African B2B e-commerce platform Wasoko raises $125m in Series B round

Wasoko — the Nairobi-based B2B platform formerly known as Sokowatch — announced this week that it has raised $125 million in Series B funding.

The investment was co-led by Tiger Global and Avenir Growth and also featured new investors VNV Global, Flipkart co-founder Binny Binsal, and Udaan co-founder Sujeet Kumar. Existing investors Quona Capital, 4DX Ventures, and JAM Fund also participated.

• The startup — which enables informal retailers of groceries and everyday essentials to restock their stores using their mobile phones — also announced its rebrand to Wasoko, which translates to ‘people of the market’ in Swahili, as it rapidly grows its pan-African operations.
• The Series B capital will enable Wasoko to drive further geographic expansion and product growth. The company is exploring expansion into Nigeria and Southern African markets, while continuing to consolidate its position across the six countries it currently operates in.
• It’s also examining opportunities to diversify into verticals such as merchant point-of-sales systems, bill payments, and social commerce through internal innovation, strategic investments, and M&A.

Why it matters:

Wasoko claims the Series B round is Africa’s largest fundraise for a non-fintech startup. The deal signifies investors’ growing interest in the continent’s food e-commerce and retail tech segments.

Indicative of its first-mover advantage, the startup has been operational since 2013; while most of its retail tech competitors only started fundraising within the last three years.

How it works:

Wasoko provides free same-day delivery of goods to informal retail stores across Africa, as well as providing them with financial services. It enables retailers to order products at any time via SMS or mobile app and receive their deliveries through Wasoko’s proprietary logistics network.

The platform allows shop owners to purchase goods at competitive prices, and to receive ‘buynow, pay later’ financing to unlock their working capital constraints.

Since its launch, Wasoko says it has delivered 2.5 million orders to over 50,000 informal retailers across Kenya, Tanzania, Rwanda, Uganda, Côte d’Ivoire, and Senegal, with revenue growth over the past 12 months at over 500%.

All of Wasoko’s employees are shareholders in the company through its universal employee equity policy.

By the numbers:

• Year founded: 2013
• Number is employees: Over 800
• Number of users: Over 50,000

The bigger picture:

The informal sector is the foundation of Africa’s economy, accounting for 81% of employment on the continent. According to Wasoko, African informal retail is worth $600 billion; this has led to the emergence of many startups aiming to take advantage.

In December, Nigerian retail tech startup TradeDepot raised $110 million in Series B financing. In January, Namibian B2B e-commerce platform Jabu netted $3.2 million while Kenyan counterpart MarketForce also closed a $40 million Series A round the following month. Also this year, Kenya’s Copia secured $50 million for its Series C round and Senegal’s ProXalys raised $150,000 in pre-seed funding.

According to a recent report from market insight provider Briter Bridges, e-commerce received around 7% of the total volume of VC funding that went into African startups in 2021. Statista data suggests that 12% went into e-commerce last year, while $362 million went to e-commerce and retail tech startups specifically – shooting up from around $88 million in 2020.

What they’re saying:

Daniel Yu, founder and global CEO, Wasoko

“After more than six years building and constantly iterating on our operations, we are proud to have demonstrated the traction and quality of business required to raise funding from world-class investors. We’re fully focused on leveraging their strategic support to build one of the biggest e-commerce companies in the world and transform access to goods and services for African citizens across every corner of the continent.”

Andrew Sugrue, founding partner, Avenir Growth Capital

“Informal retailers capture the vast majority of consumer spend in Africa, and they are dramatically underserved by existing distribution and financial infrastructure. We’re excited about [what] Wasoko is building and the efficiencies it brings to these retailers and their suppliers through a combination of superior product selection, logistics, and financial services.”