Kenyan E-Commerce Startup Expands To Uganda, Rwanda Following $2.5M Funding Round

Kenyan E-Commerce Startup Expands To Uganda, Rwanda Following $2.5M Funding Round

seed funding Ghanaian fintech e-commerce startup
Kenyan platform Sokowatch empowers informal retailers in Kenya and Tanzania. Photo – AP – Sunday Alamba

Kenyan e-commerce startup Sokowatch, which allows informal traders to use their mobile phones to buy products directly from suppliers, has launched in Rwanda and Uganda.

This follows a $2.5 million funding round. Investors included Africa-focused early-stage venture firm 4Dx Ventures which has offices in Silicon Valley and Accra; VC firms Lynett Capital and Village Global (both in California); Moroccan investment fund Outlierz Ventures; and Ghanaian investment firm Golden Palm Investments.

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Total funding to date is $4.5 million, according to Crunchbase.

Sokowatch was founded in Nairobi in 2013 by CEO Daniel Yu and COO Josh Middleman, both American.

Yu launched the company based on his experiences in Egypt, where he witnessed limited availability of products in the local retail market and the abundance of mobile phones.

Yu worked as a software developer and attended the University of Chicago where he studied international studies and linguistics before dropping out to work on Sokowatch fulltime.

Middleman earned a masters degree in international relations from the American University in Cairo after more than two years serving in the peace corps in Ghana. He is now based in the U.S. and worked at Comcast and Google while also working as COO of Sokowatch.

The co-founders established Sokowatch in Kenya to be based in a country that has a large informal sector.

The informal sector represents 83.1 percent of the country’s total labor force, or about 13.3 million people, according to a 2017 economic survey by the Kenya National Bureau of Statistics

E-commerce startup empowering informal traders

The Sokowatch app allows informal traders to use their mobile phones to buy products directly from large suppliers while arranging for same-day delivery and allowing payments for the goods to be made via the app.

This kind of access to global manufacturers and efficiency of delivery is not the norm within the informal sector, which is usually low-tech and reliant on cash. The company’s goal is to reduce costs and increase profits for traders.

The platform has successfully connected informal stores to suppliers including Procter & Gamble, Unilever and METL Group, according to Techcrunch.

After expanding its service to Kenyan cities Mombasa and Nakuru, the e-commerce startup has expanded to informal traders in neighboring East African countries Rwanda and Uganda, Quartz reports.

Investors appear to be very interested in Sokowatch due to the size of the market it is disrupting and its appetite for expansion in the East African region.

The informal economy in sub-Saharan Africa is the second-largest in the world after Latin America and the Caribbean. Up to 90 percent of jobs outside agriculture are in the informal sector, according to the IMF.

From 2010 to 2014, sub-Saharan Africa’s informal economy accounted for 41 percent of the gross domestic product in the region.