KaiOS, the function cellphone platform startup, raises a modest $3.4M to coach its sights on progress 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: function telephones. Right now, one of many gamers in that house, the function cellphone working system startup KaiOS is getting a small monetary injection that each speaks to that strain but in addition an opportunity to develop in what stays a gap out there: promoting cheaper and low-end however in the end nonetheless practical and usable gadgets, to the poorest customers in creating economies in sub-Saharan Africa.

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

Finnfund’s financing is coming within the type of a convertible observe — that means it might 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 put up as we be taught extra. It’s been awhile 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 at the moment’s cash will go towards KaiOS constructing out its enterprise in sub-Saharan Africa — a significant marketplace for lower-end, low-cost gadgets. Africa is a specific focus for the investor, and it’s instantly backed numerous startups within the area, too, together with meals provide chain startup Twiga and fintech Jumo.

“With this funding, KaiOS can increase into new markets in Sub-Saharan Africa,” mentioned Codeville in a press release. “We’re completely happy to accomplice 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 individuals on the earth at the moment with out web entry, largely in creating economies, and largely as a result of they can’t afford smartphones. Even the most affordable smartphone fashions, powered for instance by Google’s Android OS, can work out to be as excessive as 20% of customers’ month-to-month incomes, Finnfund estimates. (Working slightly 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 need to construct function telephones that may compete with low-end smartphones. Geared up with apps and different hallmarks of internet-enabled handsets, KaiOS currently lists 41 handset models working its OS, with the most affordable gadgets retailing for about $10.

However the startup has a tall order forward of it.

KaiOS spent its early years on the wings of a variety of promise. It began 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 group noticed a gap to focus on the bottom finish of the patron market, in creating economies, and to consolidate R&D aimed toward these customers on a single platform for superior function 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, wished to ensure it performed a robust function within the function cellphone section whilst Android grew its market share, and so it turned a strategic accomplice to KaiOS, investing tens of thousands and thousands 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 gadgets utilizing its OS had been shipped. On the time, IDC predicted that 500 million function telephones can be shipped yearly for the subsequent 5. Right now, the corporate says simply that “over 170 million” KaiOS-powered gadgets have been shipped — with active users out there a far decrease variety of round 100 million. It’s estimated that KaiOS at the moment has a 0.07% share of the whole 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 function telephones, its overall sales volume can also be in decline. India, adopted by China, Pakistan and Bangladesh, are the international locations that dominate the function cellphone market at the moment. However alternatively, provided that Nigeria is the one nation in Africa to make it into the top-five markets for function 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 one more essential step in connecting the unconnected,” mentioned Finnfund funding supervisor Kuutti Kilpeläinen, in a press release. “KaiOS has proved that it will probably resolve the affordability downside and we’re proud to hitch the group of traders who all share the identical bold aim of closing the digital hole.”



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