Startup Act: It's four months since Nigeria's president assented to the country's startup act, and only 32% of states in the country have indicated interest to domesticate the Act.
  • What is Nigeria's open banking operational guidelines about?: After about six years of consultation and drafting, Nigeria is now the first African country to issue an open banking regulation; it will foster legal data sharing between financial institutions and also drive inclusion.
  • Nigerian fintech startups are working on a blacklist to stop rising fraud cases: Per Semafor Africa, Some of Nigeria's largest fintech startups are quietly working on a joint strategy to tackle fraudulent transactions within their networks, starting with plans for a shared list of suspected criminals

💼 Opportunities


We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.

Product & Design

Data & Engineering

Admin & Growth

Other opportunities

  • For African founders: After investing over $7 million into 110 African startups within two years, Google through the Black Founders Fund wants to invest in more startups on the continent. Deadline: March 26, 2023
  • Entrepreneurs in Kenya, Uganda, Ethiopia, Zambia and Ghana: Applications for the 2023 cohort of the GrowthAfrica Accelerator are ongoing, and businesses in the aforementioned countries with a turnover of over $50K are eligible to apply.
  • For African edtech entrepreneurs: CcHub and Mastercard Foundation are partnering to empower edtech startups who are building tools that enhance learning outcomes and accelerate access to equitable and quality education for Africa's next generation. Application Deadline: March 17, 2023

Have a great week ahead!

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