LocalGlobe and Pronomos Capital back Itana to pave the way for Africa’s first digital free zone
Reading Time: 3 minutesAt the time, the self-described charter city — backed by Charter Cities Institute and Pronomos Capital, a Peter Thiel-backed venture fund — had secured over $10 million for the project situated within Alaro City (in the Lekki Free Zone, just outside of Lagos, Nigeria). Fundraising efforts are ongoing and it could take a couple more years for the physical city to be finalized. In the meantime, though, Talent City, now known as Itana, has raised a $2 million pre-seed, money it intends to use to establish a digital free zone.
Itana, founded by CEO Luqman Edu, COO Coco Liu and Aboyeji, a founding investor, is primed to be Africa’s first digital free zone. The founders say the funding will support the startup’s efforts to improve Nigeria’s ease-of-doing-business index, drive foreign direct investment (FDI), and catalyze employment in Nigeria.
The first version of the project is Itana Edge, an online one-stop-shop app comparable to global tech products such as Stripe Atlas. With it, international businesses, without having a physical presence in a Nigerian free zone, can, upon incorporation and operation in the country, access incentives, including taxation, business visas, banking, capital repatriation and supportive legislation. Itana can offer these services via its partnership with the Nigerian government, which issues business licenses.
On the call, Edu likened Itana’s virtual city idea in Africa’s most populous city to Delaware in the U.S., e-Estonia in Europe, or Dubai in Asia. However, given the government’s participation, whether Itana can scale as a venture-backed business is unclear. ‘When the laws governing free zones were started in Nigeria, they only considered the physical aspect. Then why not?’ Edu replied. ‘If physical private free zones have been invested in and scaled, why would that not be the case for a digital free zone designed specifically for the service and digital economy led by the private sector?’ He further asserts that Itana plans to scale via the number of services it provides for businesses to operate remotely and, leveraging the predicted success of its Lagos project, partner with other African governments to replicate digital and physical free zones in their markets.
In Nigeria, Itana, which has ambitions to become Africa’s Silicon Valley, will start its pilot with select companies over the next few weeks; it expects to go live in the first quarter of 2024. These businesses will have access to the prospective 72,000-square-meter ‘live-work-build’ campus, Itana District, which plans to accommodate permanent residents and visitors from the digital community for networking events, co-working, and co-living. The first phase of its development will be completed by 2027.
Model digital cities
According to Liu, Itana will explore several revenue streams from providing unique digital and physical online jurisdictions for global businesses trying to operate in Africa. The first layer is the annual subscription of business licenses; revenue is shared with the government. Then, several other revenue streams would be around on-demand services from the Free Zone’s one-stop-shop app, such as banking, visas, tax auditing, recruitment, payroll management, business sector licenses and establishing minimal transaction fees for non-VAT revenue. ‘We will work with relevant government agencies and as our clients expand, grow and make money, we will find a way to optimize our revenue along the way,’ said the COO, who brings operational excellence from her experience working for Google and building early-stage startups.
Aboyeji’s venture fund Future Africa is one of Itana’s backers. Others include global venture capitalists LocalGlobe, Amplo and Pronomos Capital, which has backed model digital societies and network states like e-Estonia and Afropolitan. ‘The market opportunity to serve digital service and technology businesses in Africa is significant. The ecosystem is growing at pace despite the huge infrastructure challenges faced by startups across the continent,’ said Yvonne Bajela, partner at LocalGlobe, on the investment. ‘We’ve seen the success of digital societies, such as e-Estonia, in enabling businesses to scale. We’re excited about the potential for Itana to proactively address these challenges while supporting a new generation of entrepreneurs in Nigeria and beyond.’
Ref: techcrunch
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