Kenyan E-Commerce Startup Receives $2M Seed Funding To Empower Informal Traders
Kenyan e-commerce startup Sokowatch has raised $2 million in seed funding from a group of five venture capital firms.
The Kenyan tech company closed the $2 million seed round with the aim of using the funds to further disrupt the supply chain market for informal traders across Africa, according to Ventureburn.
The seed round was led by Africa-focused early stage venture firm 4Dx Ventures, with venture capital firms Lynett Capital and Village Global, both based in California, as well as Outlierz Ventures and Golden Palm Investments involved in the round.
Golden Palm Investments is a Ghanaian investment firm based out of Accra, with tech in Africa as a major focus. Investments include Andela, Flutterwave and mSurvey. Outlierz Ventures is a Moroccan investment fund based in Casablanca.
Founded in Nairobi in 2013, Sokowatch has developed an innovative way to get a diverse set of fast-moving consumer goods from global manufacturers to informal shops on the ground in Kenya and Tanzania.
The Kenyan startup’s platform connects Africa’s informal traders directly to local and multinational suppliers by digitizing orders, delivery, and payments with the aim of reducing costs and increasing profit margins.
Massive informal economy in Africa
The Sokowatch app allows informal traders to use their mobile phones to buy products directly from large suppliers, while arranging for transport and make payments online, empowering these traders within a massive African informal economy.
The informal economy in sub-Saharan Africa is the second-largest in the world, after Latin America and the Caribbean, with up to 90 percent of jobs outside agriculture in the informal sector, according to the IMF.
From 2010 to 2014, sub-Saharan Africa’s informal economy accounted for 38 percent of GDP to the region.
In terms of attracting investment this year, Sokowatch is in good company, with a combination of 120 startup funding deals completed between January and July this year, with $168.6 million raised by the startups, according to a WeeTracker report.
The most popular tech sector for investment remains fintech, while health-tech and agritech were the next most popular sectors.
A total of 28 deals saw startups raising over $1 million during that period, with the biggest investment involving Cellulant, a digital payments solution firm which raised $47.5 million in its Series C round in May, while Branch, an online micro-lending startup, received investment of $20 million in March, according to Quartz.
Some of the other startups that received multi-million dollar funding during the reported period include Kenyan solar energy company M-Kopa, Nigerian small business loan platform Lidya, agri-tech startup WeFarm and remittance provider SureRemit.
In August last year, Sokowatch was selected along with 19 other startups to join the the first cohort of the World Bank’s XL Africa accelerator in Cape Town.
The Kenyan company was chosen among the 20 from over 900 applications, and benefited from four months of virtual mentorship before attending a two-week residency in Cape Town.