Marketforce Secures $2M Funding to Expand Rejareja B2B Marketplace

Africa's Retail Landscape and MarketForce's Expansion

A 2016 report from PwC, a global consulting firm, indicates that approximately 90% of sales within major African economies are facilitated through informal channels, such as local markets and small kiosks.

Within sub-Saharan Africa, around 90% of all retail transactions at the household level are conducted through a network encompassing roughly 100 million Micro, Small, and Medium Enterprises (MSMEs).

The Projected Growth of Retail Payments

Africa’s retail payment systems, currently heavily reliant on cash, are projected to reach a total value of $2.1 trillion by the year 2025. MarketForce, a Kenyan company, aims to digitize a significant segment of these transactions.

The company recently announced the successful completion of a $2 million pre-Series A funding round.

Investment Details

This investment round included participation from both existing investors – P1 Ventures and Y Combinator – as well as new contributors like Launch Africa, V8 Capital, Future Africa, GreenHouse Capital, Rebel Fund, Remapped Ventures, and several undisclosed angel investors.

To date, MarketForce has secured a total of $2.5 million in funding. This figure incorporates a $350,000 seed round raised last year, alongside a $150,000 investment received from Y Combinator during its Summer 2020 accelerator program.

Founding and Initial Focus

MarketForce was established in 2018 by Tesh Mbaabu and Mesongo Sibuti. The founders identified a critical issue: the fragmentation prevalent among small retail businesses and their associated distribution networks.

These small shops also frequently serve as access points for financial services for everyday Kenyans. Consequently, MarketForce’s strategy centers on streamlining the distribution of Fast-Moving Consumer Goods (FMCG) and financial services through this extensive network of agents.

From Initial Concept to RejaReja

The initial business model gained MarketForce acceptance into the Y Combinator program. Following their participation, the founders decided to explore a new venture: RejaReja, a B2B e-commerce marketplace designed for merchants.

RejaReja was launched in December 2020. The platform empowers informal retail merchants to both purchase and sell FMCGs, as well as access digital financial services.

Through RejaReja, MarketForce joins other startups, such as TradeDepot and Sokowatch, in their efforts to modernize supply chain operations for Africa’s informal retail sector.

RejaReja's Capabilities and Growth Strategy

RejaReja provides next-day delivery for hundreds of Stock Keeping Units (SKUs) sourced from a select number of FMCG brands. While the original MarketForce retail distribution product remains successful, the founders believe RejaReja presents the greatest potential for growth.

According to the CEO, “We’ve run both models simultaneously and we’ve seen much faster traction on the e-commerce side of the marketplace. We’re investing more and more resources into that, and the pre-Series A round was raised to focus on scaling that platform.”

Acquisition of Digiduka

Last month, MarketForce acquired Digiduka, another Kenyan retail platform. Digiduka enables informal retailers to resell digital services, including airtime, electricity tokens, and bill payment options.

The acquisition resulted in the full integration of Digiduka into RejaReja, which now offers a digital wallet for retailers to function as agents and facilitate mobile money and bank payments through mobile apps, WhatsApp bots, or USSD shortcodes.

Asset-Light Business Model

MarketForce’s RejaReja operates on an asset-light model, avoiding ownership of capital-intensive assets like warehouses and delivery vehicles. Instead, the company leverages the resources of its partners – distributors, manufacturers, and third-party logistics providers – who lease their assets to fulfill orders.

Retailers utilizing RejaReja can access a diverse range of SKUs through a dedicated app and place orders accordingly. Based on their purchasing patterns, MarketForce can also offer these retailers access to working capital loans.

Future Expansion Plans

The newly acquired funding will enable MarketForce to launch RejaReja in Nigeria and expand the product’s reach across additional towns in East Africa.

Currently, the startup maintains a presence in Kenya, Uganda, and Tanzania, serving over 15,000 retail customers who process thousands of orders daily through RejaReja.

Performance Metrics and Client Base

Despite RejaReja’s recent focus, MarketForce’s original SaaS product has attracted over 10,000 monthly active users. These users have completed 300,000 transactions, totaling more than $500 million since the product’s launch in 2018.

MarketForce’s clients include prominent companies such as Pepsi, Safaricom, Fort Beverages, Lami, and Platinum Credit.

“Our clients and partners understand MarketForce’s power to increase sales performance and productivity across markets and industries,” stated CTO Mesongo. “We are building the operating system for retail distribution in Africa, and we have the right combination of technology and team to make our Pan-African vision a reality.”

Challenges and Team Building

The founders, both holding computer science degrees, acknowledged the initial difficulties in scaling MarketForce. Despite lacking prior experience in fintech or e-commerce, they addressed this gap through strategic hiring.

The CEO explained, “Retail distribution is a very hardcore business so getting the right talent, the right people who understand the traditional elements in the business but are also willing to innovate and revolutionize the space has also been interesting for us.”

Overcoming Partner Hesitation

In the company’s early stages, securing partnerships proved challenging, as potential collaborators struggled to understand how MarketForce could operate effectively without owning warehouses and logistics infrastructure.

However, as the company demonstrated its value to partners, order volumes and revenue began to increase rapidly, with the latter experiencing a 100% month-on-month growth rate, according to Mbaabu.

Industry Recognition

Zachariah George, managing partner at Launch Africa, commented, “…MarketForce has proven that they know how to leverage the entire retail supply chain as a gateway for digital payments. Their organic, as well as acquisition-driven growth and expansion strategy thus far, has proven that their understanding of unit economics and marginal customer acquisition costs is solid. As a pan-African fintech company, they are very well positioned to tap into the $700 billion that gets transacted in this space every year.”