Kenyan retail-tech startup Sokowatch banks $14m funding round

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Kenyan B2B e-commerce platform Sokowatch has announced the completion of a US$14 million Series A funding round as it continues its rapid expansion across the continent.

Launched in Nairobi in 2016, Sokowatch aims to reinvent retail in Africa by providing real-time delivery, financing for growth, and data for business management to informal merchants.

It allows informal retailers to order products for their stores via SMS, voice call, or mobile app with free same-day delivery, and also offers customised lines of credit to retailers. Sokowatch has delivered 500,000 orders to over 15,000 retail shops across East Africa, with rapid growth over the past 12 months. 

The startup has now raised a US$14 million Series A round, led by Quona Capital and featuring Amplo, Breyer Capital, Vertex and some existing investors. The funding is for further expansion, with Sokowatch also announcing it has expanded into four new cities in the East African region. These are Eldoret in Kenya, Arusha and Mwanza in Tanzania, and Kampala in Uganda. 

“Currently, e-commerce in Africa is focused on reaching consumers directly,” said Sokowatch founder and group chief executive officer (CEO) Daniel Yu. “But the vast majority of the population can’t access it. Instead of creating an online platform which sells to a small audience of wealthy digital shoppers, we focus on empowering informal retailers. We reach millions of average consumers in the process.” 

Yu believes that B2B rather than B2C e-commerce is the best way to reach the mass market retail economy across Africa, considering that over 90 per cent of all the continent’s retail purchases are made with informal merchants. The Sokowatch model mirrors China’s Alibaba and India’s Udaan, retail e-commerce giants who use B2B models to digitise the informal merchant economy in their respective regions. 

Sokowatch, which last secured investment last year, is now demonstrating the scalability of this model in Africa. In less than two years, the company has grown from one to four cities in Kenya while also expanding to Tanzania, Rwanda, and Uganda. 

“Our business has been successful in Nairobi, which is a tech-focused city. But we’ve found that merchants in other markets are adopting our services even faster and ordering more on average. It supports our belief that the model can transform informal businesses all across the continent, regardless of how tech-enabled they are,” said Yu. 

Monica Brand Engel, Quona Capital co-founder and partner, said her company was delighted to support Sokowatch as it worked to solve a huge pain point in the retail supply chain in Africa – supporting small businesses and the communities they serve.

“Sokowatch is addressing the massive challenge of last mile delivery to informal retailers and doing so with impressive unit economics, fit-for-purpose financing, and a growth-with-quality discipline,” she said.
Kenyan startups had a record year of fundraising in 2019, with startups from the country securing more cash than any other ecosystem.

Sokowatch’s Series A round, alongside that raised last month by logistics startup Sendy, means 2020 is already off to a strong start.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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