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Contact Details

www.entrepreneurcountryglobal.com

Amit PauDirectorAriadne Capital Ltd Mobile: +44(0)7792 943 596

@amit_pau

@ECNigeria

@AriadneCap

@EnCountry www.ariadnecapital.com

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“When I go to Silicon Valley…they all want to eat our lunch. Every single one of them is going to try.” Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co.

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Biggest players in technology / internet space

Market Cap (USD, billions)

567.0 394.4 170.1 155.3 150.9Revenue(USD, billions)

176.0 62.3 8.9 78.1 9.7Gross Profit(USD, billions)

64.3 35.4 6.0 20.3 5.3

The compounded market capitalization of these tech giants amounts to the combined GDP of 51 countries in Africa!

Sources: Yahoo Finance, Bloomberg.

To fully comprehend the size and influence of these tech players, lets have a look at Africa’s map. The market capitalization of these 5 giants equates to the GDP of all Africa apart from the 3 countries shown on the map (Nigeria, South Africa & Angola).

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The Digital Economy in a Frontier Market – An Investment Case

Commercial rollout & expectations:– MTN Nigeria’s device-financing program in partnership with Samsung and Standard Chartered– Orange’s engagement with Speadtrum Communications to develop low-cost handsets. – Expected 412 million smartphone connections by 2018 from 79 million at the end of 2012

Mobile penetration in Africa hit 80% in the Q1 2013 and is growing at 4.2% p.a. – fastest growing continent and second largest market after Asia

Supply-side spare capacity: 62.7% of mobile connections are basic 2G and SMS services, while Smartphone penetration accounts for only 11% by 2012

Demand-side pull:Data revenue for telecoms has grown at 67% in Nigeria, Kenya and South Africa over the past few years

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Emergence of Digital Ecosystems

“To the West, ‘mobile banking’ is a new of doing something old. To many Africans, it is the obvious way of doing something new.” Business Insider

• Monthly active customers stand at an impressive 11.6 million and revenues from M-Pesa represent 18% of total companies revenues, 12.5 billion out of 69.2 billion Kshs.

• Deposit value: Kshs 94 billion. Withdrawals : Kshs 85 billion.

• Currently migrating from a ‘send money home’ product to payments platform.

• B2B proposition is driving the grow of solution - 18.5% of value is business-to-person (B2P) or person-to-business (P2B) – revenue growing at c. 90% YoY.

• Leveraging on high adoption numbers, rolling further value added services is strategic – Short Term M-PESA Pay Bill used for short term fundraising purposes for specific activities – education, weddings, medical…

• Lipa Kodi enables property owners to collect rent conveniently at no cost.

M-Pesa

• Launched in 2012, Jumia has 150,000 visits per day, registering sales in Nigerica, Morocco, Egypt and South Africa.

• Developed a unique value proposition to meet the particular profile of the African e-shopper.

• Fear of fraud and limitations of logistic infrastructure were key strategic considerations.

• Owning a motorbikes fleet, gives greater flexibility and timely delivery.

• Owning the fleet also solves the fraud suspicion, as e-shoppers can physically pay to the deliverer upon the receipt of the good.

• Currently increasing sales in the high teens with monthly revenues in the low single-digit millions.

Jumia

Impressive levels of mobile adoption and increasing smartphone penetration along with a tech-savvy culture have set the foundations for the emergence of more complex

digital ecosystems, transactions and marketplaces.

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• VC4Africa survey involved 160 startups, out of which 92 were successful in securing US$ 12m in funding – an average of US$130 k per startup

• Access to capital has improved, large number of SMEs coupled with still developing capital markets should help to drive the growth of PE investment in Africa

• Opportunity for PE – limited availability of bank financing and public markets in most African countries, provides PE with the potential to achieve significant penetration

• Africa-wide demand for capital should increase by 8% p.a. between now and 2018, making a total investment figure of US$50 billion possible over the next decade.

PE / VC – Opportunity to meet funding gap

• PE/VC migrating from alternative to mainstream asset class – set to reach $13tn by 2020 as offerings are expanded to retail clients and existing clients increasing their stakes

• Growth will be driven by HNWI and sovereign wealth fun markets, whereas traditional foundations and endowments would modestly increase their commitments

• Expected to grow by about 9.3% each year between now and 2020• Between 2006 and 2012, 81 PE funds focused on Africa closed and through the end 2012, 45 on the road

targeting US$12 bn• The aggregate value of African deals in 2013 was US$3.2 bn up from US$ 1.6 bn in 2012• This is skewed toward larger infrastructure projects rather than tech-oriented startups & SMEs – these

values remain unknown

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A new league of competitors is emerging

“When I go to Silicon Valley…they all want to eat our lunch. Every single one of them is going to try.” Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co.

“…banks that are not prepared for such new competitors (Google, Facebook, Amazon or the like) face certain death.” Francisco Gonzalez, Chairman and CEO of BBVA

financial services soon

to be transformed

by technology

In two or three years, only 5 per cent of

consumer interaction will be through

branches.

PayPal, Square, iZettle, SumUp,

Dwolla are not just niche businesses

they may expand or seek alliances, soon to be joined by big names in the digital

world

Mobile services provide flexible,

convenient customer

experienceplus potential to

double or even triple the number of

customers worldwide in the next decade.

Customers expect great

service through all channelsplus innovative

content, products and services

Old “Spaghetti Platforms” no longer

workComplex,

unwieldy, rigid, inefficient

This is a temporary solution

New entrants are free from the legacies of

banks: obsolete systems and costly

distribution networks

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Apple: Music & Telecoms

Google: Advertising

Amazon: Books

Three Visions of the Future for Financial Services

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The Technology Platform Companies take over

every industry

The Digital Davids become disruptive forces & create

new established giants

Airbnb: Travel

Uber: Taxis

Wonga: Personal Loans

David and Goliath Dance

David shows technology enables the existence of an ecosystem

through data and business model

Goliath brings customers, distribution, scale and reach

Future of the Asset Management

Industry?

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Knowledge of customer

Customer Engagement

- Cost and risk reduction

Brand Positioning

A firm’s competitive advantage is increasingly less about its traditional assets: products, production, infrastructure

It is more about how it engages with its customers to bring about a sustainable network effect:

Digital business models enable the accumulative value of these ‘marketing’ assets.

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Ariadne Capital’s Vision – ‘Blink and you’ll miss it’

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Market Opportunity

Digital Davids enabled by

AVIVA + EC Global

Take advantage of Revenue

(Profits)

Make Investments in assets (Costs)

Goliaths

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APPLICATIONS“Digital Enablers”

PLATFORMS (Google, Facebook, Apple, Amazon)

INFRASTRUCTURE High Regulation, Low Margin, Others using your investments

without contribution

D

G

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Network and Data drive Innovation and Service rather than traditional

R&D.

To win big, you must control the industry’s operating system.

Our CEO’s challenge is to reimagine the industry as an ecosystem:

An environment where Davids and Goliaths reap benefits by working

together.Davids understand they need to move fast to capitalise on

the change.

They focus on creating a new economic structure.

However, due to their small stature they cannot scale.

Goliaths leverage scale to engage with Digital Davids.

This enables Ecosystem Economics to occur:

Davids & Goliaths find their natural allies and Goliath becomes part of the

Ecosystem

New partnerships help Goliath to launch new products and

increase revenues.

Goliaths control the operating system of the industry, becoming

pioneers.

Davids then reap dividends by scaling fast and wide.

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Ecosystem Economics™

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Leveraging on Digital Enablers to build on key competitive advantages

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• Investment in FinTech has tripled during the last five years – from under $930 million in 2008 to more than $2.97 billion in 2013.

• As a highly-regulated, conservative industry financial services is ripe for digital disruption.

• Over the past three years, global investment in fintech has outpaced overall venture capital by more than four times.

• Banking and securities institutions are expected to spend $485 billion on IT in 2014, according to Gartner.

• This buying power and willingness to spend in technology is a major factor driving the fintech innovation boom.

Current Trends – FinTech already a hot space in VC

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Fintech Ecosystems

Ecosystem: e-Financial Investments – Retail and Institutional

• Going after two different kinds of markets with its service: the first is the existing market for investments, competing on commission fees due to its low cost delivery channels.

• The second market is the group of people who have yet to ever make any investments, either because they have not had enough funds or because they don’t know where to begin.

• Investment management and the ability to transfer and withdraw money enables a wider suite of services, which means that integration into wider financial service companies in B2B models is attractive.

Significant VC Investment – Ripe

for Disruption

Strategic Revenue Drivers

Rationale & Size of Opportunity

• This space capitalises on consumer disillusionment with FS institutions existing investment models.

• “This is one of the only markets that’s actually measured in trillions… the market can be massively inefficient for hundreds of billions of dollars and somehow that is still not enough for the incumbents to go after”. Adam Nash, CEO Wealthfront

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• Since the beginning of 2013, venture investors committed over $800 million in new funding to develop business providing new investment, lending, mortgage and real estate and wealth management services in the US alone.

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• http://venturebeat.com/2013/12/03/african-mobile-penetration-hits-80-and-is-growing-faster-than-anywhere-else/

• http://www.accenture.com/Microsites/fsinsights/capital-markets-uk/Documents/Accenture-Global-Boom-in-Fintech-Investment.pdf

• http://www.safaricom.co.ke/mpesa_timeline/timeline.html

• http://vc4africa.biz/blog/2014/03/03/private-equity-venture-capital-investments-in-africa-growing-fast-shift-towards-smes-expected/

• http://www.ft.com/cms/s/0/bc70c9fe-4e1d-11e3-8fa5-00144feabdc0.html#axzz36lbMeRtN

• http://www.ft.com/cms/s/0/c71d4a3c-8859-11e3-85a2-00144feab7de.html#axzz36lbMeRtN

• https://medium.com/@waynewz90/making-sense-of-the-fintech-startup-ecosystem-9213670cd34c

• http://s3.amazonaws.com/kpcbweb/files/85/Internet_Trends_2014_vFINAL_-_05_28_14-_PDF.pdf?1401286773

Glossary