Wasoko, a prominent African B2B e-commerce platform specializing in groceries and household goods, is currently navigating a complex situation. The company is set to merge with its Egyptian equivalent, MaxAB, aiming to establish a powerful presence in Africa’s B2B e-commerce sector. However, a recent valuation by VNV Global, a significant investor in Wasoko, has complicated matters by reducing the startup’s valuation by almost 50%.
In its 2023 annual report, VNV Global valued its stake in Wasoko at $260 million, marking a substantial 48% decrease from its prior evaluation. This devaluation occurred shortly after Wasoko secured $125 million in Series B funding at a remarkable valuation of $625 million. It’s worth noting that Wasoko reportedly received only $113 million of the pledged funds, adding to the complexity of the situation.
VNV Global justifies the valuation decrease with a model that relies on industry benchmarks rather than historical funding rounds. Despite this, Wasoko maintains a positive outlook. The company asserts that VNV has not reduced its shareholding and continues to be an active and supportive investor. Wasoko emphasizes its impending merger with MaxAB as an indication of long-term value.
Since its inception in 2014, Wasoko has demonstrated significant growth by eliminating intermediaries and offering competitive prices through partnerships with major suppliers such as P&G and Unilever. By 2023, the company had over 200,000 small retailers utilizing its app for sourcing goods.
Nonetheless, Wasoko is not exempt from the global challenges faced by B2B e-commerce startups. Difficult economic conditions, high operational costs, and limited access to funding, especially in developing markets, have compelled many companies to reassess their strategies. Wasoko has responded by implementing layoffs, cost reductions, and even market closures in recent months. The company has shifted its focus from aggressive expansion to profitability, prioritizing financial stability.
The merger with MaxAB could provide a potential solution. Despite facing financial obstacles despite raising over $100 million in funding, MaxAB remains a significant player in the Egyptian and Moroccan B2B e-commerce sector. The merged entity aims to utilize its combined resources and market reach to achieve profitability and position itself as a leader in African B2B e-commerce.
The future may be uncertain, but both Wasoko and MaxAB remain optimistic. The merger represents a strategic consolidation of resources to navigate the complexities of Africa’s B2B e-commerce landscape. Whether this combined entity can weather the current challenges and realize its ambitious objectives will be revealed in time.
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