SOKOWATCH RAISES $14M, To Digitize Retail Supply-Chain

KENYAN SOKOWATCH RAISES $14M TO DIGITIZE AFRICA’S INFORMAL SUPPLY-CHAIN

Nairobi business-to-business startup Sokowatch raises $14M in Series A funding aimed at reigniting supply-chain markets for Africa’s informal retailers. Meanwhile, the e-commerce startup had previously raised $2 million in 2018 and is poised to inject its new funds to its mission.

In a bid to broaden its client services – from its current working-capital to data-analytics while targeting new African markets as its priority, having expanded within Kenya into Tanzania, Rwanda, and Uganda. From its original base (Nairobi), the startup has developed a platform that connects merchants directly to local and multinational suppliers. These suppliers include Unilever and Proctor and Gamble – in the process, orders, payments and delivery logistics are digitized.

As we know, informal retail is still king in Africa – even with the emergence of well-funded e-commerce ventures, like Konga and Jumia coupled with shopping malls. While on the other hand, Sokowatch has not ruled out the use of its infrastructure to someday gain access to business-to-consumer online retail.

At the moment, the company’s primary business objective is to cut costs and scale up profit margins for small merchants. Confirming Sokowatch expansion ambition across the continent, the startup CEO ‘Daniel Yu’ said:

“We are looking to build out the largest business-to-business e-commerce network across Africa” credit: TechCrunch

It’s understood, the size and potential of the continent’s informal sector is no doubt the source of economists and startups’ attention. However, an estimate by The International Labor Organization placed more than two-thirds of Sub-Saharan Africa’s non-agricultural employment in the informal economy. This is based on the fact that 90% of sales in Africa’s major economies come via informal channels – such as kiosks and markets.

Prior to Sokowatch raising $14M, it’s been observed local merchants sacrifice capital while incurring opportunity cost due to poor supply-chain, and to curb this, Sokowatch is shifting that by serving over 15,000 small retailers within its operating regions. Yu made clear in a statement that,

“We…estimate that we save merchants at least 20% on supply-chain costs for the goods we supply”.

The funding round was led by Quona Capital, including Amplo, Vertex Ventures, Breyer Capital, Timon Capital and not excluding re-investor 4DX Ventures.

The company’s Chief Executive Officer equally made it clear that they handle all of their last-mile logistics strictly by themselves, being that Sokowatch app enables retailers to order products from its partner suppliers while maintaining a fleet of three-wheel vehicles used for delivery.

Also, the startup data analytics developed for clients is helping to access the working-capital, which Yu claim they have been able to use the “data to offer an in-kind credit line to many shops that can’t gain it from banks”.

Over the last 12 months, some business-to-business oriented ventures have raised significant capital, such as Twiga Foods which have announced it would expand to West Africa having raised $30 million, earlier this year – precisely in January, a Kenyan logistics company, Sendy also raised $20 million led by Toyota. Should Sokowatch expand in Sub-Saharan Africa? Its next destination is yet undefined.

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