KaiOS, a feature phone startup headquartered in Hong Kong, has received $3.4 million from Finnfund, an impact investor based in Finland. KaiOS has previously received funding from key investors like Google and TCL.
Financing for Finnfund is being provided in the form of a convertible note, which could convert into stock in a possible future round of fundraising.
According to Finnfund and KaiOS, the funds raised today will help KaiOS expand its operations in sub-Saharan Africa, a significant market for low-end, inexpensive electronics.
The investor has a particular interest in Africa and has directly supported several firms there, including the financial Jumo and food supply chain startup Twiga.
In a statement, Codeville claimed that KaiOS may enter new markets in Sub-Saharan Africa thanks to this financing. “We are pleased to collaborate with an investor like Finnfund that understands the significance of accelerating Africa’s digitalization.”
The early years of KaiOS were spent on the wings of great promise. It started out as a fork of Firefox OS, an unsuccessful attempt by Mozilla and partners to create a viable alternative to Google’s Android and Apple’s iOS for smartphones.
In developing economies, the KaiOS team identified an opportunity to focus on the lower end of the consumer market and to combine R&D directed at these customers on a single platform for sophisticated phones.
Others were of the same opinion, and KaiOS swiftly attracted OEMs like Nokia and software partners to expand its ecosystem.
Even Google, hedging its bets, became a strategic partner to KaiOS and invested tens of millions of dollars in the business in order to ensure that it played a significant role in the feature phone segment even as Android gained its market share.
In 2019, KaiOS stated that approximately 100 million devices running their OS had been shipped. IDC estimated that during the following five years, 500 million feature phones would be shipped yearly.
Currently, the business only reports that “about 170 million” KaiOS-powered devices have been shipped, with an even smaller number of active users on the market roughly 100 million.
According to estimates, KaiOS currently holds a 0.07% market share of the entire mobile market. In comparison, iOS has a market share of 28.3%, while Android, which has been powering a variety of devices that are becoming ever-cheaper, has just over 71%.
The overall sales volume of feature phones is declining, in addition to their limited market share. India currently holds a dominant position in the feature phone market, followed by China, Pakistan, Bangladesh, and then Pakistan.
However, the fact that Nigeria, the only nation in Africa to rank in the top five markets for feature phones, does suggest that there is still room for growth in the rest of the continent, and Finnfund is working to capitalize on this.
Techbuild’s Take
A vulnerable segment of the mobile market, feature phones, have come under even more pressure as smartphone shipments have been dropping in what has been a difficult year for mobile handsets.
The feature phone operating system startup KaiOS, one of the players in that market, is receiving a small financial boost today that speaks to that pressure while also giving it a chance to expand in what is still a market niche: providing the poorest consumers in developing economies in sub-Saharan Africa with less expensive but ultimately still useful and functional devices.
The selling point of KaiOS is that it’s a cheap alternative for handset manufacturers looking to create feature phones that can compete with entry-level smartphones.
With apps and other features that are common in internet-enabled handsets, KaiOS presently advertises 41 smartphone models that run its OS, with the most affordable models costing around $10.
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