Hong Kong-based feature phone OS startup KaiOS has raised $3.4 million in funding to expand its presence to sub-Saharan Africa.
Founder and CEO Sebastien Codeville built KaiOS on the now-defunct Firefox OS. It had difficulty competing with established competitors like Apple’s iOS and Google-supported Android. Nevertheless, the startup saw an opportunity to target consumers in developing economies with low per capita income.
The startup provides a low-cost alternative for smartphone producers who want to build affordable feature phones. Currently, 41 smartphone models use KaiOS, with the cheapest retailing for $10.
Codeville said sub-Saharan Africa is a large market for low-end devices due to its demography characteristics. According to Finnfund, who provided the funding, around 3.4 billion people live without internet access, mostly in developing nations, due to the inability to afford smartphones. Finnfund has estimated that even the cheapest smartphone models can reach 20 percent of consumers’ monthly incomes in these countries.
Another important step in connecting the unconnected
Kuutti Kilpeläinen
“The investment in KaiOS is yet another important step in connecting the unconnected. KaiOS has proved that it can solve the affordability problem,” said Finnfund investment manager Kuutti Kilpeläinen.
Finnfund provides the capital in a convertible note, meaning it can turn into equity in a future financing round. Codeville said Finnfund understands the importance of boosting digitalization on the continent, where many startups are emerging, including fintech Jumo and food supply-chain company Twiga.
This is KaiOS’ first funding round since 2019, when it secured $50 million from prominent investors like Google, TCL and Cathay Innovation. At that time, International Data Corporation (IDC) projected there would be 500 million annual sales of feature phones up to 2025.
The projection did not come through since sales only hit a little over 170 million. The sales volume of feature phones also declined in recent years. As one of the players in the mobile industry, KaiOS holds a 0.07 percent market share.
