African B2B e-commerce giant Wasoko slashed to $260M after VC halving stake | Tech Crunch

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Swedish investment firm VNV Global, which backs startups in mobility, health and marketplaces, has cut the value of its holding in African B2B e-commerce startup Wasoko by 48%, according to its 2023 annual report.

In its annual report, VNV pegged Vasoko's fair value at around $260 million as of December 2023, the month Vasoko announced its planned merger with its Egyptian counterpart, MaxAB. The valuation is based on VNV's 4.2% stake in the startup, valuing VNV at $10.9 million.

This is not VNV's first markdown for Wasoko. In Q4 2022, it valued Vasco 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 $625 million valuation. That round was complicated for other reasons, too: Wasoko revealed to TechCrunch in December 2023 that it had only secured $113 million of the total funding raised in that round. VNV Global invested $20 million in that funding round.

VNV Global attributes its fair value estimate to a valuation model based on trading multiples of public peers rather than historical funding rounds.

“Wasoko is proud to have VNV Global among our major investors,” the Tiger-backed company told TechCrunch in response to the new development. “VNV has not diluted its stake in Vasoko and continues to be active and supportive of the company, including our landmark merger with MaxAB. Vasoko is not involved in VNV's internal reporting but VNV sees Vasoko's continued holdings as a clear sign of expected long-term value growth.

The report from VNV Global, which backs BlaBlocker and Get, precedes the MaxAB merger announcement. The investment firm — formerly known as Vostok New Ventures, which backed several Russian startups (which it has now pulled out of) — said it plans to keep its stake in Vasoko after the merger. “WIn the permanent capital structure of VNVs, we are generally very long-term investors (our best investments are all 10+ year holdings) and believe that the combined company has the potential to become a very substantial and valuable business in the coming years. a spokesperson for the company said in an email to TechCrunch.

As one of Africa's largest B2B grocery marketplaces, Nairobi-based Wasoko secures contracts with major suppliers such as P&G and Unilever, bypassing middlemen and offering goods 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 $300 million in gross merchandise value (GMV) on an annual basis. By 2023, it has a customer base of 200,000 small retailers using their app to order groceries and home appliances on-demand for their respective stores.

B2C e-commerce is a small part of retail across Africa, less than 1% according to this study from MasterCard. (A point of comparison: e-commerce accounted for 15.6% of total retail sales in the US last quarter, according to the US Census Bureau.) But physical retailers must source goods, and e-commerce is proving to be a very popular channel. that Funding and interest in B2B startups began in the last decade and has grown in the wake of COVID-19.

But recently, the business models of B2B e-commerce startups have come under pressure: challenging unit economics and high costs have made profitability elusive; And funding is limited, especially in emerging markets, further narrowing startups' runways. African startups, including B2B e-commerce platforms like Wasoko, followed the same playbook as their more distant counterparts: layoffs; cost reduction; And closures are not uncommon.

Among those hits was Vasoko. In recent times, it has shifted its focus from aggressive expansion to profitability, implementing cost-saving measures accordingly.

Before its merger with MaxAB, Wasoko closed 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, Vasoko parted ways with key executives to sort out overlaps with MaxAB's business structure. Operations have also been suspended in Uganda and Zambia (where Wasoko is expected to expand in Q2 2023), local media Tekcabal reported.

Meanwhile, Wasoko also provides financial services to its traders and it continues to operate in its three largest GMV markets – Kenya, Rwanda and Tanzania. It said it expects to finalize its merger with Cairo-based MaxAB by the end of this month.

For its part, MaxAB has also been bumpy for integration. It operates a food and grocery B2B e-commerce platform in Egypt and Morocco, expanding to the latter after acquiring YC-backed Wastecap in 2021.

But even if raised Over $100 million from Silverlake, British International Investment and others, MaxAB found Last year was a financial crisis.

The structure of the new combined entity is still unclear, but together, MaxAB and Wasoko are expected to provide a fresh lifeline to their quest to profitably drive the continent's B2B e-commerce industry.

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