(Bloomberg) — U.S. private equity firms Tiger Global and Avenir Growth Capital led a funding round for Kenyan e-commerce platform Sokowatch at a $625 million valuation, which the firm will use to expand into new markets.
Sokowatch, which serves more than 50,000 merchants, plans to use the $125 million it raised to help fund an ongoing expanson in the cities of Abidjan in Ivory Coast and Senegal’s Dakar in Francophone West Africa, according to founder Daniel Yu. The company is also seeking to expand into Nigeria and South Africa — potentially through acquisitions.
“Somebody has to set up and operate the infrastructure in Africa,” Yu said in an interview. “It is that infrastructure that gives us the capability to very quickly springboard into other related areas.”
International investors are increasingly targeting African startups — both fintech and companies providing last-mile delivery — to capitalize on the vast numbers of both online and unbanked in the continent of 1.4 billion people. Sokowatch estimates Africa’s informal retail sector to be worth about $600 billion, a huge market yet to be fully tapped.
The e-commerce platform also provides financial services such as providing shop owners with the means to purchase goods. Rivals include Jumia Technologies AG, which offers similar services in countries led by Nigeria and is now listed in New York.
Tiger Global, the firm of billionaire Chase Coleman, also invested in Nigerian payments unicorn Flutterwave Inc.
Other new investors in Sokowatch include Binny Bansal, co-founder of Indian e-commerce firm Flipkart, and Sujeet Kumar of Udaan, India’s largest business-to-business e-commerce platform. Kumar will join Sokowatch’s board to bring “lessons learned and experience” from the Asian market.
“Innovations that have come out of emerging markets in Asia can play a huge role in making e-commerce work for the masses in Africa,” Yu said. “We see the opportunity to leapfrog these traditional models that have mainly come from the West.”
The company, which also operates in Tanzania, Rwanda and Uganda, is being re-branded to Wasoko.
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“Informal retailers capture the vast majority of consumer spend in Africa, and they are dramatically under-served by existing distribution and financial infrastructure,” said Andrew Sugrue, Founding Partner at Avenir Growth Capital.
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