Kenya’s Sokowatch Raises $125 Million In Series B Financing, Changes Name To Wasoko

Africa remains one of the under-tapped regions for businesses in B2B retail and e-commerce. Although the number of startups eyeing the space continues to grow every day, there are still challenges relating to access of funds, supply chain challenges, etc., that need to be eradicated to see the space grow to its full potential. One of such startups looking to fix these problems while offering viable and efficient products and services, include Sokowatch, now Wasoko.

Sokowatch has raised $125 million in a Series B funding round, and the startup has also rebranded to Wasoko. The round which was led by Tiger Global and Avenir Growth Capital, brings the company’s valuation to $625 million.

Wasoko is a big name in Kenya’s B2B and e-commerce space. It was founded in 2015 by Daniel Yu as an asset-light platform and marketplace for the distribution of fast-moving consumer goods (FMCGs) from their suppliers to retailers who need them. Sokowatch had to operate its model after realizing that it couldn’t guarantee that goods were delivered to customers who made the orders. “We realized that to deliver the quality of service these shops deserved, we needed to get more involved. In managing the operations directly ourselves, we went from an asset-light backend distribution software platform to this market-facing platform that was out there delivering goods directly to shops themselves,” Daniel Yu said.

This new model worked well for the company and by 2018, it had expanded to other east African markets namely Uganda, Tanzania and Rwanda. It was not only providing a marketplace anymore, it was also handling its distribution chain that included warehousing and logistics.

According to the company’s CEO, although Sokowatch was still observing its new model, he knew the company needed a rebrand. Its expansion out of East Africa to Senegal and Ivory Coast pushed the rebrand that it needed. Daniel Yu believes that the rebrand comes at the appropriate time as Sokowatch which was just an East African-focused startup moves to become a pan-African one.

 “Sokowatch started as this kind of backend brand. We wanted a brand that could be more front and center for the African retailer and easily pronounced across all markets while reflecting our East African roots. So that’s why we’ve rebranded now to Wasoko, meaning ‘people of the market,” he said.

Newly rebranded Wasoko will continue to power orders (via SMS or its mobile app) from retailers from Kenya, Tanzania, Rwanda, Uganda, Ivory Coast and Senegal, as well as ensuring that they are delivered on that same day through its network of logistics drivers.

Wasoko has also introduced a buy-now-pay-later offering that’ll provide retailers with working capital so that they can make more purchases. BNPL services for retailers are becoming increasingly popular and it only makes sense that Wasoko offers it too – so it can keep its users away from its rivals like MarketForce and TradeDepot.

Wasoko’s CEO, however, said that “We do buy now, pay later to our merchants and it’s a significant part of our business. But we’ve been able to do that on our own without raising any kind of separate debt facilities. But we’re looking at debt financing options.”

Unlike other rivals, Wasoko is mostly available in francophone Africa. Its rivals are present in countries like Nigeria (the largest market for informal retail), Ghana, South Africa, etc. Explaining why it chose to stick to francophone Africa (for now), Wasoko’s CEO said that “Our choice to expand to the francophone West African markets, I think, reflects the strong growth that those countries have exhibited in the region overall. If you look at the past 10 years, both Senegal and Cote d’Ivoire have experienced solid year-on-year GDP growth. Whereas 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 when it comes to the economy, currency and regulations.”

Instead of going after the big dogs and enduring regulation and strong competition from rivals, Wasoko is playing safe and sticking to smaller markets. “Any market that we look at is going to have a huge amount of demand for our services. And of course, the supply chains in these other markets are even less organized, less established, and therefore more fragmented with more inefficiencies,” Daniel Yu explained adding that “We see an opportunity to take our model to be truly effective across Africa and expect that we’ll 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 plans to use the funding to expand its offerings and make necessary acquisitions. It also has plans of expanding to Nigeria and South Africa.