Treepz founder Onyeka Akumah on how to succeed in transportation tech

In sub-Saharan Africa, only 33% of the urban population has access to public transportation compared to 75% in Europe and North America, according to UN statistics. That means that most of the continent faces challenges chasing new job opportunities, going to school, accessing healthcare and just having a night on the town.

This lack of access to transportation is in stark contrast to other upward metrics on the African continent, like its growing access to equitable education and healthcare. In fact, Africa has the largest return on education of any continent, with each year of schooling raising earnings by 11% for boys and 14% for girls. The combination of an increasingly educated workforce and still-sucky public transportation means the way people move is ripe for disruption. Treepz, the Nigerian startup that’s scaling its bus-hailing service across the continent, might be one of the main drivers of that disruption.

Since Treepz, formerly Plentywaka, was founded in 2019 in Lagos, the startup has expanded west into Ghana and east into Uganda. Co-founder and CEO Onyeka Akumah said those locations will serve as launchpads for further expansion across the sub-Saharan region.

We caught up with Akumah, whom we first interviewed a year ago, to check in on Treepz’s progress and discuss why a conservative funding environment makes for better business, how the African startup scene is maturing and what it takes to succeed in transportation technology.

The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity.

TechCrunch: You last closed a $2.8 million seed round in November. I’m assuming you’re currently raising for your Series A. How are you finding the funding environment amid the economic downturn?

Onyeka Akumah: We are preparing to raise our Series A, and we already have some interest. Some of our current investors want to invest, but they’re waiting for us to go to market. We were about to go to market before the downturn in the economy hit.

The funding environment has changed, certainly, with the downturn. The funding cycle used to be around six months for a round to pull through, and now we’re seeing it take 12 to 18 months to close. You’re seeing investors take a lot more time for due diligence.

What’s coming out of that is that startups are now raising money for real businesses rather than just raising money easily if an entrepreneur is able to deliver a nice pitch and convince investors with presentation skills. Startups now really have to prove that there is a business for an investor to invest in. So that’s resulting in more mature businesses going through the process.

How is that affecting Treepz?

We can’t continue to complain about the downturn. I’d say it’s helping us become sturdier. For instance, we’re now better focused on the real numbers that will grow the value of our business, that will help us scale and create more value for our stakeholders. It’s causing us to become more sustainable, because if we were just focused on raising money, we wouldn’t have time to really look at what the core thing our business is doing and think about how to scale sustainably.

Treepz has been expanding in Africa, but as I’m sure your company experiences, technology usually moves faster than regulation and policy. How are you dealing with the red tape of different governments as you try to expand?

Treepz is cleaning the transportation space in Africa. Historically, there hasn’t been as much technological innovation in the region as there has been elsewhere, so at Treepz, we found ourselves as the first bus-hailing platform in Nigeria, maybe the first in West Africa. So we became proof of concept that you could use technology to create structure around transportation, to create predictability on how people travel and get data for that, something else that was entirely lacking.

When coming into the regulatory space, we’ve found a more favorable environment, with regulators excited to work with us and help us create a sustainable place for us to use our technology. Our approach in our expansion as we go from one country to the other is we first approach the regulators and stakeholders in the transportation space so we can build a relationship. The relationship helps us understand what the expectations are in that environment and how we can meet them.

We do not force our technology into people’s hands or force our ideas into their system. We try to make them understand that we are core partners to help the transportation space in that market.

Transportation seems different from other tech sectors because it’s not really easy to scale up fast and become a unicorn. There’s more of a slow growth that involves lots of work with governments. So what would your advice be to other transportation founders about understanding this balance?

It’s a real sector. There are already people who have done things in that space that you’ll have to work with, like state governments or other bus operators that exist. My advice to any transportation entrepreneur is that if you’re looking at transportation, you shouldn’t necessarily look at profits from Day One. You should be looking at the scale of your operations. The sweet spot for us at Treepz is not making the maximum margin from a customer the first time they use a service. We’d rather they tell many other people about our service. The little margins you get over the long haul are what makes it exciting. So it’s a patient game in transportation.

It’s not the type of business you can just flip within a couple of months and then move on to something else. You’ve really got to be passionate about it, to feel the pain for which you’re building the business. Each of my co-founders, and our employees, understand the pain. We see it daily, and we’re passionate enough to want to solve it even when the gratification is delayed.

Another piece of advice is to make sure you’ve got the maturity on your team to be able to deal with the stakeholders, whether it’s your investors or members of the team. If maturity is missing, you will struggle in negotiations, in convincing or making them understand why your business will succeed.

There’s a lot of funding and innovation happening in Africa. What are some of the startup and tech trends you’re seeing in the region?

Fintech is still big, especially as there have been a series of acquisitions, exits and IPOs, which are attracting more investors. But when I say fintech, that covers across payments, crypto, regulators, the infrastructure to wire these payments. A lot of companies say they’re in other sectors, but really they’re fintech companies. For example, real estate startups that are focused on how people pay their rent on a monthly payment, I would consider that at its core to be a fintech product.

I would also say the ecosystem in Africa is maturing, now that we’re in what I’d call our third phase of development. The first phase was in the 2000s, the second in the 2010s and the third is happening now in the 2020s. A lot of entrepreneurs who got their start in the first or second phase are now leaving well-established companies with a lot of experience and coming out to build new businesses. So rather than first-time founders experimenting with ideas, you’re finding people who’ve worked in established businesses on the continent learning from their experience to build more solid businesses. This is what is making Africa even more attractive — because these entrepreneurs understand investor relations. They understand how to get and keep customers.

At the same time, I’ve seen a lot of people who’ve exited many of these startups coming back to reinvest in new, smaller companies. So there are a lot of syndicate funds springing up with people putting in small tickets, which together become a big ticket for the startup. As a result, the funds are getting bigger. You have the likes of Microtraction, that invested in our pre-seed — their tickets have grown from $5,000 to $100,000 to now around $150,000 to $250,000.

So the funds are getting bigger, and Africa is a massive market, but is it at the stage yet where African startups can rely on African investors to make it to the growth stage? Or do they still need foreign investment?

Yes, you still need that foreign investment to call in those big checks. It’s growing, but it’s not yet at the level of $100 million checks. But below that, you might find opportunities with a couple of VCs that are doing $5 million, $10 million, $20 million. Having said that, it’s growing. Just the same way one or two years ago, you only had funds that could do $250,000 $100,000, $500,000 or $1 million. Now we’re doing up to $10 million. So who’s to say that in the next two years, we’ll have funds that are able to do $20 million or $30 million tickets? And then when that happens, you will start finding more and more African startups having the option of comparing funds in Africa with funds outside of Africa and asking themselves what they are getting as an advantage beyond the money. That’s when the real value starts coming into context.

It’s also important to remember that the risk appetite of an African-based investor who maybe only has $30 million might be different than a U.S. investor with a bigger fund. An African investor’s due diligence might be much higher, for example.

Where do you expect Treepz to be this time next year?

Within the next year, we are hoping to be in 10 African countries. At the moment we’re in three. We want to hit that mark before considering an opportunity to export the technology outside of Africa. We’re looking at Francophone West African countries, East African countries and also Southern African countries. In all of these, we’re not going to force our technology down people’s throats. We’re looking for collaborators, partners, investors that are happy to help us scale across the region. What we’re really after is building the leading shared mobility platform across the continent of Africa.

We also just want to get our customers to move better. The geographical reach is important, but the value we give to the customers is even more vital. The last thing is getting value for every person that has trusted us. In a year, we’d like to give value to our investors and our team members.