AfricaSokoni, an online marketplace based in Nairobi, recently closed an additional US $445,000 in funding as part of its Seed round. The funding round which closed on March 10, 2019, is follow on investment from an already existing angel investor in the business. Ebrima Fatty, CEO and Co-founder of AfricaSokoni, declined to disclose who the angel investor is.
“We raised the funding through a European angel investor, who would like to maintain his identity private, at least for now, for a very good reason,” Fatty wrote in an email to Digest Africa.
In October 2017, the startup raised $300,000 from an undisclosed angel investor which it followed up with $250,000 from the same angel investor in June 2018. This funding, therefore, takes AfricaSokoni’s total funding raised to date to almost a million dollars. “The total funding now stands at $995K from inception,” Fatty noted.
The company is looking to use the funding to “consolidate their gains” so far as well as expand their current product offerings on the platform.
“We are also building an important component of our Business model which we could not build from the beginning because of funding and strategic issue,” Fatty pointed out. To date, AfricaSokoni maintains a team of 30 employees who are all based in Nairobi.
Founded in 2017 but officially launched in 2018 AfricaSokoni is one of the many startups across the continent that are looking to take advantage of the still expected - but yet to arrive - growth and boom in e-commerce across Africa.
In 2018, according to the Digest Africa Index, e-commerce with 25 funding rounds lagged financial services (71 rounds) as well as transport and logistics (29 rounds) by the number of funding rounds recorded. This makes sense considering financials services (payments, credit), as well as transport and logistics, are the rails on which E-commerce grows. Of the 25 funding rounds recorded, 19 were at Seed/Series A stage representing a still nascent e-commerce market.
While there have been some early players in the e-commerce sector including Jumia/Zando, Takealot and Konga, other than these, there are yet to be any other significant players in the e-commerce space across the continent. Though there’s a new breed of emerging players, who are vertically focused including Copia Global, Twiga Foods, Kasha, Sky.Garden and La Reina who all raised funding in 2018.
E-commerce has recorded several high profile failures in the past decade after seeing record figures in investment mostly due to Jumia, Takealot and Konga - whose investors have all since found an exit. Jumia listed on the New York Stock Exchange, Takealot was acquired by long-time investor Naspers while Konga was acquired by Zinox and merged it with its offline subsidiary Yudala.
The ventures that have not survived the e-commerce boom include Egypt’s Nefsak which had raised to the tune of EGP 10 million ( ~ US $0.5 million), as well as a cohort of Naspers-backed ventures - comprehensive e-commerce platform Kalahari (which was absorbed by Takealot in South Africa), high-end furniture platform 5Rooms, online fashion outlet Style 36, digital camera store SAcamera and baby product outfit Kinderelo.
This year, Nigeria’s DealDey became the latest e-commerce venture to close shop. The platform was established in 2011 by Konga co-founder and former CEO, Sim Shagaya. In 2015, at its peak, the startup raised $5 million from Swedish investors Kinnevik. On the other hand, Gloo.ng decided to pivot from e-commerce all-together to instead focus on e-procurement.
The struggle of e-commerce ventures across Africa amid underdeveloped payment solutions, trade and logistics infrastructure and a cash culture with low albeit improving per capita incomes makes survival even harder for startups in the industry without funding to survive years of cash burning as they wait for the e-commerce market to mature. This struggle is further reflected in the fact that those that are currently looked at as notable e-commerce ventures across Africa have raised not less than $100 million each in total funding.
Besides, payments and transport and logistics companies that were previously B2B are looking to pivot and build e-commerce market places in a B2B2C model to reach Africa’s mass market. These include Safaricom (Masoko), MTN (open APIs), Flutterwave (GetBarter), Cellulant (Mula) and DHL (eShop Africa). We would also expect global e-commerce players to look to enter the market through partnerships with existing payments and transport and logistics players as was the case with Safaricom tie-up with AliExpress.
To continue to build their venture and to survive through their losses, AfricaSokoni and any other early-stage e-commerce ventures will need to raise more funding - lots and lots of it. According to Fatty, the startup is looking to close another round which will still form part of their current round. “We are trying to close our current extended seed round,” he said.
However, they won’t stop there. AfricaSokoni also has their eyes on securing a follow-on, though at the “appropriate time”. Fatty noted: “We will certainly fundraise again, but the timing depends on the outcome of the current round. We will do a “series A” round when we decide to expand; as you know AfricaSokoni is an African brand, and we have our eyes on the entire continent. The amount and timing of that round will be decided at the appropriate time.”
Update: An earlier version of this article stated that Nefsak had raised US $10 million instead of EGP 10 million. We have since updated that.
- written with help from Kenneth Legesi, Chief Data Officer, Digest Africa