Hundreds of billions of dollars of consumer goods are sold through informal retail in Africa each year. Shop owners and kiosks still have issues with access to capital and getting goods regularly and on time from suppliers and distributors.
B2B retail and e-commerce platforms have received substantial investor backing since the Pandemic and have tried to fix inefficient supply chains.
Sokowatch, one of the major players in the space, announced that it has raised $125 million in Series B funding, showing that investors aren't slowing down. The investment values the company at $625 million and coincides with its rebrand to Wasoko.
In 2015, Daniel Yu launched Sokowatch, an asset-light platform and marketplace for distributing consumer goods from suppliers to retailers. The model wasn't efficient because Sokowatch couldn't guarantee that the goods would be delivered to the customer.
The CEO said that they realized that they needed to get more involved.
At this point, Sokowatch had full-scale asset-heavy, owning and leasing facilities in its distribution chain. The markets in East African countries began to grow in the same year.
Yu said that the company was still figuring out operations in the new model. The recent entry into the two countries forced its hand. Sokowatch is moving from an East African player to a pan-African one and Yu believes it is ready for a new name.
Sokowatch was the kind of brand that started. We wanted a brand that was easy to identify across all markets and reflected our East African roots. He said that Wasoko means people of the market.
Wasoko allows retailers in Africa and the Caribbean to order products from suppliers via a mobile app or text message and have them delivered the same day.
Retailers who need working capital can use the buy now, pay later option. Buy now, pay later offerings are the newest trend for B2B retail and e-commerce companies. They think it's a sticky option in a volatile space where retailers aren't committed to one player.
To provide working capital to these retailers, the likes of TradeDepot and MarketForce raised impressive rounds with significant debt components. Wasoko is financing its option from its balance sheet, instead of going down that route.
We buy now, pay later to our merchants and it is a significant part of our business. We have been able to do that on our own without any debt facilities. Yu said that they are looking at debt financing options.
MarketForce is an asset-light platform that is present in six countries. TradeDepot has an asset-heavy model across Nigeria, Ghana and South Africa. Nigeria is arguably the largest market for informal retail in Africa.
I think our choice to expand to the Francophone West African markets reflects the strong growth that those countries have exhibited in the region overall. If you look at the past 10 years, both of the countries in the West African region have experienced solid year-on-year GDP growth.
Growth in Nigeria has been negative in the past and has been volatile. There are a lot of challenges in Nigeria when it comes to the economy, currency and regulations.
TradeDepot raises $110M from IFC, Novastar to extend BNPL service to merchants across Africa
Any first-mover advantage is given by informal retail in any African market. The Nigerian market is more saturated than other markets because of the numerous players vying to digitize the country's informal supply chain. There is an enormous opportunity for Wasoko in less competitive markets.
Any market that we look at will have a lot of demand for our services. The supply chains in these other markets are more fragmented with more inefficiencies.
We see an opportunity to take our model to be truly effective across Africa and expect that we will be able to leverage on our existing experience in our playbook for successfully launching and scaling our services now in six countries across the continent.
Wasoko has delivered 2.5 million orders to more than 50,000 retail customers. The company has seen its revenue grow over the past year. The African B2B e-commerce platform is processing $300 million in ARR/ GMV across more than 150,000 monthly orders.
Wasoko has 800 employees who are shareholders of the company. The Series B round of funding is good news for both employees and early backers who took a bet on Wasoko years ago, as new investors Tiger Global and Avenir Growth Capital lead its round.
It was strategic. When asked about the similarities between his and Flutterwave's round, Yu said that 4DX was an early investor in both.
When it came to raising this round, I think being able to follow in their footsteps by working with these great global investors who had seen the great return that Flutterwave had brought them, I think helped smooth path for us as we reached the stage in our growth.
This is the 10th deal for Tiger Global and the first outside fintech. Wasoko is the second e-commerce investment by the company, after leading Takealot's $100 million in 2014). It is the third African investment for Avenir Growth Capital.
Two years after closing a $14 million Series A, Wasoko is back with a round that includes participation from VNV Global, Binny Bansal, and Sujeet Kumar.
Kumar brings years of experience from running Udaan, the largest B2B retail e-commerce company globally.
This is the second- largest non-tech round in Africa after Andela and the largest in the B2B retail e-commerce space with big names such as MaxAB and Twiga. Wasoko will be able to drive geographic expansion and product growth thanks to the new investment.
The seven-year-old company said it is exploring expansion into the West African nation as well as Southern Africa while maintaining its position across its six current markets.
It might build in-house or acquire companies that provide such services, as it expands its product offerings to point-of-sale merchant systems, bill payments and social commerce.
Sokowatch raises $14M to digitize Africa’s informal B2B supply-chain
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