Image Credits: Bryce Durbin
What’s more rewarding for an angel investor than paper returns in a startup? An acquisition that turns those paper returns into a cash payout while still maintaining shares in the company. “The return after dilution was eight times my investment,” said Selma Ribica in an interview with TechCrunch recently. “I kept some stock of the new entity, but a big majority was cash.”
Ribica currently serves as the general partner at First Circle Capital, a venture capital firm specializing in fintech SaaS, or fintech 2.0 as she terms it. She made her angel investment in Expensya, an expense management startup based in Tunis and Paris, which was acquired last June by the private equity firm Medius for a sum over $100 million, according to sources familiar with the deal.
Only a few African or Africa-focused tech companies have been acquired for more than that amount: InstaDeep to BioNTech, Sendwave to WorldRemit, DPO Group to Network International and Paystack to Stripe. Like InstaDeep, the acquisition of Expensya underscores the potential of Africa-founded products to serve global markets and subsequently get bought by larger companies.
For years, venture capital globally experienced a bullish trend, and Africa, albeit late to the party, caught on before things went south for the asset class in the latter half of 2022. Before the bust, local investors mainly encouraged African startups to focus on building solutions for the continent, with the promise that capital would follow. Building global products was often an afterthought, particularly as local solutions, especially fintechs, demonstrated exit opportunities by just targeting markets within the continent.
However, there has been a notable shift in this narrative in the last 18 months. As African startups strive to develop solutions for local challenges, they now confront headwinds and macroeconomic challenges beyond their control. The economies of the continent’s most prominent tech markets — Nigeria, Kenya and Egypt — are currently grappling with currency devaluation issues, resulting in stagnant or slower revenue growth in dollar terms for startups operating in these markets, thereby diminishing their valuations in the eyes of global investors.
In response, investors are now urging startups to explore strategies to safeguard their revenues, reigniting discussions about the importance of local founders adopting a global mindset when developing their products. That mindset was integral from the beginning for founders like Karim Jouini, founder and chief executive officer of Expensya.
“Adopting a global focus was almost from day one for many reasons. Regardless of what you are building as a company, Tunisia is a pretty small market that isn’t integrated enough with its neighbors,” said Jouini in an interview with TechCrunch. “It’s a country with an average income level and with companies that aren’t necessarily mature enough to be interested in spend management. Their companies are still setting up the first CRM or ERP. So from the beginning, we looked at building a product that is for markets where companies are mature and are at the stage where they are looking at employee productivity and spend management.”
From Tunis to Europe
Founded by Jouini and CTO Jihed Othmani in 2014, Expensya specializes in automated expense management solutions tailored for European businesses. Its software enables companies to implement autonomous spending within predefined rules and limits, optimizing time and simplifying employee expense processes. When integrated with ERP applications, Expensya helps finance teams to oversee and track business expenditures and facilitate streamlined staff reimbursement procedures.
The spend management startup, designed to support companies of all sizes in automating their professional expenses, was launched first in France, leveraging the CEO’s network and decade-plus experience working for Parrot, Musiwave and Microsoft. Expensya’s first set of clientele, which had between 1,000 and 10,000 employees, operated across multiple European countries — as a result, the startup quickly adapted its product to function in these other countries, handling local taxes and certifications along the way, which catalyzed its movement into Spain and Germany.
And despite the seeming advantage of proximity to Europe, being a Tunisian startup posed its challenges. First, navigating the European market reasonably protected from external competition due to laws like GDPR was a significant obstacle. Compliance with GDPR necessitated setting up operations in Europe and establishing strong local teams in sales and marketing was crucial for the startup to sell to large companies; it set up teams in France, Spain and Germany to address this requirement and compete against Concur, Nautilus and N2F.
“Sometimes, there was a bit of hesitation from these large customers when…