MarketForce, the retail B2B and end-to-end distribution platform founded in Kenya, has raised $40 million in Series A funding to fund trading inventory and expansion in Africa.
MarketForce, which launched last year in Uganda, Tanzania and Rwanda after growing beyond Kenya and Nigeria, plans to introduce buy-now-pay-later (BNPL) options to give traders access to FMCGs (Fast -Moving-Consumer-Goods) on credit. It also plans to enter additional markets in East and West Africa.
Through the Merchant Super app RejaReja, informal merchants can buy goods (hundreds of SKUs) directly from manufacturers and distributors, place and pay for orders digitally, accept payments for utility bills and access loans for their business. The retail marketplace RejaReja was launched in 2020 as a brainchild of MarketForce, a SaaS product for the formal markets, founded by Tesh Mbaabu and Mesongo Sibuti in 2018.
“Our mission is to help SMEs grow, and what we’ve realized over time is that it’s great to offer them loans, but we need to enable them to access goods. And that’s why we introduced this trade stock financing, which is a type of overdraft facility where they can order goods and pay later after they are sold. We’ve started a pilot and things are going well,” MarketForce CEO and co-founder Mbaabu told TechCrunch.
During the pilot, Mbaabu said the value of the order inventory tripled, underscoring the demand for such tailor-made inventory financing options for traders who sell a large portion of all FMCGs sold in Sub-Saharan Africa.
“We are very consciously working on expanding working capital and that’s why we’ve put in some debt and also because we see that fintech angle as our big frontier for the next phase of our business,” said Mbaabu.
This latest round (equal amount of debt and equity) brings the total amount MarketForce has raised so far to $42.5 million. It also comes seven months after the startup raised $2 million in a pre-Series A round.
The final round was led by V8 Capital Partners; an Africa-focused investment vehicle in London and Lagos with participation from Ten13 VC, SOSV Select Fund, Vu Ventures, Vastly Valuable Ventures, Uncovered Fund. Existing investors participating in the round include Reflect Ventures, Greenhouse Capital, Century Oak Capital and Remapped Ventures. Cellulant co-founder Ken Njoroge, who joins the MarketForce board as chairman, also took part in the round.
“MarketForce demonstrates what we see as a triple threat to returns. A strong executive team with an amazing track record, a vast untapped market of casual retailers across the continent, and a business model that scales extremely quickly,” said Tobi Oke, V8 Capital General Partner and Member of the MarketForce Board.
MarketForce also plans to double its team to 800 and grow the number of merchants using the RejaReja app by 2.5 times to 250,000 in the coming months, from 5,000 they served a year ago. A growth in the number of sellers and the expansion of RejaReja also means new markets for FMCG brands.
RejaReja is an asset-light model, meaning it does not own capital assets such as warehouses and vans, as most of them are provided by its partners, including manufacturers and distributors. The nature of the business allows it to grow rapidly.
“We have grown into two cities in the markets we are in. This has also opened up distribution opportunities for brands that previously had no access to these markets,” said Mbaabu.
During an interview last December, Mbaabu told TechCrunch that RejaReja expects its merchants to grow to 1 million by the end of this year as it works to digitize the estimated 100 million small merchants in sub-Saharan Africa.
He also said RejaReja has grown exponentially since its launch with more than 87,000 orders placed through the platform with an average basket value of $151. Growing 40% month-on-month, it forecast more than $60 million in sales at the end of last year. achieve annualized transaction volumes. RejaReja’s main competitors are TradeDepot and Sokowatch.
About 80% of household retail in sub-Saharan Africa is supplied through informal retailers, but these stores face a number of challenges, such as inventory shortages, unstable revenues and lack of financing, factors that make it difficult for their businesses to grow.
MarketForce solves this through RejaReja by providing a marketplace where informal traders can buy goods directly, which also keeps product prices competitive by removing the need for agents, and ensures next day delivery of goods. It also uses the merchants’ transaction history to develop the credit profiles needed to secure loans. The startup has a partnership with Pezesha – a digital financial markets platform – to provide loans to its traders.
MarketForce plans more partnerships to bring other services on board for traders, such as insurance, savings and investing.
“The goal of RejaReja is to be the super app of the informal market. We want merchants to have a single point of entry for all the different financial and digital services they need to grow in the digital age,” said Mbaabu.