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

Smartphone shipments have been declining in what has been a tough yr for cellular handsets, and that’s meant much more strain on an already-precarious sliver of the cellular market: characteristic telephones. At the moment, one of many gamers in that house, the characteristic telephone working system startup KaiOS, is getting a small monetary injection that each speaks to that strain, but additionally an opportunity to develop in what stays a gap available in the market: promoting cheaper and low-end, however finally nonetheless practical and usable units, to the poorest customers in creating economies in sub-Saharan Africa.

The Hong Kong-based characteristic telephone startup, which has beforehand been backed by strategic traders like Google and TCL, has picked up $3.4 million from Finnfund, an impression investor out of Finland.

Finnfund’s financing is coming within the type of a convertible word — that means it may convert into fairness in a possible future funding spherical.

We’ve reached out to Sebastien Codeville, the founder and CEO of KaiOS, to ask whether or not extra monetary exercise is within the pipeline and can replace this publish as we study extra. It’s been some time since KaiOS raised (or extra particularly disclosed) outdoors funding: its final funding was in 2019, when it raised $50 million from traders together with Cathay Innovation, Google and TCL.

Finnfund and KaiOS mentioned that as we speak’s cash will go in the direction of KaiOS constructing out its enterprise in sub-Saharan Africa — a serious marketplace for lower-end, low-cost units. Africa is a specific focus for the investor, and it’s immediately backed a lot of startups within the area, too, together with meals supply-chain startup Twiga and fintech Jumo.

“With this funding, KaiOS can develop into new markets in Sub-Saharan Africa,” mentioned Codeville in an announcement. “We’re completely satisfied to companion with an investor like Finnfund who share our imaginative and prescient of how essential it’s to spice up digitalisation in Africa.”

Finnfund estimates that there are some 3.4 billion folks on this planet as we speak with out web entry, principally in creating economies, and principally as a result of they can’t afford smartphones. Even the most cost effective smartphone fashions, powered for instance Google’s Android OS, can work out to be as excessive as 20% of customers’ month-to-month incomes, Finnfund estimates. (Working just a little math on its numbers, Finnfund’s funding works out to $0.001 or 1/10 of a cent funding per potential consumer.)

KaiOS’s pitch is that it’s a low-cost various for handset makers that wish to construct characteristic telephones that may compete with low-end smartphones. Geared up with apps and different hallmarks of in internet-enabled handsets, KaiOS presently lists 41 handset fashions working its OS, with the most cost effective units retailing for about $10.

However the startup has a tall order forward of it.

KaiOS spent its early years on the wings of lots of promise. It started life in 2017 as a fork of Firefox OS, which was an ill-fated try by Mozilla and companions to construct a viable smartphone platform competitor to Google-backed Android and Apple’s iOS. Optimistically, the KaiOS workforce noticed a gap to focus on the bottom finish of the buyer market, in creating economies, and to consolidate R&D aimed toward these customers on a single platform for superior characteristic telephones.

Others agreed, and KaiOS shortly picked up OEMs like Nokia, in addition to software program companions to construct out its ecosystem. Even Google, hedging its bets, needed to ensure it performed a powerful function within the characteristic telephone section whilst Android grew its market share, and so it turned a strategic companion to KaiOS, investing tens of tens of millions of {dollars} within the startup. 

However issues haven’t performed out as anticipated.

When KaiOS introduced funding in 2019, it mentioned that some 100 million units utilizing its OS had been shipped. On the time, IDC predicted that 500 million characteristic telephones can be shipped yearly for the subsequent 5. At the moment, the corporate says simply that “over 170 million” KaiOS-powered units have been shipped — with lively customers available in the market a far decrease variety of round 100 million. It’s estimated that KaiOS as we speak has a 0.07% share of the entire cellular market. In distinction, Android, which itself has been powering an ever-cheaper vary of smartphones, has simply over 71% and iOS has a 28.3% share.

Along with the small market share for characteristic telephones, its total gross sales quantity can be in decline. India, adopted by China, Pakistan and Bangladesh, are the nations that dominate the characteristic telephone market as we speak. However then again, on condition that Nigeria is the one nation in Africa to make it into the top-five markets for characteristic telephones (it’s quantity 5), that does indicate that there’s nonetheless potential throughout the remainder of the continent, one thing that Finnfund is hoping to construct on.

“The funding in KaiOS is yet one more essential step in connecting the unconnected,” mentioned Finnfund funding supervisor Kuutti Kilpeläinen, in an announcement. “KaiOS has proved that it could actually clear up the affordability drawback and we’re proud to affix the group of traders who all share the identical formidable objective of closing the digital hole.”

Leave a Reply

GIPHY App Key not set. Please check settings