VNV Global, a Swedish investment firm that backs startups in the mobility, health and marketplace sectors, slashed the value of its holding in African B2B e-commerce startup Wasoko by 48%, according to its 2023 annual report.

In its annual report, VNV set Wasoko’s fair value at about $260 million as of December 2023, the same month Wasoko announced plans to merge with Egyptian peer MaxAB. The valuation is based on VNV’s 4.2% stake in the startup, which VNV values ​​at $10.9 million.

This is not the first time VNV has cut prices on Wasoko. Wasoko was valued at $501 million in Q4 2022, just months after the eight-year-old startup closed a $125 million investment round co-led by Tiger Global and Avenir at a $625 million valuation USD Series B investment. The funding round was also complicated for other reasons: Wasoko disclosed to TechCrunch in December 2023 that it had received only $113 million of the total funding round. VNV Global invested $20 million in the round.

VNV Global attributes its fair value estimate to a valuation model based on public peer transaction multiples rather than historical funding rounds.

“Wasoko is proud to have VNV Global as one of our major investors,” the Tiger Management-backed company told TechCrunch in response to the new development. “VNV has not reduced its stake in Wasoko and continues to actively support the company, Including our landmark merger with MaxAB. Wasoko is not involved in VNV’s internal reporting, but views VNV’s continued holding of Wasoko as a clear signal of expected long-term value growth. “

VNV Global also backs Blablacar and Gett, and the report was published before MaxAB announced the merger. The investment firm, formerly known as Vostok New Ventures, which backed a number of Russian startups (now spun off), said it plans to retain its stake in Wasoko after the merger. “WWith VNV’s permanent capital structure, we are generally very long-term investors (our best investments have been held for 10+ years) and believe the combined company has the potential to become a very large and valuable company in the coming years. enterprise. ” a company spokesperson said in an email to TechCrunch.

As one of Africa’s largest B2B grocery marketplaces, Nairobi-based Wasoko bypasses middlemen and offers goods at competitive prices, striking deals with major suppliers such as Procter & Gamble and Unilever. Founded in 2014 by Daniel Yu, the company has experienced continued growth, expanding from Kenya to six additional African markets by 2022. During this period, Wasoko reported annualized gross merchandise value (GMV) of $300 million. By 2023, it has a customer base of over 200,000 small retailers who use its app to order groceries and household items on-demand for their respective stores.

According to this Mastercard study, B2C e-commerce accounts for only a small proportion of the overall African retail industry, less than 1%. (Point of comparison: U.S. e-commerce accounted for 15.6% of total retail sales last quarter, according to the U.S. Census Bureau.) But brick-and-mortar retailers need to source goods, and e-commerce has proven to be a very popular channel. That. Funding and interest in B2B startups began to take off over the past decade and have surged in the wake of the COVID-19 pandemic.

But recently, B2B e-commerce startups’ business models have come under pressure: unit economics are challenging, costs are high, and profits are elusive; funding is particularly constrained in developing markets, further shortening startup runways. African startups, including B2B e-commerce platforms like Wasoko, have followed the same strategies as their counterparts further afield: layoffs; cost-cutting; closures are not uncommon.

Wasoko is one of them. In recent years, the company has shifted its focus from aggressive expansion to profitability and implemented cost-saving measures accordingly.

Before merging with MaxAB, Wasoko closed hubs in Senegal and Ivory Coast and laid off employees in Kenya. Between December 2023, when the two companies announced their merger, and March this year, Wasoko parted ways with key executives to streamline overlap with MaxAB’s business structure. Operations in Uganda and Zambia have also been temporarily halted (Wasoko expanded in the second quarter of 2023), local media TechCabal reported.

At the same time, Wasoko also provides financial services to its merchants and continues to operate in its three largest GMV markets – Kenya, Rwanda and Tanzania. The company said it expects to complete its merger with Cairo-based MaxAB by the end of this month.

For its part, MaxAB has also had a bumpy road to integration. The company operates a food and grocery B2B e-commerce platform in Egypt and Morocco, expanding into the latter after acquiring YC-backed WaystoCap in 2021.

But despite improving MaxAB found investments exceeding $100 million from Silverlake, British International Investment and others Last year itself was in financial crisis.

The structure of the new merged entity remains unclear, but MaxAB and Wasoko expect that together they will be able to provide a new lifeline to their pursuit of leading the continent’s B2B e-commerce industry profitably.

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