Sokowatch changes name to Wasoko as it raises $125M Series B from Tiger Global and Avenir – TechCrunch

Informal retail is king in Africa, with hundreds of billions of dollars worth of consumer goods sold through its channels every year. Yet its industry remains highly fragmented as store owners and kiosks still struggle with access to capital and regular and timely supply of goods from suppliers and distributors.

B2B retail and e-commerce platforms have primarily attempted to fix these inefficient supply chains over the past two years and have received substantial support from investors since the pandemic.

This has been a hot sector for investors, and today’s news shows that they are not yet slowing down their support for these startups, as Sokowatch, one of the major players in the sector, has announced that it will had raised $125 million in Series B funding. The investment — which values ​​the company at $625 million, as TechCrunch has learned — coincides with its name change to Wasoko.

In 2015, Founder and CEO Daniel Yu launched Sokowatch in Kenya as an asset-light platform and marketplace for the distribution of fast-moving consumer goods from suppliers to retailers. He told TechCrunch that this model was not effective because Sokowatch could not guarantee that the goods were delivered to the customer when ordering.

“We realized that to deliver the quality of service these stores deserved, we needed to get more involved,” the CEO said. “By managing operations directly ourselves…we went from a low-resource backend distribution software platform to this market-facing platform that delivered goods directly to the stores themselves.”

At this point, Sokowatch owned and leased large-scale facilities in its distribution chain, from warehousing to logistics. And what started in Kenya quickly spread to neighboring East African markets, Tanzania, Rwanda and Uganda in 2018.

But while the company was set to change its name, Yu said it was still figuring out operations in this new integrated model. However, its recent entry into Ivory Coast and Senegal has somewhat forced the company’s hand. Yu believes Sokowatch is now ready for a rebrand as it enters its next phase of growth – moving from an East African player to a pan-African player.

“Sokowatch started out as that kind of backend brand. We wanted a brand that could be more front and center for the African retailer and easily pronounced in all markets while reflecting our East African roots. That’s why we we are renamed Wasoko, which means ‘market people’,” he said.

Wasoko enables retailers in Kenya, Tanzania, Rwanda, Uganda, Ivory Coast and Senegal to order products from suppliers via SMS or its mobile app for same-day delivery to their stores and boutiques via a network of logistics drivers.

The company also offers a buy-it-now, pay-later option for retailers who need working capital to order more merchandise. Buy now, pay later offers are the latest trend for retail and B2B e-commerce businesses. They see it as a sticky option in an otherwise volatile space where retailers aren’t committed to a single player given non-differential deals.

To provide working capital to these retailers, companies like TradeDepot and MarketForce have raised impressive seed rounds with significant debt components. But Wasoko chose not to go that route; instead, it funds its BNPL option from its balance sheet.

“We buy now, pay later to our merchants and it’s an important part of our business. But we were able to do it on our own without raising any kind of separate credit facilities. But we are looking at debt financing options,” Yu said.

Still on competition and market games, MarketForce, an asset-light platform, is present in Nigeria, Kenya, Uganda, Tanzania and Rwanda. TradeDepot, on the other hand, operates an asset-intensive model in Nigeria, Ghana, and South Africa. What they have in common is a presence in Nigeria, arguably the largest informal retail market in Africa.

“Our choice to expand into Francophone West African markets, I think, reflects the strong growth these countries have shown across the region. If you look at the past 10 years, Senegal and Ivory Coast have had solid year-on-year GDP growth,” Yu said when asked why Sokowatch had expanded to d. other West African markets other than Nigeria.

“As you look at a market like Nigeria, the reality is that growth has been volatile and in some years, in fact, negative. And on top of that, you have a lot of challenges in Nigeria’s macro environment right now. concerning the economy, the currency and regulations.

Informal retail in any African market is an untapped opportunity that gives any first-time entrant a ridiculous advantage. And while no B2B retail e-commerce player has a monopoly in the Nigerian market, it is more saturated than other markets due to the many players vying to digitize the country’s informal supply chain – from Sabi to Omnibiz and Alerzo. Therefore, less competitive markets like Ivory Coast and Senegal present a huge opportunity for Wasoko.

“Any market we look at is going to have a huge demand for our services. And of course the supply chains in those other markets are even less organized, less established, and therefore more fragmented with more inefficiencies,” Yu said.

“We see the opportunity to leverage our model to be truly effective across Africa and hope to leverage our existing experience in our playbook to successfully launch and scale our services now in six countries across the continent.”

Since its launch in 2016, Wasoko has delivered 2.5 million orders to more than 50,000 active retail customers in its network. The company said its revenue has grown more than 500% in the past year and 1,000% since 2019. TechCrunch has learned that the African B2B e-commerce platform processes $300 million in ARR/GMV on more than 150,000 monthly orders.

Wasoko’s 800 employees are shareholders in the company thanks to its universal pay equity policy. The funding round is good news for employees and early backers who bet on Wasoko years ago as new investors Tiger Global and Avenir Growth Capital lead its Series B round (the pair also co-led Flutterwave’s Series C investment last March).

“It was strategic. We’ve shared investors with Flutterwave since the early days; 4DX Ventures, for example, was an early investor in both Flutterwave and us,” Yu said when asked about the similarities between his tower and Flutterwave’s.

“When it came to lifting that round, I think being able to follow in their footsteps working with those great global investors who had seen the great return that Flutterwave had brought to them, I think we eased the way as we reached the stage of our growth as well.

For Tiger Global, this is the 10th deal and the first outside of fintech since entering the African tech market in 2021. Wasoko is also its second e-commerce investment on the continent after leading the 100 million dollars from Takealot in 2014 (Wasoko is B2B e-commerce, while Takealot is B2C).

This is the third African investment for Avenir Growth Capital after its checks in Flutterwave and Carry1st.

Wasoko’s round, which comes two years after a $14 million Series A close, also saw participation from VNV Global; Binny Bansal, co-founder of Flipkart; and Sujeet Kumar, co-founder of Udaan; Quona Capital; 4DX Ventures; and the JAM Fund.

Kumar, with years of experience managing Udaan, the world’s largest B2B retail e-commerce company, joins Wasoko’s Board of Directors.

The new investment, the second largest non-fintech round in Africa after Andela and the largest in the B2B retail e-commerce space, will allow Wasoko to continue its geographic expansion and product growth across the continent.

Despite staying away from Nigeria for so long, the seven-year-old company said it plans to expand into the West African country as well as Southern Africa while consolidating its position in its six current markets. It will also be hiring and expanding its product offerings to merchant point-of-sale systems, bill payments and social commerce, verticals it could create internally or in return and acquire companies that provide such services.

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