Beleaguered Startup Sky.Garden Avoids Collapse After Finding Buyer In Kenya
Sky.Garden, the Kenyan e-commerce startup that seemed to be on the verge of shutting down as of September, appears to have secured a bail-out that would save the business from shuttering, salvaging jobs and sustaining operations.
This is according to co-founder/CEO, Martin Majlund, a Dane, who shared that the company had been acquired and will continue operating under a new administration in a recent LinkedIn post.
“Today, I’m happy to announce that we’ve found an acquirer for the IP and the Kenyan company. Sky.Garden will live on with new owners and new management,” he shared.
Although, curiously, Amit V., who is a Managing Partner at the electronics seller Fonati Kenya and also describes himself as an investor in Sky.Garden, left a comment that conveyed a hint of displeasure.
“What does this mean for investors, Martin? There has been zero communication with Kenyan angels since September who put their own money into this company. Not great reading about this on LinkedIn, to be fair,” he wrote. At this point, it’s unclear what circumstances played out as neither Amit nor Majlund has addressed this matter in greater detail.
Sky.Garden kicked off in Kenya in 2017, going on to employ 100+ people and raising just over USD 5 M to build an Amazon-style marketplace selling electronics, home goods, and other products. It earns an 8 percent commission on every sale and boasts thousands of small and medium-sized businesses selling through its online marketplace, especially in the capital Nairobi. They rely on its platform and infrastructure which takes an end-to-end approach to order fulfilment.
However, scale can be tricky and profitability hard to come by for e-commerce ventures in Africa, as has been observed with many defunct e-tailers and even surviving bigger players like Jumia which has struggled to make the numbers work over the past decade. Crippling infrastructural gaps, economic constraints, and hard-to-change consumer habits are among the biggest impediments.
While it’s not clear how much Sky.Garden was making in revenues, or how that figure has changed over time, it is understood that the startup was in danger of collapsing after running into a cash crunch and seeing its efforts at raising additional funding, after last year’s USD 4 M series A, fall through.
At the time, it was revealed that the startup was in the balance as a memo had been sent out to employees explaining the difficulties and termination notices also went out to staff earlier from the CEO Majlund after a town hall meeting, during which he revealed that the company was running out money and will close on October 16. But there were hints that there was still hope of salvaging the business.
“Rising prices, inflation, the war in Ukraine and increased interest rates have made the venture capital space very challenging, especially being a B2C e-commerce business,” Majlund had told TechCrunch in September. “We have therefore for a while been in deep M&A conversations. But we are not the only ones being hurt by the macroeconomic contractions which have had a negative implication on the timeline of these conversations leaving us in the above-mentioned situation[in danger of shutting down due to a cash crunch].”
But having ultimately found buyers (the identity of which is still unknown) who have now taken ownership of the company, Sky.Garden will remain in business and look to turn its fortunes around.
Majlund wrote that the company impacted thousands of businesses and consumers in Kenya and groomed 100+ employees since inception and some are already working for multinationals such as Microsoft, Google, Meta, though what concluded this paragraph of his statement may have rubbed off on a few people the wrong way.
“And we did it coming from a PowerPoint without ever having set foot on the ground in Africa,” he boasted, leaving some people unimpressed and drawing a few remarks to the effect of weird, privileged flex.
In any case, it is known that apart from Majlund, Sky.Garden had five other co-founders namely: James Mwai, Christian Grubak, Isaac Hunja, Daniel Maison, and Morten Grubak, of which at least two are Kenyan locals.