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African B2B e-commerce giant Wasoko downsized to $260 million after VC halves stake | TechCrunch

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VNV Global, a Swedish investment firm that supports startups in mobility, health and marketplaces, has reduced the value of its stake in Wasoko, an African B2B e-commerce startup, by 48%, according to its annual report for 2023.

In its annual report, VNV pegged Wasoko’s fair value at around $260 million in December 2023, the month Wasoko announced plans to merge with Egyptian peer MaxAB. The valuation is based on VNV’s 4.2% stake in the startup, which VNV values ​​at $10.9 million.

This is not the first VNV markdown for Wasoko. As of Q4 2022, Wasoko was valued at $501 million, just months after the eight-year-old startup closed a $125 million Series B investment co-led by Tiger Global and Avenir at a valuation of $625 million. of dollars. This round was complicated for other reasons as well: Wasoko revealed to TechCrunch in December 2023 that it had only received $113 million of the total funding raised in this round. VNV Global invested $20 million in this funding round.

VNV Global attributes its fair value estimate to a valuation model based on commercial multiples of public peers rather than historical financing cycles.

“Wasoko is proud to count VNV Global among our major investors,” the Tiger-backed company told TechCrunch in response to the new development. “VNV has in no way reduced its stake in Wasoko and continues to remain active and supportive of the company, notably thanks to our historic merger with MaxAB. Wasoko is not involved in VNV’s internal reporting, but views VNV’s continued stake in Wasoko as a clear signal of expected long-term value growth.

The report from VNV Global, which also backs Blablacar and Gett, preceded the announcement of the merger with MaxAB. The investment company – formerly known as Vostok New Ventures, which backs a number of Russian startups (from which it has now divested) – announced plans to retain its stake in Wasoko following the merger. “WWith VNV’s permanent capital structure, we are generally very long-term investors (our best investments have all been holdings over 10 years) and believe the combined company has the potential to become a very important and valuable in the years to come,” the company spokesperson said in an email to TechCrunch.

As one of Africa’s largest B2B grocery marketplaces, Nairobi-based Wasoko strikes deals with large suppliers like P&G and Unilever, bypassing middlemen and offering products at competitive prices. Founded by Daniel Yu in 2014, the company has seen steady growth, expanding from Kenya to six additional African markets by 2022. During this period, Wasoko reported a gross merchandise value (GMV) of $300 million on an annualized basis. By 2023, it had a customer base of over 200,000 small retailers using its app to order groceries and household items on-demand for their respective stores.

B2C e-commerce represents a tiny proportion of retail commerce in Africa, less than 1% according to this Mastercard study. (Point of comparison: In the United States, e-commerce last quarter accounted for 15.6% of all retail sales, according to the US Census Bureau.) But brick-and-mortar retailers need to stock up on goods, and the E-commerce has proven to be a very popular channel for consumers. that. Funding and interest in B2B startups has taken off over the past decade and seen a sharp increase in the wake of COVID-19.

But more recently, the business models of B2B e-commerce startups have come under pressure: difficult unit economics and high costs have made profit elusive; and funding has been particularly limited in developing markets, further shortening startups’ runways. African startups, including B2B e-commerce platforms like Wasoko, have followed the same pattern as their counterparts further afield: layoffs; cost reductions; and closures are not uncommon.

Wasoko was among those affected. In recent times, it has shifted its focus from aggressive expansion to profitability, implementing cost-cutting measures accordingly.

Before its merger with MaxAB, Wasoko closed its hubs in Senegal and Ivory Coast and laid off staff in Kenya. Between December 2023, when the companies announced the merger, and March this year, Wasoko parted ways with its key executives to streamline overlaps with MaxAB’s business structure. Operations were also temporarily halted in Uganda and Zambia (which Wasoko expanded into in the second quarter of 2023), local media outlet TechCabal reported.

Meanwhile, Wasoko also offers financial services to its merchants and continues to operate in its three largest GMV markets: Kenya, Rwanda and Tanzania. It said it plans to complete its merger with Cairo-based MaxAB by the end of the month.

For its part, MaxAB has also followed a rocky path to consolidation. It operates a B2B food and grocery e-commerce platform in Egypt and Morocco, expanding to the latter following its acquisition of YC-backed WaystoCap in 2021.

But despite the increase more than $100 million from Silverlake, British International Investment and others, MaxAB uncovered itself in financial peril last year.

The structure of the new combined entity still remains unclear, but MaxAB and Wasoko anticipate that together they will be able to offer a new lifeline to their quest to profitably lead the continent’s B2B e-commerce industry .

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