Sabi, a B2B e-commerce startup based in Africa, surpasses a valuation of $300 million through recent funding.

Sabi, a Lagos-based B2B e-commerce startup providing digital commerce 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, signaling revived investor interest in a B2B e-commerce market going through some reckoning.

Frankfurt-based specialist fintech investor CommerzVentures, Stockholm-based but Africa-focused growth-stage investor Norrsken22, U.S.-based growth-stage 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 most of Africa’s $1 trillion retail market. The largely fragmented industry has welcomed innovation from several startups trying to connect informal retailers to manufacturers and large wholesalers via digital platforms like apps and a network of logistics and distribution services over the last couple of years.

For most of 2021 and early 2022, these B2B e-commerce startups enjoyed a fine run, raising millions of dollars from local and global investors, money most of them pushed to drive growth tactics such as providing incentives and discounts on various products to capture merchants early. However, such propositions are always a race to the bottom. With free money evaporating in light of rising global interest rates, some B2B e-commerce startups are reviewing growth strategies as they cut costs and retreat from specific markets.

Well, not Sabi. According to people with knowledge of the company’s dealings, the startup, with operations in Nigeria, Kenya and South Africa, is showing no signs of struggle, posting mind-boggling growth numbers for a startup that has just been in business for two-and-the-half years.

In late 2021, Sabi executives Anu Adasolum and Ademola Adesina told TechCrunch that it had over 175,000 merchants on its network while recording a $200 million annualized GMV run rate. Those numbers have increased multiple-folds to more than 300,000 merchants and over a $1 billion annualized GMV, three people familiar with the startup’s financials said.

In comparison, Wasoko, the most capitalized B2B e-commerce of the lot, which raised $125 million at a $625 million valuation last March and seems to be faring well despite industry-wide contractions, noted that it had 50,000 active merchants while processing over $300 million in GMV (it’s worth noting that Wasoko’s GMV numbers have increased since then).

Sabi sets itself apart in the B2B e-commerce landscape with its operational model and customer focus, enabling it to achieve impressive merchandise numbers. Unlike other platforms such as Sokowatch, MaxAB, Alerzo, and TradeDepot, which adopt asset-heavy models by owning and leasing distribution facilities, Sabi utilizes an asset-light approach. It acts as a complementary player in the B2B e-commerce retail chain, connecting manufacturers, distributors, wholesalers, and retailers (referred to as “merchants” by the startup). Sabi employs offline agents, call centers, merchant partners, and supplier centers equipped with tools like inventory management, sales tracking, digital invoices, and analytics to engage with stakeholders across the value chain.

According to Sabi’s executives, their growth strategy prioritizes focusing on fundamental aspects, ensuring sound unit economics and profitability before expanding further. This differentiates Sabi from its competitors and enables the company to maintain a sustainable trajectory even in challenging market conditions. CEO Adasolum emphasizes the importance of the startup’s ecosystem-based approach, which adapts and responds to market dynamics while creating value for various stakeholders.

Sabi’s primary revenue sources remain consistent: earning a 5-6% take rate from marketplace transactions and generating a financing margin from credit-related transactions. The startup has facilitated over $100 million on behalf of local microfinance banks and fintech lenders, which likely influenced the investment decision of fintech-focused investor CommerzVentures.

Sources indicate that Sabi is currently processing 15,000 monthly orders and experiencing over 20% month-on-month growth. Although this figure is lower than Wasoko’s monthly order volume from last March, Sabi likely achieves higher average order values, primarily from wholesalers rather than retailers, contributing to its substantial Gross Merchandise Value (GMV). With over $60 million raised in funding, including a previously unreported $15 million Series A round last year, Sabi plans to launch new products and features targeting its agents and last-mile merchants. These additions will likely accommodate additional revenue models and enable a greater focus on the B2B payments value chain.

As a category-agnostic platform, Sabi’s merchants deal with a wide range of products, including fast-moving consumer goods (FMCG), agricultural goods, electronics, and chemicals. The startup aims to expand its operations into other markets, including Tanzania and Malawi through acquisition, as well as the Democratic Republic of Congo (DRC) and Francophone West Africa, according to sources familiar with the company’s plans.

Source techcrunch

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top