Termii Raises $1.4M Seed Funding - Nigeria

The Importance of Effective Customer Communication for Businesses

It is generally anticipated that all businesses should be able to connect with their customer base in a productive manner. However, this isn't always achievable, as various obstacles can impede effective digital communication at different stages of growth.

Termii Secures $1.4 Million Seed Funding

Termii, a Nigerian communications platform-as-a-service startup addressing this challenge for African businesses, has recently announced the successful completion of a $1.4 million seed funding round.

Investment Details

The funding round was jointly led by Future Africa, an African early-stage venture capital firm, and Kepple Africa Ventures, a Japan-based VC with a focus on Africa. Additional investors included Acuity Ventures, Aidi Ventures, Assembly Capital, Kairos Angels, Nama Ventures, RallyCap Ventures, and Remapped Ventures.

Angel Investor Participation

Notable angel investors also contributed to the round, including Ham Serunjogi, co-founder and CEO of Chipper Cash; Josh Jones, previously co-founder and CTO of Dreamhost; and Tayo Oviosu, co-founder and CEO of Paga.

The Genesis of Termii

Termii was founded by Gbolade Emmanuel and Ayomide Awe. Emmanuel’s prior experience as a digital marketer highlighted the necessity for businesses to possess robust communication channels.

Identifying a Critical Need

While consulting for various companies, Emmanuel utilized email for customer retention, but discovered this method to be inefficient. This realization prompted a search for alternative, more effective communication solutions.

Multichannel Messaging as a Solution

“This led me to consider multichannel messaging,” Emmanuel explained to TechCrunch. “The core idea was to enable companies to utilize WhatsApp, voice, and SMS seamlessly. Crucially, the process needed to be straightforward, as complexity is a barrier in the African market.”

Company Launch and Product-Market Fit

The company officially launched in 2017 and subsequently received investment from Lagos-based VC Microtraction. Emmanuel states that true product-market fit was achieved two years later, after gathering sufficient data from companies across diverse industries to understand their specific requirements.

Expanding Service Offerings

Termii determined that, beyond customer retention, there was a significant demand for tools to verify, authenticate, and engage customers.

Addressing a Key Pain Point

“Many businesses we engaged with expressed a need for tools to communicate and verify customers effectively, as they were experiencing financial losses due to inefficiencies in these areas,” Emmanuel added. “We identified this as a substantial problem.”

Growth and API-Based Infrastructure

Following adjustments to their approach, the team observed a surge in customer acquisition, particularly among fintech startups. Termii developed an API-based communication infrastructure, now serving over 500 fintech startups throughout the continent.

Widespread API Usage

Furthermore, more than 1,000 businesses and developers are currently leveraging Termii’s API.

Notable Termii Clients

Some of the businesses utilizing Termii’s services include uLesson, Yassir, Helium Health, PiggyVest, Bankly, Paga, and TeamApt.

Market Opportunity and Business Model

Operating within a $3.6 billion B2C communications market projected to grow at a rate of 6% annually, Termii employs a B2B2C model. The founders deliberately avoided a subscription-based model, based on lessons learned during their search for product-market fit.

Unique Payment System

Instead, the company utilizes a virtual wallet system linked to a bank account. Customers can fund these wallets through mobile money, bank transfers, and credit card payments. Charges are applied on a per-message basis, and also for each successful customer verification.

Y Combinator and Accelerated Growth

In early 2020, Termii experienced significant progress and was accepted into the Y Combinator program. Throughout the year, messaging transactions increased by 1,000%, and Annual Recurring Revenue (ARR) grew by 400%.

Continued Revenue Growth

Emmanuel reports that the company’s revenue is currently increasing by 60% month-over-month, driven by the rise in online financial transactions, which currently account for 68% of total messaging transactions.

Use of Funds

The newly secured seed investment, coming a year after Termii’s YC graduation, will be allocated to expansion efforts and the introduction of additional messaging features across Africa.

Expansion Plans

Emmanuel stated that the company is targeting North Africa, with a planned physical presence in Algeria, due to the region’s growing market share – currently representing 15% of Termii’s messaging transactions, compared to Nigeria’s 76%.

Leveraging Investor Expertise

The company intends to benefit from the experience of new investors like Oviosu and Serunjogi, who have successfully guided local companies through expansion phases.

A Notable Investment Trend

Termii’s funding round is significant as it deviates from the typical investor focus on fintech, mobility, agritech, and cleantech sectors. There are relatively few venture-backed communications platform-as-a-service companies on the continent, with Kenya’s Africa Talking being a prominent example.

Shifting Investor Focus

This investment suggests a growing willingness among investors to explore opportunities in less conventional sectors.

Local Investment Gains Momentum

Furthermore, the round highlights a positive trend of local and Africa-focused firms taking the lead in funding rounds, signaling a healthy development for the African tech ecosystem.

Future Africa’s Milestone

This round also marks a milestone for Future Africa, representing the firm’s first million-dollar lead investment since its launch last year. This achievement builds upon their recent activity, having invested in over 10 African startups in the last three quarters and 30 startups overall.

Kepple Africa Ventures’ Active Role

Kepple Africa Ventures, the co-lead investor, is recognized as one of the most active early-stage VC firms on the continent, having invested in 79 companies across 11 countries.

Investor Perspective

Satoshi Shinada, a partner at Kepple Africa, commented, “Fragmented and unstable communication channels pose a major challenge to the digitization of businesses in Africa. Emmanuel has demonstrated his vision and ability to implement innovative solutions in this space, making his team uniquely positioned for success.”

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