Ten13 VC, SOSV Select Fund, Vu Ventures, Vastly Valuable Ventures, and Uncovered Fund were among the investors in the round, led by V8 Capital Partners, a London and Lagos-based African-focused investment firm.
Reflect Ventures, Greenhouse Capital, Century Oak Capital, Remapped Ventures, and Cellulant co-founder Ken Njoroge, who joined the Marketforce board as chairman, were among the existing investors that participated in the round.
With this latest funding, Marketforce has now raised a total of $42.5 million. This comes just seven months after the company secured $2 million in a pre-Series A round of funding last year.
After extending beyond Kenya and Nigeria, Marketforce was launched in Uganda, Tanzania, and Rwanda in 2021. It provides buy-now-pay-later options to assist dealers in getting credit for fast-moving consumer goods (FMCGs). It also intends to expand its presence in East and West Africa.
Informal traders may acquire items directly from manufacturers and distributors, pay for orders digitally, accept payments for energy bills, and receive financing for their enterprises using RejaReja, the company’s merchant super app. MarketForce, a SaaS application for the formal markets developed by Tesh Mbaabu and Mesongo Sibuti in 2018, launched the RejaReja retail Marketplace in 2020.
“Our mission is to enable SMEs to grow and what we have realized over time is that it is great to give them credit, but we need to empower them to access the goods,” Marketforce CEO and Co-founder Mbabu said. “And that is why we have introduced inventory financing, which is like an overdraft facility, where they can order and sell goods and pay later. So we started a pilot, and it is going well.”
The order stock price quadrupled during the trial, according to Mbaabu, highlighting the demand for such targeted inventory finance solutions for merchants selling a substantial share of all FMCGs sold in Sub-Saharan Africa.
Informal merchants supply almost 80% of home shopping items in Sub-Saharan Africa. However, most of these merchants encounter challenges, including stockouts, instability of profit margin, and lack of access to finance. Marketforce tackles these problems with Rezareza, a marketplace where informal merchants receive items directly, keeping product costs reasonable by eliminating the need for intermediaries and ensuring next-day delivery. It also leverages the merchants’ transaction history to create the credit profile needed to acquire the loan.
To offer loans to its merchants, the business has teamed with Pezesha, a digital financial marketplace platform.
“We are very deliberate about expanding working capital, and so we have raised some debt and also because we are looking at that fintech angle as our big front for the next phase of our business,” Mbabu said.
“MarketForce demonstrates what we see as a triple threat with regards to returns; a strong executive team with an amazing track record, a vast untapped market of informal retailers across the continent, and a business model that delivers very quickly.” V8 Capital general partner and Marketforce board member Toby Oke said.
With this new capital, Marketforce expects to raise its staff to 800 people and more than quadruple the number of merchants using the Rezareza app to 250,000 in the next several months, up from 5,000 a year ago. The development of Rezareza and the increase in merchant numbers also imply new markets for FMCG companies.
Rezareza is an asset-light business, which means it doesn’t have any capital assets like warehouses or delivery vehicles because most of them are provided by its partners, including manufacturers and distributors. The nature of the company permits it to expand quickly.
Mbabu intimated in December that Rezareza expects to reach a million merchants by the end of the year as it works to digitize an estimated 100 million small merchants in Africa.
Rezareza has expanded drastically since its launch with an average of $151 worth of goods and over 87,000 purchases placed through the portal, according to him. In addition, it is estimated to have generated over $60 million in yearly transaction volume in 2021, indicating 40% month-over-month growth.
Marketforce intends to expand its alliances to include insurance, savings, and investment services for traders.“Rezareza aims to be the super app of the informal market. We want merchants to have one access point to all the various financial and digital services they need to thrive in the digital age,” said Mbabu.