Sabi, a B2B e-commerce startup based in Lagos, is engaged in providing digital commerce infrastructure to Africa’s informal economy. Recently, the company successfully raised $38 million in Series B funding, with a valuation of $300 million. This development indicates a renewed interest from investors in the B2B e-commerce market, which is currently experiencing significant changes.
The funding round saw participation from notable investors such as CommerzVentures, a specialist fintech investor based in Frankfurt, Norrsken22, a growth-stage investor focused on Africa from Stockholm, Fluent Ventures and Proof VC, both growth-stage funds based in the United States, and pan-African early-stage investors CRE Venture Capital and Janngo Capital.
Why The Investors Invested
The informal trade sector constitutes a major portion of Africa’s $1 trillion retail market. This industry, which is largely fragmented, has witnessed innovation from various startups in recent years. These startups aim to connect informal retailers with manufacturers and large wholesalers through digital platforms, including apps and a network of logistics and distribution services.
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During most of 2021 and early 2022, B2B e-commerce startups experienced significant growth, attracting substantial investments from both local and global investors. Many of these startups utilized the funds to implement growth strategies, such as providing incentives and discounts on products to onboard merchants. However, with the availability of free capital diminishing due to rising global interest rates, some B2B e-commerce startups have started reevaluating their growth strategies, cutting costs, and withdrawing from certain markets.
However, Sabi stands apart from the rest. According to sources familiar with the company’s operations, despite being in business for just two and a half years, the startup, operating in Nigeria, Kenya, and South Africa, has exhibited remarkable growth.
In late 2021, Anu Adasolum and Ademola Adesina, executives at Sabi, disclosed that the company had already amassed a network of over 175,000 merchants and achieved an annualized Gross Merchandise Value (GMV) run rate of $200 million. Since then, these figures have grown significantly, with the company now boasting over 300,000 merchants and an annualized GMV surpassing $1 billion, as confirmed by three individuals familiar with Sabi’s financials.
A Look at What Sabi Does
Sabi, operating in Nigeria, Kenya, and South Africa, provides digital commerce infrastructure to Africa’s informal economy. The startup acts as an intermediary, facilitating connections between manufacturers, distributors, wholesalers, and retailers (referred to as merchants). Sabi’s asset-light model utilizes offline agents, call centers, merchant partners, and supplier centers to engage with stakeholders in the B2B e-commerce retail chain. The company offers various tools for inventory management, sales, tracking, digital invoices, and analytics, enhancing the efficiency of the value chain.
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Sabi’s primary revenue streams remain consistent, primarily through capturing a 5–6% take rate (depending on the category) from marketplace transactions. Additionally, the company earns a financing margin on credit-related transactions that it originates. Sabi has facilitated over $100 million on behalf of local microfinance banks and fintech lenders, highlighting its role in the financial ecosystem and potentially explaining the investment from CommerzVentures, a fintech-focused investor.
Sources indicate that Sabi is currently processing around 15,000 monthly orders and experiencing over 20% month-on-month growth. While this is a fraction of Wasoko’s monthly order volume from March last year, Sabi’s higher GMV suggests that it records higher average order values, primarily from wholesalers rather than retailers. To further capitalize on this, Sabi plans to launch new products and features aimed at its agents and last-mile merchants. These additions are expected to create additional revenue streams and strengthen the company’s focus on the B2B payments value chain.
Sabi, which caters to a broad range of product categories, including FMCG goods, agriculture, electronics, and chemicals, also has expansion plans. According to insiders, the company intends to enter new markets, including Tanzania and Malawi through acquisition, as well as the Democratic Republic of Congo (DRC) and Francophone West Africa.
Sabi
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard