Super apps: What’s in a name?

The phrase super apps has gained currency in recent years, generally used to mean a digital one-stop-shop for a range of services. The likes of Uber and DoorDash have expanded their offerings beyond their core services, while Revolut refers to itself as a ‘financial super app’ in its marketing, and the recent IPO of Kazakh fintech Kaspi.kz at a valuation of $18bn brought the concept further into the mainstream.

It is, however, a pretty vague concept, and one I think merits unpacking further. To do so, I sat down with my colleagues Thomas Rubens and Guy Ward Thomas, who have led DN Capital’s investment in Yassir, a North African super app that’s the most valuable startup in North Africa and one of the most highly valued companies in Africa and the Middle East.

Nenad: To kick things off, what exactly do people mean when they say ‘super app’, and what’s the appeal of the business model?

Thomas: Put simply, a super app combines multiple services into a single platform. It offers a variety of goods and services, typically including ride-hailing, food and grocery delivery, e-commerce, and financial services like P2P and merchant payments, lending, and remittances.

The business model is highly appealing once you’ve built a substantial user base and earned their trust, enabling cross-selling across diverse products and solutions. This approach can significantly boost customer lifetime value, leading to attractive profit margins at scale. Moreover, integrating various services enhances your defence against new market entrants, helping to safeguard these margins.

We have seen super apps embed themselves more prominently in emerging markets, with WeChat being the world’s most established example with 1.3bn users, and Kaspi which only operates in Kazakhstan and is used by over 60% of the Kazakh population.

Our investment Yassir is a great example, offering on-demand services including ride-hailing, delivery, financial services and more across North Africa and the Middle East.

Nenad: On the question of emerging markets — why is it the case that super apps have taken off better here compared with established markets?

Thomas: In emerging markets there are a number of clear dynamics that make the super app model so effective. Often there is less pre-existing infrastructure for these services, meaning early movers can quickly build market share. Input costs are more favourable, especially looking at labour and warehousing.

Secondly, the super app model builds a funnel of trust, starting with low-risk solutions like ride-hailing and food delivery before expanding into critical services like financial payments and banking. This dynamic also means that super app providers have greater customer data and understanding, allowing them to offer tailored financial services that more traditional operators can’t provide.

Super apps also create the infrastructure for services like e-commerce, payments and digital banking where previously it didn’t exist. Many emerging markets are predominantly cash economies so there is a lot of complexity in developing a new payments network, but this also means there’s a unique opportunity for the likes of Yassir to pioneer digital card and payments systems in the regions in which they operate.

Another dynamic is that the primary markets for emerging markets startups are typically smaller both in customer size and overall GDP per capita, meaning expanding the range of services offered is crucial for growing customer lifetime value and increasing market potential.

Nenad: Do you think it’s likely that the super app model will embed itself further in established economies?

Guy: Companies like Uber and DoorDash have been steadily expanding their services, but I wouldn’t say they have really achieved super app status yet.

They face intense competition across all of the core service offerings they are expanding into — in ride-hailing Uber competes with Lyft and others, in food delivery there are a number of established players, banking services and payments infrastructure are well-trusted and well-established, and in e-commerce incumbents like Amazon and Walmart are difficult to displace.

Moreover, some of those same dynamics that spur the super app model in emerging markets simply aren’t in play — customer trust doesn’t play out in the same way, and there isn’t necessarily the impetus to capture more customer lifetime value by expanding services when consumers have sufficient purchasing power to make one core service profitable enough.

I think we’ll see further efforts towards the super app model by the likes of Uber, but there are market fundamentals that mean the outlook is very different between emerging and established markets.

Nenad: What about Yassir has made it a good fit for DN Capital, and how have we helped the business develop?

Thomas: We think Yassir is a great business. We first invested back in March 2020 and also contributed to its $30m Series A in 2021 and $150m Series B in 2022. It has structurally low input costs, is an early mover in a market with secular growth trends in terms of population and GDP per capita, and has low customer acquisition costs with high potential for customer lifetime value.

Yassir also has a clear mission. Yassir literally translates to ‘easy’ in Arabic and it has a clear purpose to simplify daily life and improve services across markets where people have long been underserved.

There’s also a longer-term mission in improving financial inclusion. Most people in Francophone Africa are unbanked, due to a lack of infrastructure and poor services.

Through that funnel of trust I described earlier — building trust in Yassir’s ability to deliver better services in other areas like ride-hailing and deliveries, and then offering existing customers financial services through a trusted brand and infrastructure — Yassir is aiming to expand vital financial infrastructure to more customers.

Yassir has also become a significant technological hub in Africa, aiding thousands in upskilling and aiming to nurture an ecosystem of technological entrepreneurship. The technological sector in the region is flourishing, as exemplified by BioNTech’s recent acquisition of Tunisian AI company InstaDeep.

Overall, Yassir has strong unit economics, enormous opportunity and positive impact, which is a DN sweet spot.

Guy: Part of our work with Yassir has been to bring the expertise we have developed in our core markets to the company — for example, taking lessons learned from DN’s investment in Remitly to help develop Yassir’s remittances services, and our understanding of the challenges faced by grocery and e-commerce firms in Europe and the US to help steer the development of Yassir’s equivalent services.

We have also directly sourced a number of senior executives for Yassir, and will be working with the team to support raising future financing rounds in the US.