Kenya’s MarketForce raises $ 2 million and plans to focus on its B2B retail marketplace RejaReja – TechCrunch
According to a 2016 study by global consulting firm PwC, an estimated 90% of sales in Africa’s major economies are generated through informal channels such as markets and kiosks. In sub-Saharan Africa, 90% of these retail transactions are with households are worn over a network of around 100 million MSMEs.
Africa’s bulk payments, mostly cashless, It is expected Reach $ 2.1 trillion by 2025. Kenya’s MarketForce wants a big one portion of them. Today, the end-to-end B2B retail distribution platform announced the completion of its $ 2 million Pre-Series A round.
Investors who participated in this round include existing – P1 Ventures and Y Combinator as well as new ones like Launch Africa, V8 Capital, Future Africa, GreenHouse Capital, Rebel Fund, Remapped Ventures and some unnamed angel investors.
MarketForce has raised a total of $ 2.5 million, including last year’s $ 350,000 seed round and $ 150,000 check from Y Combinator as part of the accelerator batch in the summer of 2020.
Tesh Mbaabu and Mesongo Sibuti founded MarketForce in 2018. The founders wanted to solve the problem of fragmentation they were seeing in small retail stores and their distribution networks. In addition, these stores are often used as a focal point for providing financial services to the everyday Kenyan. Thus, the game from MarketForce enables the optimized distribution of FMCG goods and financial services via this network of agents.
It was this business that brought the startup to Y Combinator. But after graduation, MarketForce decided to try their hands on another product – RejaReja, a B2B e-commerce marketplace for merchants.
RejaReja was started in December 2020. The platform helps informal retailers buy and sell FMCGs and digital financial services. With RejaReja, MarketForce joins a growing list of startups like TradeDepot and Sokowatch trying to reshape the supply chain markets for Africa’s informal retailers.
RejaReja offers next day delivery on hundreds of SKUs from a handful of FMCG brands. Although the branded product MarketForce is still very successful for retail sales, the founders see RejaReja as the company’s greatest opportunity.
“We drove both models at the same time and we’ve seen a much faster pull on the ecommerce side of the marketplace. We are investing more and more resources in this and the pre-series A-round was raised focus on scaling this platform, ”the CEO told TechCrunch.
Last month, MarketForce acquired another Kenyan retail platform, Digiduka. The platform enables informal retailers to resell digital services such as airtime, power tokens and bill payments. The Digiduka acquisition showed that it was completely Integrated into RejaReja, which now offers merchants a wallet that can act as agents and collect mobile money and bank payments via mobile app, WhatsApp bots or USSD shortcodes.
MarketForce’s RejaReja operates an asset-light model in which it does not own capital investments like warehouses and vans. Most of the assets are provided by the company’s partners (distributors, manufacturers and external logistics service providers) who lease their assets to fulfill orders.
Kiosks using RejaReja have access to various SKUs and can place orders on it. And based on their ordering habits, MarketForce can grant them working capital loans.
With this funding round, MarketForce plans to launch RejaReja in Nigeria and expand the product to other cities in East Africa. The startup has a presence in Kenya, Uganda and Tanzania, where over 15,000 retail customers use RejaReja to process thousands of orders every day.
On the other hand, MarketForce’s SaaS branded product, has gained over 10,000 monthly active users despite giving RejaReja a year ahead. These users have completed 300,000 transactions valued at more than $ 500 million since it was launched in 2018. MarketForce customers include Pepsi, Safaricom, Fort Beverages, Lami, Platinum Credit, among others.
“Our customers and partners understand the possibilities of MarketForce to increase sales performance and productivity in all markets and industries,” said CTO Mesongo in a statement. “We are building the operating system for retail distribution in Africa and we have the right combination of technology and team to make our pan-African vision a reality. “
With computer science degrees, the founders said it was difficult to scale MarketForce at first. And although they lacked experience and know-how in fintech or e-commerce before founding the company, they made up for this gap with good new hires.
“Retail distribution is a very tough business, so it was also interesting for us to find the right talents and the right people who understand the traditional elements of the business, but are also willing to innovate and revolutionize the space,” said the CEO.
Another challenge the company faced in its early years was that it took partners a while to get on board because they didn’t understand how MarketForce would work without their own warehouses and logistics. But over time, as the company created value for its partners, orders and sales grew rapidly, with the latter metric Recording a 100% month-to-month growth, according to Mbaabu.
“… MarketForce has proven they know how to use the entire retail supply chain as a gateway for digital payments. Her previous organic and acquisition-driven growth and expansion strategy has proven that her understanding of the unit economy and the marginal costs of customer acquisition is solid. As a pan-African fintech company, they are very well positioned to unlock the $ 700 billion that are made in this space each year.“Launch Africa Managing Partner Zachariah George said in a statement.