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Sokowatch rebrands to Wasoko as it raises $125M Series B from Tiger Global and Avenir

Informal retail is king in Africa, with hundreds of billions of dollars of consumer goods are sold through its channels yearly. Yet its industry remains highly fragmented as shop owners and kiosks still have issues around access to capital and getting goods regularly and on time from suppliers and distributors.

B2B retail and e-commerce platforms have primarily tried to fix these inefficient supply chains over the last couple of years and have received substantial investor backing since the pandemic.

It has been a hot sector for investors, and today’s news shows they aren’t slowing down in backing these startups just yet as Sokowatch, one of the major players in the space, announced that it has raised $125 million in Series B funding. The investment — which values the company at $625 million,  — coincides with its rebrand to Wasoko.

In 2015, founder and CEO Daniel Yu launched Sokowatch in Kenya as an asset-light platform and a marketplace for distributing fast-moving consumer goods from suppliers to retailers. He said that this model wasn’t efficient because Sokowatch couldn’t guarantee that the goods were delivered to the customer when they made orders.

“We realized that to deliver the quality of service these shops deserved, we needed to get more involved,” said the CEO. “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.”

At this point, Sokowatch was full-scale, asset-heavy, owning and leasing facilities in its distribution chain from warehousing to logistics. And what started in Kenya soon scaled into neighboring East African markets Tanzania, Rwanda and Uganda in 2018. While the company was due for a rebrand, Yu said it was still figuring out operations in this new integrated model.

However, its recent entry into Ivory Coast and Senegal 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 one.

[ss_click_to_tweet tweet=”“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.” content=”“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.” style=”default”]

[ss_click_to_tweet tweet=”Wasoko allows retailers from 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 shops via a network of logistics drivers. The company also offers a buy now, pay later option for retailers who need working capital to order more goods.” content=”Wasoko allows retailers from 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 shops via a network of logistics drivers. The company also offers a buy now, pay later option for retailers who need working capital to order more goods.” style=”default”]

Buy now, pay later offerings are the latest trend for B2B retail and e-commerce companies. They see it as a sticky option in an otherwise volatile space where retailers aren’t committed to one player, given non-differential offerings. To provide working capital to these retailers, the likes of TradeDepot and MarketForce raised impressive rounds with a significant debt component. But Wasoko chose not to go down that route; instead, it is financing its BNPL option from its balance sheet.

“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,” Yu said.

In terms of competition, MarketForce, an asset-light platform, is also present in Uganda, Tanzania and Rwanda. TradeDepot, on the other hand, operates an asset-heavy model across Nigeria, Ghana and South Africa. What they have in common is a presence in Nigeria, arguably the largest market for informal retail in Africa.

“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,” said Yu when asked why Sokowatch hasn’t expanded into West African countries other than Nigeria.

“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.”

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