MarketForce And Pezesha Find Fix To Debt Dispute At Tech Summit

By  |  April 5, 2024

Kenya-based B2B e-commerce player MarketForce and business lender Pezesha, two startups that appeared to be at loggerheads, have announced an out-of-court settlement in their longstanding dispute. The resolution comes after months of legal wrangling and represents a pivotal moment for both companies.

MarketForce, a prominent player in Africa’s B2B e-commerce sector, faced significant challenges in recent years. Founded in 2018 by Tesh Mbaabu and Mesongo Sibuti, MarketForce initially aimed to digitize Africa’s informal retail sector.

However, funding setbacks and market complexities forced the company to downscale operations, leading to significant job cuts and a strategic shift towards focusing efforts primarily on Kenya and Uganda. Last August, MarketForce launched a crowdfunding campaign to raise USD 1 M; it’s unclear how the endeavour fared.

Pezesha, on the other hand, is a digital financial marketplace that provides debt capital to SMEs. Founded by CEO Hilda Moraa in late 2016, Pezesha has been a leading enabler platform, connecting small and medium-sized businesses to working capital through collaborative approaches. The startup secured USD 11 M in pre-series A funding in 2022 and boasts over 250,000 registered SMEs.

The relationship between MarketForce and Pezesha, fast-tracked by the existing cordial friendship between both founders per local business publication Kenyan Wall Street, began with a partnership where Pezesha provided merchant lending to MarketForce’s retailers, later expanding to a working capital facility. However, as MarketForce faced funding challenges exacerbated by Series A funding commitments that didn’t materialise, the startup struggled to meet its debt obligations and tensions arose between the two companies.

“Because of trust, I didn’t ask so many questions in the beginning…I didn’t ask, ‘oh, what happened to your fundraising?’ Those things came out later,” Moraa told Kenyan Wall Street. “This unpaid debt was really affecting our portfolio quality, especially when the dollar started to play its own role. Plus the fluctuations in the market. There were a lot of questions from our investors and board driven by our strong governance in place,” she explained.

The dispute reached a boiling point when Pezesha filed a liquidation suit against MarketForce in August 2023, seeking to settle outstanding debts. MarketForce’s struggles with funding realities and market complexities, coupled with Pezesha’s pressure from investors and board members, led to the legal standoff between the two companies.

However, the turning point came during the Harambeans Global Summit at Maasai Mara in March 2024, where Moraa and Mbaabu engaged in discussions and eventually reached a consensus to reconcile their differences. The settlement agreement, which includes MarketForce using its intangible assets valued by Pezesha to settle the debt, signifies a mutual understanding between the two parties.

The resolution of the dispute signifies a willingness on the part of both MarketForce and Pezesha to prioritise reconciliation and move forward collaboratively. It also reflects the broader challenges faced by startups in Africa’s tech space, where funding realities and market dynamics can pose significant obstacles to growth and sustainability.

Reflecting on the dispute, Mbaabu admitted, “We underestimated the challenges of scaling and could have communicated better with Pezesha during our funding setbacks.” Moraa echoed this sentiment, stating, “We could have handled the situation more diplomatically and sought alternative solutions before resorting to legal action.”

As MarketForce and Pezesha move forward following the settlement, both founders emphasized the importance of constructive dialogue and collaboration within the tech ecosystem. “This episode has taught us the value of open communication and the need to prioritize relationships over disputes,” remarked Moraa. Mbaabu added, “We’ve learned the importance of resilience and adaptability in navigating challenges, and we’re committed to fostering a culture of cooperation and trust moving forward.”

Featured Image Credits: Kenyan Wall Street

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