Over the past few years at EchoVC, we have become intrigued with blockchains. The more we explored, and learned, the more excited we’ve become about the applications of blockchain and its functions in Africa.
We made our first investment in the blockchain segment in 2021, and have continued making further pre-seed and seed investments since then. For African markets, we believe blockchain functionality is more of a need, rather than a want, and our thesis is to leverage these functions to enable new leapfrogs, or unlock novel market opportunities, across the continent.
In keeping with our mission to support underrepresented founders and startups targeting underserved markets, we are excited to announce EchoVC Chain, an $8m ‘pilot’ seed fund focused on making investments in founders and startups that span our specific areas of interest, as set out below.
Fundamentally, we’ve been excited with two capabilities of blockchain: a) the ability to abstract / tokenize, and b) the ability to scale autonomously.
However, our perspective on the applications of blockchain in Africa traverses multiple layers. Our first layer of focus is on foundational fintech infrastructure. This includes infrastructure leveraging stablecoins to optimize payments, liquidity, and treasury; and also explores the unbundling and delivery of crypto/fintech building blocks, or “primitives” – which other companies can utilize to scale faster.
The second layer above this targets blockchain functionality. DeFi functionality can be leveraged in Africa for innovative financial products improving access to credit and savings, or perhaps powering new-age decentralized neobanks. NFTs can serve to foster the creator economy for the rising Gen-Z, enable games to provide new ways to earn, or even fractionalize real-world assets and portfolios to lower affordability barriers to investments.
Thirdly, we are excited about the prospects of DAOs, not just for their ability to scale autonomously, but also to organize human networks. Examples in Africa are social collectives and informal markets, which are key strands of Africa’s offline economic fabric. DAOs can organize the offline and informal networks in a way that is beneficial for all participants. This should unlock labor liquidity and increase earning potential for the bottom-of-the-pyramid demographics. Other examples include decentralized agent networks, social networks, as well as gig networks.
Looking beyond this, we continue to explore other emerging blockchain aspects ranging from digital identity, privacy, decentralized infrastructure edge nodes and agile supply chains to a possible future intersection between AI/ML and DAOs.
On the regulatory side, we continue to observe the evolving landscape. Our view is that regulation is required and will have a positive impact to help guide innovation, improve stability, and remove frictions that still exist between decentralized and centralized worlds. One aspect that we are tremendously excited about is the advent of central bank digital currencies (CBDCs) as the digital version of cash – channeled through the banking system – to remove friction in access to financial products, streamline cross-border payments, and enable programmable local money.
Our current blockchain-related portfolio comprises 7 companies:
- Fonbnk (Aug’21): offers a wallet and marketplace that connects airtime to stablecoins enabling users and agents in Africa to easily on-ramp, off-ramp, and remit using airtime. We were excited with Fonbnk’s ability to tap into airtime – the most common digital commodity – and its ability to scale into other emerging markets
- Odum (Oct’21): runs automated market-making within cryptocoin and crypto-derivatives markets. We backed a promising founder, Ikenna Igboaka, formerly a trader at IMC. Odum’s market-making thrives with volatility, and crypto derivatives are an interesting market with trade volume roughly 2x that of crypto spot
- Ponto (Dec’21): provides regulated payment APIs connecting cryptocurrencies to mobile money and wallet products. We were thrilled with the potential for Ponto’s infrastructure to optimize payment channels into and out of Africa, and around the world
- Stakefair (May’22): has created a loss-less sports-wagering platform by leveraging DeFi functionality, however, what we were intrigued with is the founder’s acumen and vision to offer treasury services to enterprises and create a customized DeFi pool for African corporates to earn yield
- MUDA (Jul’22): conducts OTC exchange and payments for flows across Africa, as well as from Africa to Asia. We were impressed with the founder’s approach to building MUDA, his ability to leverage agent networks, and his ambition to provide MUDA’s platform as an API that can embed into other fintechs as well as into social channels
- OneLiquidity (Aug’22): provides crypto and fiat liquidity-as-a-service to crypto startups, fintechs, and large enterprises in Africa. Liquidity has been a persistent problem in scaling a crypto or fintech startup on the continent and we were keen to back an extremely driven founder, highly adept at execution, and an avid learner who is deeply involved in the blockchain ecosystem in Africa
- FUHLStack (Dec’22): unbundles the components that are “undifferentiated heavy lifting” for crypto startups, fintechs, as well as enterprises that are digitizing. This enables clients to focus on getting to market faster and scaling more efficiently. The founder – one of the most impressive devs we have ever come across in Africa – is beginning with ledger-as-a-service as well as crypto wallet infrastructure, and has the potential to create interesting network effects within his ecosystem as he adds more services
The EchoVC team is incredibly grateful to our limited partners that have signed up to accompany our team and our founders on this exciting journey.
We welcome founders serving blockchain products and markets to reach out. EchoVC Chain is open for business.