Zaytech, the proprietor of ZayRide - a ride-hailing service in Ethiopia - has closed an undisclosed amount of funding. The company, which made the announcement in a press release on December 30, 2018, also remained tight-lipped on who the investors were.
Instead wrote that they "successfully and significantly" raised equity capital which attracted "significant interest" from the technology investing world both locally and internationally, especially from diaspora investors.
According to Zekarias Amsalu, founder and MD of IBEX FRONTIER - Digest Africa's data partner for Ethiopia - this is the startup's second known round of funding.
He also helped decode what Zaytech's message implies:
"To put the [sic] perspective of what 'significant' investment it means, you may refer to the 2017 report where they raised below $200K, but this round is significantly higher than this though they did not disclose the deal (amount)".
Following the fundraising, Zaytech is now looking at diversifying its offerings to anchor ZayRide. "The equity raise provides Zaytech with the necessary financing to roll out its ambitious growth plans," the startup wrote.
The startup also added that it would enable them:
"launch additional complementary and game-changing innovative products in Ethiopia, expand market penetration and increase its talent pool significantly as it plans to roll out further products and enter new markets in the coming months."
Founded by Habtamu Tadesse, an Ethiopian-born entrepreneur who moved to the US at the age of 12, Zaytech started operations in 2016 as an Ethiopian taxi hailing startup, and it is still known to many as ZayRide.
Also read: How Ethiopia-based Apposit became Paga’s technology provider
With close to 105 million people, Ethiopia is the second most populous country in Africa, after Nigeria. Despite such a market size, the country lags behind others like Kenya with less than half their size. That is partly because the state operated a closed economy model for quite some time. That is why companies like Uber, Jumia (tried entering but exited) and other's found it hard to set up shop there.
The closed economy model left the opportunity to the locals to set up the alternatives to what international upstarts like Uber and Jumia offer. Deliver Addis, for example, launched in 2015 by Feleg Tsegaye is an alternative to Uber Eats and Jumia Food.
It is, however, anticipated that the country will see more and more multinational service providers enter the market with the reforms that kicked in starting early last year. According to our Digest Africa Index report, the country's early stage and technology companies raised a total of $13 million in 2018. But, more than half of that - $9.87 million - came from M-BIRR's funding deal.