MTNOY MTN Group Ltd (PK)

By Stu Woo and Friedrich Geiger 

Africa has its unicorn.

Africa Internet Group, the startup behind what has been called the Amazon.com of Africa, said Thursday it raised more than EUR300 million ($327 million) in its latest round of funding, with investors valuing the company at just over $1.1 billion.

With that fundraising round, the Lagos, Nigeria-based firm becomes the first in Africa to join the ranks of tech startups valued at over $1 billion--called unicorns in the lexicon of Silicon Valley. And it is passing that threshold just as investors in the U.S. and elsewhere start taking a harder look at some of the astronomical valuations bestowed on an earlier generation of unicorns.

Rocket Internet SE, the Berlin-based tech incubator, founded Africa Internet in 2012. The group's first business was a Nigeria-based online retailer called Jumia. It is a general merchandiser that sells electronics, groceries and clothing, though selling cell phones is one of the biggest parts of its business. Jumia is now in 11 African countries.

Jumia is the biggest division of Africa Internet, which runs nine other online businesses on the continent, including Uber-competitor Easy Taxi and auto-classified site Carmudi.

Investors in the round included Goldman Sachs Group Inc., African telecom giant MTN Group Ltd., and French insurer Axa SA. Rocket Internet also invested in the round. Previously, it had owned a third of the company, but didn't disclose its current stake after the most recent round.

Unlike Amazon, which largely uses outside delivery services such as United Parcel Services Inc. in the U.S., Sacha Poignonnec, one of Africa Internet's two chief executives, said Jumia delivers 90% of its orders with drivers in its own network. It has experimented with delivering goods using drivers from its Easy Taxi service and plans to further test that strategy.

Africa Internet will use the investment to strengthen its existing businesses, including the non-Jumia ones, and to selectively expand to new countries, said Mr. Poignonnec. He said in an interview Thursday that he wanted all of Africa Internet "to be in a position of profitability" in two to three years, though the company might then opt to forgo profitability and instead invest in future growth, depending on what the market looks like.

"I often take the example of Amazon, where it's not possible every quarter to be profitable," Mr. Poignonnec said.

MTN Group Chief Digital Officer Herman Singh said in an interview last week, before the announcement of the latest investment round, that Africa Internet was spending about EUR100 million to EUR200 million a year, largely to market to new customers.

Prior to the latest cash injection, Africa Internet had been valued at EUR500 million. Africa Internet is the latest business from Rocket's portfolio to cross the $1 billion valuation threshold, following Delivery Hero, HelloFresh, Global Fashion Group, Lazada and Home24.

Write to Stu Woo at Stu.Woo@wsj.com and Friedrich Geiger at friedrich.geiger@wsj.com

(END) Dow Jones Newswires

March 03, 2016 11:14 ET (16:14 GMT)

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