Kenyan B2B ecommerce platform Wasoko has restructured its office in Zanzibar and “paused” its operations in both Uganda and Zambia. The move means it now operates in Kenya, Tanzania, Rwanda and DRC.
In Uganda it had operations in Kampala. It did not disclose its distribution in Zambia, a market it only entered in May 2023. Rival Copia closed its operations in Uganda in April 2023 under the auspices of a pause. Twiga Foods retains some distribution in Uganda. Wasoko had previously entered and then (in mid 2023) quietly exited Cote d’Ivoire and Senegal.
In December 2023, Wasoko and Egyptian B2B e-commerce platform MaxAB merged, a process that also reportedly meant that around 10% of the workforce was made redundant. The rationale for that merger was that it would create an online retail giant serving 65m customers in eight markets. As we noted at the time, the merger was more likely due to MaxAB running out of cash. We also noted that in March 2024 Wasoko would have had two years without a funding round.
Industry media Techpoint has reported that co-founder Josh Raine as well the CFO and CTO have all exited the business. We believe that the MaxAB merger as well as this new round of exit from expansion markets is part of the process of finding new investor funding.
Note that when Wasoko announced it would integrate MaxAB, the PR release said that in 2023 Wasoko reported a 30% increase in monthly revenue and expanded its merchant network. MaxAB saw a 25% increase in its monthly active merchant network and a 50% rise in fintech transaction volumes. But as other online platforms, notably Jumia, have found, investors are less interested in growth than they are at financial sustainability.
If Wasoko doesn’t announce new funding soon then the question becomes how much of its $125m Series B round from March 2022 it still has. Based on the experiences of Twiga and Copia, both of which also raised substantial sums and have since received interim funding, Wasoko may need to raise funding soon or cut back further. For reference, Twiga raised $50m in November 2021, $150.4m in total by that point and had started to aggressively cut back operations in early 2023. It subsequently raised $35m in debt financing in late November 2023. Similarly, Copia raised a $50m Series C round in January 2022, restructured substantially through 2023 and secured a $20m Series C extension in December 2023.
Wasoko raised more funding, but overall had raised less than Twiga and had a larger footprint, at least in terms of the number of countries it operated in. As such, we can safely assume that it will face a severe cash crunch between now and Q3 2024. Furthermore, its main market of Kenya is super competitive with Twiga and Copia, as well as newer social selling app Kapu, all looking to win out.
Update 9th April 2024: a previous version of this report noted that Wasoko had shuttered its operations in Tanzania. The company has since clarified that it remains operational in mainland Tanzania, continues to operate in Dar es Salaam, Arusha and Mwanza and is “preparing for a significant expansion” from its existing base of 30,000 retailers within Tanzania.
