FUNDING | As Y Combinator Retreats, Baobab Network Declares Ambition to Invest i...

As per a recent 2023 report, blockchain technology has the capability to reduce cross-border payment expenses for financial institutions by approximately $10 billion by 2030.

The report, published by digital payments network, Ripple, in collaboration with United States Faster Payments Council (FPC), surveyed 300 finance professionals from diverse sectors, including fintech, banking, media, consumer technology, and retail across 45 countries.

Out of the participants surveyed, which included analysts, directors, and CEOs, an overwhelming 97% expressed a strong belief that blockchain technology will be instrumental in enabling faster payment systems within the coming three years.

REPORT | 2023

What is the largest benefit of blockchain tech / crypto for payments?

See full report here by @Ripple and @Faster_Payments: https://t.co/EXmNLPY7qo pic.twitter.com/SC86cRVE5T

— BitKE (@BitcoinKE) October 21, 2023

Moreover, more than half of the respondents acknowledged that the most substantial advantage of cryptocurrency lies in its potential to reduce costs.

“In the survey, over 50% of respondents believe that lower payment costs – both domestically and internationally – is crypto’s primary benefit,” the report notes.

The report anticipates significant cost savings for banks in the next six years due to the adoption of blockchain technology in global transactions.

“Juniper Research supports this notion, pointing to blockchain’s potential to significantly increase savings for financial institutions conducting cross-border transactions – an estimated $10 billion by 2030.”

With the e-commerce landscape continuously expanding and businesses increasingly focusing on international markets, cross-border payments are projected to grow in the years to come. The report emphasized a notable anticipated surge in international payment transactions by the year 2030.

“Global cross-border payment flows are expected to reach $156 trillion – driven by a 5% compound annual growth rate,” the report noted.

Nevertheless, opinions among the participants were divided regarding the timing of when a majority of merchants would adopt digital currency payments. The survey results revealed that 50% of the participants were optimistic that most merchants would adopt crypto payments within the next three years. However, confidence levels varied significantly when considering whether this adoption would occur within the next year.

Among the participants, those from the Middle East and African regions displayed the highest level of confidence, with 27% of them believing that a majority of merchants would embrace crypto as a payment method within the next year.

Leaders in the Asia-Pacific region exhibited the least confidence, with only 13% foreseeing the adoption of crypto payments within the next year. On the other hand, across all 300 participants surveyed globally, 17% expressed their belief that such widespread adoption could take place within the next year.

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Baobab Network, a pioneering early-stage investor and accelerator, has announced its ambition to invest in 1,000 startups across the continent by 2033.

Today we are excited to announce our plan to invest in #1000 African tech companies over the next decade
It’s a significant commitment, but with the recent launch of our Co-Investment Vehicle and subsequent new $100k #cheque size, we mean business.https://t.co/b5YZ5NK8zt

— Baobab Network (@baobabnetwork) October 5, 2023

Since its inception in 2016, Baobab has been a dedicated advocate for African startups, offering crucial financial support and guidance. Every chosen company is granted a significant $100,000 investment, in addition to a customized 12-week accelerator program designed to expedite their growth and long-term viability.

“We have the platform to dramatically scale the number of investments we review and execute across Africa,” said Toby Hanington, Co-Founder of Baobab.

“Our goal is to empower 1000 start-ups, catalyzing innovation and driving economic growth across the continent.”

Baobab’s most recent cohort includes promising startups such as:

• Brandrive
• PocketFood
• Bunce from Nigeria
• Kawu from Uganda
• Alal from Senegal

Each of these businesses has received a $50,000 investment from Baobab, reinforced by an additional $50,000 from Baobab’s newly introduced co-investment vehicle.

Hanington underlined the company’s proactive stance amidst global market fluctuations.

“We have already completed 10 deals this year [2023], with a larger cohort expected in Q4,” he revealed.

The company has also recently appointed Niama El Bassunie, a YC alumna and a notable exited entrepreneur in Africa, as managing partner, a decision which the VC sees as further buttressing its position as a key player in the continent’s tech revolution.

Baobab Network’s ability to endure market challenges underscores the enduring potential of Africa’s tech ecosystem. With its ambitious goal of investing in 1,000 startups over the next decade, the organization exemplifies the essence of African innovation and entrepreneurship.

The move by Baobab is particularly significant given the scaling back of Y Combinator, another key accelerator for African startup ecosystem, in recent times.

The Y Combinator’s S22 batch featured merely eight African startups, marking a 63% decrease from the preceding cohort (W22) which had a record 24 African startups. In the most recent W23 cohort, only three startups from Africa were included, representing the lowest number in recent years.

According to industry watchers, the Silicon Valley-based accelerator has decided to focus more in America, which is epitomized by 90% of investments being there in W23. The drawback has not just been from Africa, but other parts of the world, including India, Asia, and Latin America that have been affected by the apparent change in strategy.

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