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MarketForce Faces Obstacles in Ambitious Growth Plans Following $40m Funding Round
Kenyan B2B e-commerce platform, MarketForce, aimed to increase the number of informal merchants sourcing FMCGs from its platform by over a million by the end of 2022, leading to a larger expansion for years to come. The startup ‘s co-founder and CEO, Tesh Mbaabu, revealed these plans to after the successful completion of a $40m Series A funding, which included $20m equity. However, the startup’s expansion plans have been disrupted since some of the VCs who made commitments to the funding round withdrew their support, sending MarketForce back to the market to solicit new investors amid a capital crunch.
MarketForce is yet to reveal which investors backed out or why they did it. According to Mbaabu, $8m of the committed $20m equity failed to come through because of ‘failed capital calls on their (investors) side.’ The funding crisis also led to a reduction of the startup’s growth pace and scaling down of operations, but Mbaabu hopes to turn the situation around by engaging anticipative conversations with potential investors.
MarketForce’s growth goals were to meet a significant number of informal retail sector traders in Africa, accounting for approximately 80% of household trade in sub-Saharan Africa. Informal merchants in the region are faced with multiple challenges that hinder business growth, such as stock-outs, earnings instability, lack of financing, among others. MarketForce aims to solve these issues by enabling informal traders to order goods through RejaReja, a super-app from a merchant, which ensures next-day delivery. Additionally, traders access credit for acquiring goods based on their transaction history and credit profile.
MarketForce’s restructuring efforts are toward sustainable growth, with a reduction in staff, optimizing logistics, shutting down routes and focusing on profitable operations. The startup aims to secure a meaningful capital injection and become self-sustainable.
## Subheadings
– MarketForce’s Ambitious Growth Plans in Jeopardy After Investor Back-Outs
– MarketForce’s Dependence on Informal Retailers and its Proven Distribution Model
– The E-commerce Landscape in Africa
– MarketForce’s Path to Sustainability and Optimizing Operations
– MarketForce’s Selective Search for Investors
## Conclusion
The current investment climate in Africa is challenging, as the seed funding frenzy seems to be dying down. Many startups are finding it difficult to secure funding and raise cash, forcing them to make hard decisions and scale down operations. MarketForce is among the startups impacted as some investors recently withdrew their funding commitments, resulting in a cash crunch – forcing the firm to slow down its growth plans and downsize. Despite this hurdle, MarketForce’s co-founder and CEO, Tesh Mbaabu, is optimistic that his carefully selected investors and the startup’s path to profitability would enable MarketForce to stabilize financially and sustainably grow.
## FAQ
#### What is MarketForce?
MarketForce is a Kenyan B2B e-commerce platform that enables the thousands of informal retailers in sub-Saharan Africa to access goods on credit using its quick delivery super-app, RejaReja.
#### Why has MarketForce downsized?
Some of the VCs who made commitments to the startup’s $40 million Series A funding round withdrew their support, causing the company to slow down its growth and downsize.
#### What is the informal retail sector in Africa?
The informal retail sector in Africa accounts for approximately 80% of household trade in sub-Saharan Africa. Informal traders face several challenges, such as stock-outs, earnings instability, and lack of financing that hamper their businesses’ growth.
#### How is MarketForce repositioning itself towards sustainable growth?
MarketForce is optimizing operations by reducing staff, shutting down unprofitable routes, and focusing on profitable operations, with the goal of achieving sustainable growth.
#### What is MarketForce’s future outlook?
MarketForce aims to secure the meaningful capital injection it needs to sustainably grow the firm and become self-sustainable. The startup is optimistic that its carefully selected investors and a path to profitability would enable it to stabilize financially and grow sustainably.
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