Kenya’s Sokowatch Secures USD 2 Mn Seed Round Led By 4DX Ventures
In a move that is expected to revamp the supply-chain market for Africa’s informal retailers, Kenyan B2B eCommerce enterprise, Sokowatch, has secured a seed investment valued at USD 2 Mn.
4DX Ventures are the major players in the latest funding round as they are reported to be the leaders of the recent seed investment, alongside other investment firms of the likes of Village Global, Lynett Capital, Golden Palm Investments, and Outlierz Ventures.
The Kenyan startup prides itself in serving as a veritable platform through which Africa’s informal retail outlets can link up with the big players (both local and multinational suppliers), including such household names as Unilever and Procter & Gamble. Sokowatch’s business model and blueprint support and facilitates transactions between both ends of the supply-chain by digitizing orders, deliveries, and payments with a view to cutting down on costs and maximizing profits for Africa’s informal retailers.
With the latest capital injection and by virtue of its ideals which incorporates both price and productivity benefits, Sokowatch seems poised to inspire something of a revolution in Africa’s existing supply-chain structure. As pointed out by Daniel Yu, Sokowatch’s founder and CEO, in an interview with TechCrunch; “With both manufacturers and the small shops, we are becoming the connective layer between them, where previously you had multiple layers of middle-men from distributors, sub-distributors, to wholesalers.” The CEO also indicated that with the current business model and mechanisms that have been put in place, Sokowatch is well-positioned to cut down on the cost of sourcing goods by an estimated 20 percent for these shopkeepers.
Yu affirmed the uncertainty surrounding the number of small shops on the continent by citing a possible lack of reliable information on the subject. He however anchored the premise for the recent move on a 2016 KPMG study which estimated fast-moving consumer goods spending in Nigeria alone to be around USD 41 Bn annually, whilst also reiterating that a portion of those goods are channeled through the expansive network of roadside markets, shops, and stands that litter the continent.
“There are millions of informal stores across Africa’s cities selling hundreds of billions worth of consumer goods every year,” said Yu. Sokowatch’s mobile app can be leveraged by these stores to ease the process of purchasing wares directly from large suppliers, as well as take care of other details which revolve around transport and payments. According to Yu, the platform even comes with a feature which allows for free and timely delivery of products that are ordered via SMS or Android.
The CEO also revealed that Sokowatch rakes in revenue in the form of margins earned on the goods sold to the shopkeepers. They also benefit on the supply front from aggregating demands and bulk deals on the products distributed. As indicated by Yu, Sokowatch boasts as much as 100,000 completed deliveries to customers in “a few thousand shops” since its inception. As part of its retailers-tailored initiatives, the company also lays claim to have recently launched a line of credit product which makes working capital available to some of its clients. The latest USD 2 Mn seed investment is expected to bolster the B2B eCommerce platform’s plans to expand its operations into other East African markets from its current bases of operation in Kenya and Tanzania. By the CEO’s reckoning, the funds will also be channeled towards introducing its additional value-added services to the retail outlets.
As part of the funding agreement, Peter Orth, Co-Founder and Managing Partner at 4DX; the lead investors in the seed round, is expected to join the Sokowatch board.
Note: This development was first reported by TechCrunch. Image credit: Sokowatch
