Egyptian B2B e-commerce startup MaxAB and Wasoko, a Kenya-based e-commerce player with operations in Tanzania, Rwanda, Uganda and Zambia, are in talks to merge operations, TechCrunch has exclusively learned from multiple sources. TechCrunch could not establish the terms of the deal. Sources say talks are still ongoing, and the agreement hasn’t been finalized.
The merger talks come as B2B e-commerce companies in Africa continue to scale back operations due to funding scarcity. Wasoko has been no exception: It recently conducted its largest round of layoffs, which affected most of its employees in Kenya, including some of the company’s executives. Earlier in the year, it left Senegal and Ivory Coast markets and closed hubs, including the one in Mombasa, Kenya, amid a push for profitability.
MaxAB, on the other hand, encountered financial challenges of its own and was actively seeking a survival strategy as its cash reserves depleted. Sources say MaxAB and Wasoko were actively exploring mergers with other e-commerce platforms. However, given their shared investors, the decision to become partners seemed more logical under the circumstances.
Meanwhile, other B2B e-commerce companies that have scaled back operations due to cash crunch and new funding realities include Copia Global, which laid off 700 employees and exited Uganda. Twiga’s push for a “lean, agile and cost-effective organization” saw the company dismiss its sales team for independent agents and do away with in-house delivery, which affected more than 300 employees. MarketForce has also experienced a tumultuous period, leading it to exit all but one market. Earlier in the year, Alerzo also scaled back operations, which affected more than 15% of the employees.
Our sources claim that while Wasoko closed a $125 million round last year, the funding was to be released as it met set milestones. TechCrunch learned that the company had only received $30 million by the time merger talks, said to be investor-led, started. The company refutes this claim, saying they received $113 million, adding that “there was no milestone system for the funds release.” Wasoko raised the Series B round from institutional investors such as Tiger Global and Avenir at a post-money valuation of $625 million.
Like Wasoko, MaxAB, the food and grocery B2B e-commerce and distribution platform serving a network of traditional retailers across Egypt and Morocco, has raised over $100 million (including a $55 million Series A and $40 million pre-Series B last year from DisruptAD, BII and Silverlake. According to some sources, the company was in talks with existing investors to raise a bridge round this year.
MaxAB is supposedly the most significant player in Egypt’s and North Africa’s B2B retail and e-commerce market (it acquired YC-backed WaystoCap for its Morocco expansion and Capiter, which was supposed to pose a threat, shut down last year). The same can be said for Wasoko in East Africa.
As of last year, the prospect of a merger between MaxAB and Wasoko, both asset-heavy businesses, seemed unlikely. In discussions with both CEOs, Belal El-Megharbel of MaxAB and Daniel Yu of Wasoko, last year, there was no indication that they were considering any merger. MaxAB’s post-pre-Series B plan focused on leveraging its network and relationships with local and multinational suppliers, aiming for full distribution in Morocco and expansion into Saudi Arabia by year’s end. Meanwhile, Wasoko aimed to explore West Africa expansion and broaden its product offerings to include point-of-sale merchant systems, bill payments and social commerce.
While MaxAB has not officially launched in Saudi Arabia according to the latest information on its website, sources claim that the startup has initiated operations in the country. Conversely, Wasoko has exited Ivory Coast and Senegal, the West African markets it initially entered, to complement its core operations in East African markets — Kenya, Tanzania, Uganda and Rwanda. Yet, despite exiting West Africa, the seven-year-old B2B e-commerce company has expanded its reach to include Zambia and the Democratic Republic of Congo.
Just last month, Yu told TechCrunch that monthly revenues had grown by over 30% since the start of 2023. He said “several markets have achieved profitability over this period and Wasoko forecasts strong ongoing growth while continuing to explore and experiment with opportunities to expand our services across Africa.”
Since launch, MaxAB, in a TechCrunch interview last October, said it has connected suppliers with over 150,000 unique traditional retailers in this food and grocery supply chain across Egypt and Casablanca. Meanwhile, Wasoko claims to serve over 200,000 informal retailers across its six markets. Both companies also offer financing products to the merchants they serve; MaxAB’s is a bill aggregation product, while Wasoko provides a BNPL product, similar to what many African B2B e-commerce platforms have commonly offered over the years.
Updated to reflect that Wasoko refutes the claim it only received $30 million of the $125 million raised.
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