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HomeTechAfrican B2B e-commerce startup Sabi surpasses $300 million in new funding

African B2B e-commerce startup Sabi surpasses $300 million in new funding


Sabia Lagos-based B2B e-commerce startup that provides digital trading infrastructure to Africa’s informal economy has raised $38 million in Series B funding at a valuation of $300 million, according to two people familiar with the matter, indicating on a renewed investor interest in a B2B e-commerce market is going through a reckoning.

Frankfurt-based specialist fintech investor CommerzVentures, Stockholm-based but Africa-focused investor Norrsken22, US-based growth funds Fluent Ventures and Proof VC, and pan-African early-stage investors CRE Ventures and Jaango are some of the investors in this round , the people said.

Sabi declined to comment on the matter.

The informal trade sector makes up the bulk of Africa’s $1 trillion retail market. The largely fragmented industry has welcomed innovation in recent years from several startups seeking to connect informal retailers with manufacturers and major wholesalers through digital platforms such as apps and a network of logistics and distribution services.

Throughout most of 2021 and early 2022, these B2B e-commerce startups enjoyed a good run, raising millions of dollars from local and global investors, money most of them pushing to drive growth tactics such as giving incentives and discounts on various products to capture merchants early. However, such proposals are always a race to the bottom. With free money evaporating in the face of rising global interest rates, some B2B ecommerce startups are reviewing growth strategies to cut costs and pull out of specific markets.

Well, not Sabi. According to those with knowledge of the company’s operations, the startup, with operations in Nigeria, Kenya and South Africa, shows no signs of struggle and is posting staggering growth figures for a startup that has been in business for just two and a half years. half the year.

End of 2021, Sabi executives Anu Adsolum And Adola Adesina told TechCrunch it had more than 175,000 merchants on its network while recording an annual GMV run rate of $200 million. Those numbers have multiplied to more than 300,000 salespeople and more than $1 billion GMV annually, said three people familiar with the startup’s financials.

By comparison, Wasoko, the most capitalized B2B e-commerce of the lot, raised $125 million last March at a valuation of $625 million and seems to be doing well despite industry-wide contractionnoted that it had 50,000 active sellers while processing more than $300 million in GMV (it’s worth noting that Wasoko’s GMV numbers have since increased).

One thing to point out is how Sabi’s operating model and the customers it targets enable it to bring in more goods numbers.

Sokowatch, MaxAB, Alerzo and TradeDepot are full-scale, asset-rich platforms that own and lease facilities in their distribution chain, from warehousing to logistics. Some marketplaces, such as Chari, Cartona, and Omnibiz, use asset-light models, using third-party warehousing and logistics, while marketplaces like Market Force use hybrid models.

These platforms, whether heavy or poor, talk to wholesalers, manufacturers and distributors (or become one themselves), but ultimately target the retailers or traders as they are called. On the other hand, Sabi’s asset-light model complements the intermediaries in the B2B e-commerce retail chain, from manufacturers and distributors to wholesalers and retailers (which the startup collectively refers to as merchants). It uses offline agents, call centers, trading partners and supplier centers (with access to tools such as inventory management, sales, tracking, digital invoices and analytics) as channels to meet the various stakeholders in this value chain.

The company’s executives said in an email statement to TechCrunch that Sabi’s growth model and its approach to “focus on the fundamentals and ensure a healthy unit economy and profitability before expanding” sets it apart from other startups in the industry. sector and has enabled it to follow a sustainable trajectory, even in challenging market conditions.

“Sabi’s ecosystem-based approach, where we treat manufacturers, distributors, wholesalers and retailers as sellers, is designed to be highly adaptive and responsive to market dynamics. By creating value for different stakeholders and adapting our approach based on new learnings, we can maintain long-term sustainability, even in the midst of short-term explosive growth. This flexibility is crucial in the markets we operate in, where stakeholder roles can vary,” CEO Adasolum added when questioned about the long-term sustainability of the startup model.

Sabi’s primary sources of income remain the same: achieving a 5-6% withdrawal rate (depending on the category) of trades in the marketplace and earning a funding margin on credit-related trades it makes. The startup has facilitated more than $100 million on behalf of local microfinance banks and fintech lenders, said three people familiar with the company’s financials, likely speaking of why fintech-focused CommerzVentures invested in the company.

Meanwhile, according to the sources, Sabi is recording 15,000 monthly orders and experiencing more than 20% growth on a monthly basis. That’s one-tenth of Wasoko’s monthly orders from last March; however, a higher GMV (if Wasoko’s is below $1 billion) could mean that Sabi is recording higher average order values, mostly from wholesalers, not retailers. This is why the startup, which raised more than $60 million last year (including an unreported $15 million Series A last year), is launching new products and features to target its agents and last-mile sellers. Sabi could view these additions as a means to enable additional revenue models and focus more on the B2B payments value chain.

The category-agnostic upstart, whose traders deal in FMCG goods and products in agriculture, electronics and chemicals, also plans to expand into other markets, including Tanzania and Malawi (via an acquisition), the Democratic Republic of the Congo ( DRC) and francophone West Africa, according to two people familiar with the company’s plans.

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