InstaDeep’s acquisition is a global affair for an African startup • TechCrunch

This January, Germany BioNTech, the largest vaccine manufacturer, has announced that it has agreed to buy Tunisian-born, London-based AI startup InstaDeep for £562 million.

The InstaDeep deal — which is subject to regulatory approval and is expected to close in the first half of this year — is surprising, for a few reasons. First, when it closes (at $682 million, adjusted in US dollars), it will be the largest acquisition deal involving an African or African-focused startup, with best prices negotiated for Sendwave, DPO Group and Paystack. Second, unlike other high-profile acquisitions, InstaDeep is not fintech. And third, early believers who watched InstaDeep grow from a local company to a global startup knew it had plenty of exit options, but didn’t think the acquisition would happen this quickly, said Khalid Ben Jilani, InstaDeep’s senior partner for Africa Invest. earlier investors, in a call with TechCrunch.

In the year In 2019, InstaDeep raised an 8.5 million Series A at a valuation of $30 million, according to sources familiar with the round, led by Africa Invest with participation from New York-based Endeavor Catalyst and a wide range of business angels in the global AI industry. The investment is African Invest’s first involvement in an AI startup and follows the decision of InstaDeep’s founders to sell their global vision to a pan-African private equity firm.

“InstaDeep was very different from other companies in our pipeline because they were really deep into technology and applying technology to a specific sector, basically you become an operator in that sector. They were creating a unique technology that could impact multiple sectors,” said Jilani at InstaDeep. Pioneering Technology said: “It was especially exciting in Africa, where such companies are rare. And as we discussed the vision and strategy with Kevin, we quickly realized that InstaDeep would move from an African leader to a global player in AI.”

InstaDeep uses advanced machine learning techniques, including deep reinforcement learning, in applications in enterprise environments that cross diverse industries such as biotech, transportation, electronics manufacturing, and logistics. Ultimately, this helps companies improve their decision-making process and improve efficiency.

Karim Begir and Zohra Slim launched the startup in Tunis in 2014 with “two laptops, $2,000 and a lot of enthusiasm,” CEO Begir told TechCrunch last year. The bootstrapped company — which didn’t receive outside capital until 2018 — is based on Begir’s published original AI research, which led the startup to exclusive clients, and later to partners and investors such as DeepMind, Google and prospective buyer BioNTech. .

Can InstaDeep’s global success be replicated in Africa?

As InstaDeep’s clientele grew globally, so did the team. The company has 240 employees in Tunis, London, Lagos, Dubai, Berlin, Cape Town, Paris, Boston and San Francisco. Also, Instadip’s desire to become a global company has moved its headquarters from Tunis to London, with some publications citing it as its home base, ignoring its African roots.

“InstaDeep is a global company, but in its origins and early days as a company, we are definitely African,” Begir told me on the call. “One of the reasons we founded InstaDeep was to show that there is real potential and opportunity for AI in Africa. So we want people to see us as a deep-tech African startup going global, which sends a big message of hope to the space. If anything, InstaDeep is an African company with African talent. It has proven to be able to successfully serve its clients while building a bridge of talent commensurate with growth.

On the other side of the table, there are a few naïve views that dispute the “Africanness” of InstaDeep. Tunisia is an unsuitable place for any startup or venture capital due to prohibitive government policies – Tunisian startups, not including Instadip, raised $17 million last year, according to a report by VC firm Partech. As such, most startups had to live abroad to get funding. Also, InstaDeep’s impact on building AI capability on the continent is under-discussed. Last year, First Person played a prominent role in helping organize and nurture Africa’s AI ecosystem through Deep Learning Indaba and AI Hack, hackathons and events attended by thousands of AI talents and 400 researchers. After all, an African startup serving customers outside the continent does not make it African. In fact, founders should be encouraged to build software and AI businesses that offer better exit opportunities from e-commerce, logistics and payments. These sectors are only considered when international companies expand into new territories.

The result of InstaDeep’s global-first build is that it has put the Tunisian tech ecosystem, and more broadly the AI ​​industry in Africa, under the radar with the news of the acquisition. However, it is too early to predict whether this will suddenly open up venture capital to Tunisian technology or the African AI market. But there is potential, especially with the application of the technology in various sectors such as agriculture and manufacturing. Startups like South African Aerobotics and DataProfet have contributed significant funding to this – however, patience is needed before any dramatic moves happen.

To my question about whether InstaDip is an outsider, Beguire expressed hope that success stories from Africa’s deep tech and AI community will soon be told, especially as the venture capital market turns red for AI-based innovation. When that happens, the CEO hopes founders and investors will invest back into the space, saying InstaDeep and AfricInvest are taking steps to move things forward.

“I believe AI is a huge opportunity for Africa and I have been vocal about it. We often see AI as a technology and competition between developed countries. In fact, AI is essential for Africa’s success in the 21st century, and the reason is the transformative technology of our time; I think these days you will see more examples than GPT and disruptive potential,” continued Beguier, who is half Tunisian and half French. But importantly, barriers to entry for AI are much lower than, say, earlier technologies with legacy companies and archaic ties to superpowers. Therefore, it is a great opportunity for the continent,” he said.

Last January, InstaDeep raised $100 million in Series B, more than 12x what it raised in its previous valuation round. In the year In 2019, there was interest from new investors including Alpha Intelligence Capital, CDB, Google and BioNTech to deploy new developments in AI and ML for various novel drugs. Cancer and infectious diseases. Following the investment, InstaDeep was looking to make some discoveries to increase its data collection capabilities before BioNTech stepped in with the acquisition offer.

“That was crazy. To tell the truth, we [InstaDeep and early investors like AfricInvest] He didn’t expect this to happen,” explained Ben Jilani, whose firm could be placed at a conservative 10x+ exit multiple based on independent calculations. InstaDeep came out with a higher estimate for the S Series B than it ordered, according to Begir.

According to a statement on the acquisition, BioNTech and InstaDeep have developed several end-to-end AI-based applications trained on public and proprietary datasets in various scientific domains. These include projects to improve neoantigen selection, bioentech platforms to improve ribological sequencing, and the development of an early warning system to identify and control high-risk SARS-CoV-2 variants based on the immunogenicity announced last January.

“With BioNTech, we have partnered over the years and completed many successful projects together. We see great opportunities to build the next generation of immunotherapies and become a leader in biopharma and AI. I believe this is an exciting time, and we will have much to share in the coming months,” said Begier. While not disclosing new details about the acquisition, InstaDeep said it will use its Series B funding and use the funds to grow its teams and capabilities across Africa and globally.

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