China’s largest messaging app will invest 50 million Rand (about 3.4 million USD) in African start-up businesses, to support local entrepreneurs and technology innovations. In a blog post, Brett Loubser, head of WeChat Africa said that the chinese tech giant will work with Cape Town tech strategy firm Batstone Ventures to find promising early-stage companies.
Earlier in 2015, WeChat, which has over 600 million users and is owned by Chinese Internet giant Tencent, made its first investment in Africa, putting an undisclosed amount into M4JAM (Money For Jams).
Based in South Africa, M4JAM is similar to Taskrabbit in that it connects people with temporary “microjobs.” Unlike Taskrabbit, however, M4JAM reaches its users exclusively through WeChat. A few months later, WeChat also announced a partnership with PicUp, which is also based in South Africa and only accessible through WeChat.
In today’s post, WeChat said that its new fund will look for other companies that, like M4JAM and PicUp, use the messaging app to conduct business, which in turn may help it take advantage of Africa’s rapidly improving smartphone penetration rates.
“Our experience in the past two years has demonstrated that many companies have huge potential but are unable to communicate what they do clearly,” says Alexandra Fraser, Head of Batstone Ventures. “We don’t want to miss the chance to work with smart businesses just because they can’t succinctly tell us what they can do in an online form, so our process will include a face-to-face workshop element to mitigate this risk.”
WeChat has users worldwide, but it hasn’t disclosed country-specific numbers. The service is ubiquitous in China, where it can be used to play games, pay utility bills, book taxis, and make online payments, but it has struggled to gain a foothold in other markets where it competes with WhatsApp, Facebook Messenger, and Viber, among other apps. These messaging platforms all see African countries as a growth opportunity (and there are also homegrown apps, like South Africa’s Mxit and Nigeria’s Howfar).
SMS still dominate in countries with low smartphone penetration rates. But in countries like South Africa and Nigeria, where there are many more smartphone owners, messaging apps are quickly gaining traction.
The Online Application for african start up businesses will open in mid January 2016. It’s worth noting that the selection of applicants will be based on a mix of online application and a series of purpose workshops, according to WeChat and its partner in this venture, the Cape Town tech strategy firm Batstone.