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After its first $54M fund, Algebra Ventures launches $90M fund for startups in Egypt

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The venture capital scene in the North African tech ecosystem will be absolutely buzzing right now with the announcement of two large VC funds in the space of two days. Today, Algebra Ventures, an Egyptian VC firm, announced that it has launched its $90 million second fund.

Four years ago, Algebra Ventures closed its first fund of $54 million, and with this announcement, the firm hopes to have raised a total of $144 million when the second fund closes (with first close by Q3 2021). If achieved, Algebra will most likely have the largest indigenous fund from North Africa and arguably in Africa.

According to the managing partners — Tarek Assaad and Karim Hussein, the first fund was an Egyptian-focused fund. Still, the firm made some selective investments in a few companies outside the country. The second fund will be similar — Egypt first, Egypt focused, but allocating investments in East and West Africa, North Africa and the Middle East.

Assaad and Hussein launched the firm in 2016 as one of Egypt’s first independent venture capital funds. It wasn’t easy to start one at the time, and it took the partners two years to close the first fund.

“Raising a venture capital fund in Egypt in 2016, in all honesty, was a pain. There was no venture capital to speak of back then,” Assaad told TechCrunch. “The high-flying startups back then were raising between $1 million and $2 million. We decided to take the bull by the horn and raise from very established LPs.”

These LPs include Cisco, the European Commission, Egyptian-American Enterprise Fund (EAEF), European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC) and private family offices. From the first fund, Algebra backed 21 startups in Egypt and MENA, and according to the firm, six of its most established companies are valued at over $350 million and collectively generate more than $150 million in annual revenue. It hopes to back 31 startups from the second fund.

Algebra says it’s sector-agnostic but has a focus on fintech, logistics, health tech and agritech. Although the firm has invested in startups in seed and Series B stages, Algebra is known to be an investor in startups looking to raise Series A investments.

Another appealing proposition from Algebra lies in the fact that it owns an in-house team focused on talent acquisition — in operations, marketing, finance, engineering, etc., for portfolio companies

The firm’s ticket size remains unchanged from the first fund and will continue to cut checks ranging from $500,000 to $2 million. However, some aspects as to how the firm handles operations might change according to the partners.

“One of the lessons learned in our first fund is that we see that there are more interesting opportunities and great entrepreneurs in the seed stage. And given that we’re more on the ground in Egypt, sometimes we wait for them to mature to Series A. But going forward, we might need to build relationships with those we find exceptional at the seed level and also expand our participation on the Series B level, too,” Hussein said on how the firm will act going forward.  

Algebra Ventures

Karim Hussein (Managing partner, Algebra Ventures)

Hussein adds that the company will also be doubling down on its talent acquisition network. Typically, Algebra helps portfolio companies hire C-level executives, and while it plans to continue doing so, the firm might adopt a startup studio model — pairing some professionals to start a company that eventually gets Algebra’s backing and support.

The reason behind this stems from the next set of companies Algebra will be looking to invest in. According to Hussein, the partners at Algebra have studied successful businesses in other emerging markets for some time and want to identify parallels in North Africa where the firm can invest.

“In cases where the firm can’t find those opportunities, we may spur some of those in the network to start building those businesses and capture those opportunities,” he remarked.  

Before Algebra, Hussein has been involved with building some successful tech companies in the U.S. Primarily an engineer after bagging both bachelors and doctorate degrees from Carnegie Mellon University and MIT, respectively, he ventured into the world of startup investing and entrepreneurship after working for a consulting company in the dot-com era.

He would go on to start Riskclick, a software company known for its commercial insurance applications. The founders sold the company to Skywire before Oracle acquired the company to become part of its suite of insurance services. After some time at WebMD, Hussein returned to Egypt and began mentoring startups as an angel investor. Alongside other angel investors, he co-founded Cairo Angels, an angel investor network in Egypt, in 2013

“There was a massive gap in the market. We were putting in a bit of small angel money to these businesses but there were no VCs to take them to the next level. So I met up with Tarek and Ziad Mokhtar, and the rest is Algebra,” he said. 

Assaad is also an engineer. He obtained his bachelors in Egypt before switching careers by going to Stanford Graduate School of Business. He continued on that path working for some Bay Area companies before his return to Egypt. On his return, he became a managing partner at Ideavelopers, a VC firm operating a $50 million fund since 2009. The firm has had a couple of good success stories, the most notable being fintech startup Fawry. Fawry is now a publicly traded billion-dollar company and Assaad was responsible for the investment which realized a $100 million exit for Ideavelopers in 2015.

Algebra Ventures

Tarek Assaad (Managing partner, Algebra Ventures)

With Algebra, both partners are pioneering local investments in the region. Some of its portfolio companies are the most well-known companies on the continent — health tech startup Yodawy; social commerce platform Brimore; logistics startup Trella; ride-hailing and super app Halan; food discovery and ordering platform Elmenus; fintech startup, Khazna; and others.

The firm’s latest raise and $144 million capital amount is one of the largest funds dedicated to African startups. Other large Africa-focused funds include the $71 million fund recently closed by another Egyptian firm, Sawari Ventures; Partech’s $143 million fund; Novastar Ventures’ $200 million fund; and the $71 million Tide Africa Fund by TLcom Capital.

These funds have been very pivotal to the growth of the African tech ecosystem in terms of funding. Last year, African startups raised almost $1.5 billion from both local and international investors, according to varying reports. This number was just half a billion dollars six years ago.

However, regardless of the period — 2015 or 2021 — African VC investments have always been largely dominated by foreign investors. But VC firms like Algebra Ventures are showing that local investors can cumulatively raise nine-figure funds or attempt to do so. Obviously, this will provide more startups with more funds and pave the way for indigenous and local VCs to at least increase their participation to nearly equal levels when compared to international investors.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Vietnamese electric motorbike startup Dat Bike raises $2.6M led by Jungle Ventures

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Son Nguyen, founder and chief executive officer of Dat Bike on one of the startup's motorbikes

Son Nguyen, founder and chief executive officer of Dat Bike

Dat Bike, a Vietnamese startup with ambitions to become the top electric motorbike company in Southeast Asia, has raised $2.6 million in pre-Series A funding led by Jungle Ventures. Made in Vietnam with mostly domestic parts, Dat Bike’s selling point is its ability to compete with gas motorbikes in terms of pricing and performance. Its new funding is the first time Jungle Ventures has invested in the mobility sector and included participation from Wavemaker Partners, Hustle Fund and iSeed Ventures.

Founder and chief executive officer Son Nguyen began learning how to build bikes from scrap parts while working as a software engineer in Silicon Valley. In 2018, he moved back to Vietnam and launched Dat Bike. More than 80% of households in Indonesia, Malaysia, Thailand and Vietnam own two-wheeled vehicles, but the majority are fueled by gas. Nguyen told TechCrunch that many people want to switch to electric motorbikes, but a major obstacle is performance.

Nguyen said that Dat Bike offers three times the performance (5 kW versus 1.5 kW) and 2 times the range (100 km versus 50 km) of most electric motorbikes in the market, at the same price point. The company’s flagship motorbike, called Weaver, was created to compete against gas motorbikes. It seats two people, which Nguyen noted is an important selling point in Southeast Asian countries, and has a 5000W motor that accelerates from 0 to 50 km per hour in three seconds. The Weaver can be fully charged at a standard electric outlet in about three hours, and reach up to 100 km on one charge (the motorbike’s next iteration will go up to 200 km on one charge).

Dat Bike’s opened its first physical store in Ho Chi Minh City last December. Nguyen said the company “has shipped a few hundred motorbikes so far and still have a backlog of orders.” He added that it saw a 35% month-over-month growth in new orders after the Ho Chi Minh City store opened.

At 39.9 million dong, or about $1,700 USD, Weaver’s pricing is also comparable to the median price of gas motorbikes. Dat Bike partners with banks and financial institutions to offer consumers twelve-month payment plans with no interest.

“These guys are competing with each other to put the emerging middle class of Vietnam on the digital financial market for the first time ever and as a result, we get a very favorable rate,” he said.

While Vietnam’s government hasn’t implemented subsidies for electric motorbikes yet, the Ministry of Transportation has proposed new regulations mandating electric infrastructure at parking lots and bike stations, which Nguyen said will increase the adoption of electric vehicles. Other Vietnamese companies making electric two-wheeled vehicles include VinFast and PEGA.

One of Dat Bike’s advantages is that its bikes are developed in house, with locally-sourced parts. Nguyen said the benefits of manufacturing in Vietnam, instead of sourcing from China and other countries, include streamlined logistics and a more efficient supply chain, since most of Dat Bike’s suppliers are also domestic.

“There are also huge tax advantages for being local, as import tax for bikes is 45% and for bike parts ranging from 15% to 30%,” said Nguyen. “Trade within Southeast Asia is tariff-free though, which means that we have a competitive advantage to expand to the region, compare to foreign imported bikes.”

Dat Bike plans to expand by building its supply chain in Southeast Asia over the next two to three years, with the help of investors like Jungle Ventures.

In a statement, Jungle Ventures founding partner Amit Anand said, “The $25 billion two-wheeler industry in Southeast Asia in particular is ripe for reaping benefits of new developments in electric vehicles and automation. We believe that Dat Bike will lead this charge and create a new benchmark not just in the region but potentially globally for what the next generation of two-wheeler electric vehicles will look and perform like.”

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Binance Labs leads $1.6M seed round in DeFi startup MOUND, the developer of Pancake Bunny

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Decentralized finance startup MOUND, known for its yield farming aggregator Pancake Bunny, has raised $1.6 million in seed funding led by Binance Labs. Other participants included IDEO CoLab, SparkLabs Korea and Handshake co-founder Andrew Lee.

Built on Binance Smart Chain, a blockchain for developing high-performance DeFi apps, MOUND says Pancake Bunny now has over 30,000 daily average users, and has accumulated more than $2.1 billion in total value locked (TVL) since its launch in December 2020.

The new funding will be used to expand Pancake Bunny and develop new products. MOUND recently launched Smart Vaults and plans to unveil Cross-Chain Collateralization in about a month, bringing the startup closer to its goal of covering a wide range of DeFi use cases, including farming, lending and swapping.

Smart Vaults are for farming single asset yields on leveraged lending products. It also automatically checks if the cost of leveraging may be more than anticipated returns and can actively lend assets for MOUND’s cross-chain farming.

Cross-Chain Collateralization is cross-chain yield farming that lets users keep original assets on their native blockchain instead of relying on a bridge token. The user’s original assets serve as collateral when the Bunny protocol borrows assets on the Binance Smart Chain for yield farming. This allows users to keep assets on native blockchains while giving them liquidity to generate returns on the Binance Smart Chain.

In statement, Wei Zhou, Binance chief financial officer, and head of Binance Labs and M&A’s, said “Pancake Bunny’s growth and MOUND’s commitent to execution are impressive. Team MOUND’s expertise in live product design and servie was a key factor in our decision to invest. We look forward to expanding the horizons of Defi together with MOUND.”

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Battery Resourcers raises $20M to commercialize its recycling-plus-manufacturing operations

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As a greater share of the transportation market becomes electrified, companies have started to grapple with how to dispose of the thousands of tons of used electric vehicle batteries that are expected to come off the roads by the end of the decade.

Battery Resourcers proposes a seemingly simple solution: recycle them. But the company doesn’t stop there. It’s engineered a “closed loop” process to turn that recycled material into nickel-manganese-cobalt cathodes to sell back to battery manufacturers. It is also developing a process to recover and purify graphite, a material used in anodes, to battery-grade.

Battery Resourcers’ business model has attracted another round of investor attention, this time with a $20 million Series B equity round led by Orbia Ventures, with injections from At One Ventures, TDK Ventures, TRUMPF Venture, Doral Energy-Tech Ventures and InMotion Ventures. Battery Resourcers CEO Mike O’Kronley declined to disclose the company’s new valuation.

The cathode and anode, along with the electrolyzer, are major components of battery architecture, and O’Kronley told TechCrunch it is this recycling-plus-manufacturing process that distinguishes the company from other recyclers.

“When we say that we’re on the verge of revolutionizing this industry, what we are doing is we are making the cathode active material — we’re not just recovering the metals that are in the battery, which a lot of other recyclers are doing,” he said. “We’re recovering those materials, and formulating brand new cathode active material, and also recovering and purifying the graphite active material. So those two active materials will be sold to a battery manufacturer and go right back into the new battery.”

“Other recycling companies, they’re focused on recovering just the metals that are in [batteries]: there’s copper, there’s aluminum, there’s nickel, there’s cobalt. They’re focused on recovering those metals and selling them back as commodities into whatever industry needs those metals,” he added. “And they may or may not go back into a battery.”

The company says its approach could reduce the battery industry’s reliance on mined metals — a reliance that’s only anticipated to grow in the coming decades. A study published last December found that demand for cobalt could increase by a factor of 17 and nickel by a factor of 28, depending on the size of EV uptake and advances in battery chemistries.

Thus far, the company’s been operating a demonstration-scale facility in Worcester, Massachusetts, and has expanded into a facility in Novi, Michigan, where it does analytical testing and material characterization. Between the two sites, the company can make around 15 tons of cathode materials a year. This latest funding round will help facilitate the development of a commercial-scale facility, which Battery Resourcers said in a statement will boost its capacity to process 10,000 tons of batteries per year, or batteries from around 20,000 EVs.

Another major piece of its proprietary recycling process is the ability to take in both old and new EV batteries, process them and formulate the newest kind of cathodes used in today’s batteries. “So they can take in 10-year-old batteries from a Chevy Volt and reformulate the metals to make the high-Ni cathode active materials in use today,” a company spokesman explained to TechCrunch.

Battery Resourcers is already receiving inquiries from automakers and consumer electronics companies, O’Kronley said, though he did not provide additional details. But InMotion Ventures, the venture capital arm of Jaguar Land Rover, said in a statement its participation in the round as a “significant investment.”

“[Battery Resourcers’] proprietary end-to-end recycling process supports Jaguar Land Rover’s journey to become a net zero carbon business by 2039,” InMotion managing director Sebastian Peck said.

Battery Resourcers was founded in 2015 after being spun out from Massachusetts’ Worcester Polytechnic Institute. The company has previously received support from the National Science Foundation and the U.S. Advanced Battery Consortium, a collaboration between General Motors, Ford Motor Company and Fiat Chrysler Automobiles.

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