KaiOS, the feature phone platform startup, raises a modest $3.4M to train its sights on growth in Africa - TechCrunch

Smartphone shipments person been declining successful what has been a unsmooth twelvemonth for mobile handsets, and that’s meant adjacent much unit connected an already-precarious sliver of the mobile market: diagnostic phones. Today, 1 of the players successful that space, the diagnostic telephone operating strategy startup KaiOS, is getting a tiny fiscal injection that some speaks to that pressure, but besides a accidental to turn successful what remains an opening successful the market: selling cheaper and low-end, but yet inactive functional and usable devices, to the poorest consumers successful processing economies successful sub-Saharan Africa.

The Hong Kong-based diagnostic telephone startup, which has antecedently been backed by strategical investors similar Google and TCL, has picked up $3.4 cardinal from Finnfund, an interaction capitalist retired of Finland.

Finnfund’s financing is coming successful the signifier of a convertible enactment — meaning it could person into equity successful a imaginable aboriginal backing round.

We’ve reached retired to Sebastien Codeville, the laminitis and CEO of KaiOS, to inquire whether much fiscal enactment is successful the pipeline and volition update this station arsenic we larn more. It’s been a portion since KaiOS raised (or much specifically disclosed) extracurricular investment: its past backing was in 2019, erstwhile it raised $50 million from investors including Cathay Innovation, Google and TCL.

Finnfund and KaiOS said that today’s wealth volition spell towards KaiOS gathering retired its concern successful sub-Saharan Africa — a large marketplace for lower-end, low-cost devices. Africa is simply a peculiar absorption for the investor, and it’s straight backed a fig of startups successful the region, too, including nutrient supply-chain startup Twiga and fintech Jumo.

“With this investment, KaiOS tin grow into caller markets successful Sub-Saharan Africa,” said Codeville successful a statement. “We are blessed to spouse with an capitalist similar Finnfund who stock our imaginativeness of however important it is to boost digitalisation successful Africa.”

Finnfund estimates that determination are immoderate 3.4 cardinal radical successful the satellite contiguous without net access, mostly successful processing economies, and mostly due to the fact that they cannot spend smartphones. Even the cheapest smartphone models, powered for illustration Google’s Android OS, tin enactment retired to beryllium arsenic precocious arsenic 20% of consumers’ monthly incomes, Finnfund estimates. (Running a small mathematics connected its numbers, Finnfund’s investment works retired to $0.001 oregon 1/10 of a cent concern per imaginable user.)

KaiOS’s transportation is that it’s a low-cost alternate for handset makers that privation to physique diagnostic phones that tin vie with low-end smartphones. Equipped with apps and different hallmarks of successful internet-enabled handsets, KaiOS presently lists 41 handset models moving its OS, with the cheapest devices retailing for astir $10.

But the startup has a gangly bid up of it.

KaiOS spent its aboriginal years connected the wings of a batch of promise. It began beingness successful 2017 arsenic a fork of Firefox OS, which was an ill-fated effort by Mozilla and partners to physique a viable smartphone level rival to Google-backed Android and Apple’s iOS. Optimistically, the KaiOS squad saw an opening to people the lowest extremity of the user market, successful processing economies, and to consolidate R&D aimed astatine these users connected a azygous level for precocious diagnostic phones.

Others agreed, and KaiOS rapidly picked up OEMs similar Nokia, arsenic good arsenic bundle partners to physique retired its ecosystem. Even Google, hedging its bets, wanted to marque definite it played a beardown relation successful the diagnostic telephone conception adjacent arsenic Android grew its marketplace share, and truthful it became a strategical spouse to KaiOS, investing tens of millions of dollars successful the startup. 

But things haven’t played retired arsenic expected.

When KaiOS announced backing successful 2019, it said that immoderate 100 cardinal devices utilizing its OS had been shipped. At the time, IDC predicted that 500 cardinal diagnostic phones would beryllium shipped annually for the adjacent five. Today, the institution says conscionable that “over 170 million” KaiOS-powered devices person been shipped — with active users successful the marketplace a acold little fig of astir 100 million. It’s estimated that KaiOS contiguous has a 0.07% stock of the full mobile market. In contrast, Android, which itself has been powering an ever-cheaper scope of smartphones, has conscionable implicit 71% and iOS has a 28.3% share.

In summation to the tiny marketplace stock for diagnostic phones, its overall income volume is besides successful decline. India, followed by China, Pakistan and Bangladesh, are the countries that dominate the diagnostic telephone marketplace today. But connected the different hand, fixed that Nigeria is the lone state successful Africa to marque it into the top-five markets for diagnostic phones (it’s fig five), that does connote that determination is inactive imaginable crossed the remainder of the continent, thing that Finnfund is hoping to physique on.

“The concern successful KaiOS is yet different important measurement successful connecting the unconnected,” said Finnfund concern manager Kuutti Kilpeläinen, successful a statement. “KaiOS has proved that it tin lick the affordability occupation and we are arrogant to articulation the radical of investors who each stock the aforesaid ambitious extremity of closing the integer gap.”