Swedish investment firm VNV Global has reduced the value of its stake in Wasoko, an African B2B e-commerce startup, by 48% according to its 2023 annual report. In this report, Wasoko’s fair value was set at approximately $260 million as of December 2023, coinciding with Wasoko’s announcement of a planned merger with Egyptian equivalent, MaxAB. This valuation comes from the VNV’s 4.2% stake in the startup, assessed at $10.9 million.
This isn’t the first markdown VNV has applied to Wasoko. The firm valued Wasoko at $501 million in Q4 2022, only a few months after the startup completed a $125 million Series B investment. Despite the funding round being led by Tiger Global and Avenir and valued at $625 million, Wasoko revealed it only received $113 million. VNV Global invested $20 million in this round.
VNV Global’s fair value estimation is based on a valuation model that utilizes trading multiples of public peers, rather than previous funding rounds.
Responding to this development, Wasoko expressed pride in having VNV Global as a key investor and highlighted that VNV has not reduced its shareholding in Wasoko. It further noted VNV’s continued support and active role in the company, including during the merger with MaxAB. It emphasized that the firm’s ongoing holdings in Wasoko as indicative of anticipated long-term value growth.
VNV Global, an investor in Blablacar and Gett, released the report prior to the merger announcement with MaxAB. The investment firm, previously known as Vostok New Ventures and an investor in numerous Russian startups, plans to retain its stake in Wasoko following the merger. A spokesperson for VNV Global highlighted the firm’s long-term investment strategy and their belief in the potential of the merged company to become a sizeable and valuable business in the future.
As one of the largest B2B grocery marketplaces in Africa, Wasoko, based in Nairobi, collaborates with major suppliers like P&G and Unilever to provide goods at competitive prices. The company, founded by Daniel Yu in 2014, saw consistent growth and expanded to six additional African markets by 2022. During this period, Wasoko achieved an annualized Gross Merchandise Value (GMV) of $300 million. By 2023, over 200,000 small retailers were using Wasoko’s app to order groceries and household items for their stores.
B2C e-commerce constitutes less than 1% of Africa’s retail sector, according to a Mastercard study. However, e-commerce has become a popular channel for sourcing goods for physical retailers, with B2B startups attracting funding and interest, especially during the COVID-19 pandemic.
Nevertheless, B2B e-commerce companies, including African platforms like Wasoko, have recently faced challenges. Economic pressures and high costs have made profitability difficult, and limited funding in developing markets has curtailed startups’ operations. Meanwhile, startups have been forced to reduce cost through staff layoffs and closures.
In light of these challenges, Wasoko has shifted its focus from rapid expansion to profitability. Prior to its merger with MaxAB, Wasoko closed hubs in Senegal and Ivory Coast, laid off staff in Kenya, and suspended operations in Uganda and Zambia temporarily. The company has also terminated certain key executive roles to avoid overlapping roles with MaxAB’s business structure.
Despite these changes, Wasoko continues to offer financial services to its merchants, and remains operational in its three largest GMV markets — Kenya, Rwanda, and Tanzania. The merger with Cairo-based MaxAB is expected to be concluded by the end of the current month.
MaxAB, a B2B e-commerce platform for food and groceries operating in Egypt and Morocco, has also encountered financial difficulties, despite raising over $100 million. The details of the merged entity are currently unclear, but both MaxAB and Wasoko hope their joint efforts will revitalize their pursuit to profitably lead the continent’s B2B e-commerce sector.
