market strengththe Kenya-founded B2B retail and end-to-end distribution platform has raised $40 million in Series A funding for its financing and commercial inventory expansion across Africa.
MarketForce, which launched in Uganda, Tanzania and Rwanda last year after growing beyond Kenya and Nigeria, plans to introduce buy-now-pay-later (BNPL) options to help merchants access fast-moving consumer goods (FMCGs) I believe . It also plans to enter additional markets in East and West Africa.
Through your super merchant app Reja Reja, informal merchants can purchase goods (hundreds of SKUs) directly from manufacturers and distributors, place and pay orders digitally, accept utility bill payments, and access loans for their businesses. The RejaReja retail marketplace was launched in 2020 as the brainchild of MarketForce, a SaaS product for formal markets founded by Tesh Mbaabu and Mesongo Sibutme in 2018.
“Our mission is to enable SMEs to grow, and what we’ve realized over time is that offering loans to them is great, but we need to empower them to access goods. And that’s why we’ve introduced this merchant inventory financing, which is like an overdraft where they can order goods and pay after they sell them. We’ve started a pilot and it’s going well,” Mbaabu, CEO and co-founder of MarketForce, told Ploonge.
During the pilot, Mbaabu said the value of order inventory tripled, highlighting the demand for these customized inventory financing options for merchants who sell a large portion of all FMCGs sold in Sub-Saharan Africa.
“We are very deliberate about extending working capital and that is why we raised some debt and also why we are looking at this fintech angle as our big frontier for the next phase of our business,” Mbaabu said.
This latest round (equal amount of debt and equity) brings the total funds raised by MarketForce to date to $42.5 million. It also comes seven months after the startup raised $2 million in a pre-Series A round.
The latest round was led by V8 Capital Partners; an Africa-focused investment vehicle based in London and Lagos with participation from Ten13 VC, SOSV Select Fund, Vu Ventures, Vastly Valuable Ventures, Uncovered Fund. Existing investors who participated in the round include Reflect Ventures, Greenhouse Capital, Century Oak Capital and Remapped Ventures. Cellulant co-founder Ken Njoroge, who joins MarketForce’s board as chairman, also participated in the round.
“MarketForce demonstrates what we see as a triple threat to returns. A strong executive team with an incredible track record, an expansive untapped market of informal retailers across the continent, and a business model that expands extremely quickly,” said Tobi Oke, General Partner at V8 Capital and Board Member at MarketForce.
MarketForce also plans to double its staff to 800 and increase the number of merchants using the RejaReja app by 2.5x to 250,000 in the coming months, growing from 5,000 who served a year ago. The growth in the number of merchants and the expansion of RejaReja also mean new markets for the FMCG brands.
RejaReja is an asset light model, which means it does not have capital assets like warehouses and delivery trucks as most of these are provided by its partners which include manufacturers and distributors. Its business nature allows it to grow quickly.
“We grew to two cities in the markets where we operate. It also opened up distribution opportunities for brands that were previously unable to access these markets,” said Mbaabu.
During an interview in December last year, Mbaabu told Ploonge 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 that since launch, RejaReja has grown exponentially with over 87,000 orders placed through the platform at an average basket value of US$151. With a monthly growth of 40%, it is expected to register over US$60 million. in annualized transaction volumes at the end of last year. RejaReja’s main competitors include TradeDepot and Sokowatch.
About 80% of domestic retail in sub-Saharan Africa is delivered through informal retailers, but these stores face a number of challenges, such as out-of-stocks, unstable earnings, and lack of financing, all of which make it difficult for their businesses to grow.
MarketForce, through RejaReja, solves this by providing a marketplace where informal traders can purchase goods directly, which also keeps product prices competitive, eliminating the need for agents and ensuring next-day delivery of goods. It also uses traders’ transaction history to develop the credit profiles needed to secure loans. The startup has partnered with Pezesha – a digital financial market platform – to provide loans to its merchants.
MarketForce plans more partnerships to bring other services to merchants such as insurance, savings and investment.
“RejaReja’s goal is to be the super app for the informal market. We would like merchants to have an access point to all the different financial and digital services they need to grow in the digital age,” said Mbaabu.