Kenyan e-commerce and fintech platform for mass market consumers Copia Global has welcomed a new addition to its board with the appointment of John Lazar, the former CEO of Metaswitch, a Microsoft subsidiary. This decision comes following the company’s recent injection of $20 million in new funding.
Enza Capital, the Pan-African venture capital firm co-founded by Lazar in 2019, was a major participant in Copia’s Series C extension round, along with other notable investors such as global private bank LGT, investment firm Goodwell Investments, and the U.S. International Development Finance Corporation (DFC).
“We’re thrilled to have John on board with his wealth of experience building and managing successful businesses,” said Tracey Turner, founder and chair of Copia Global. “His longstanding relationship with our team and impressive track record of investments make him a valuable addition to our board.”
Lazar’s tenure at Metaswitch Networks, which began in 1987, saw him rise from software engineer to chairman and CEO as the company became a leader in cloud communications software. He has also served as the charity Raspberry Pi Foundation’s chair, is an angel investor and mentor in both the U.K. and Africa, and has made over 40 pre-seed and seed investments.
In a conversation with TechCrunch, Lazar acknowledges his admiration for Copia and highlights Enza Capital’s interest in the company’s fulfillment network and the increasing adoption of digital services among consumers. This has been a key factor in their decision to back the Kenyan e-commerce platform.
The Potential of the African Market
The International Monetary Fund (IMF) projects that consumer spending in Africa will exceed $2 trillion in the next three years, largely driven by the continent’s growing middle class. With this potential in mind, Copia, which focuses on mid- and low-income consumers in rural areas, sees an opportunity to cater to this largely underserved market that faces barriers to accessing goods and services.
Compared to their urban and higher-income counterparts who have access to Western-style and Africa-focused e-commerce platforms, such as Jumia and Takealot, consumers in rural areas often struggle with limited options, higher prices, and unreliable service. Despite the challenges of reaching this market and their potentially smaller budgets, Copia recognizes the potential of the estimated 750 million people across Africa and their collective purchasing power.
To reach this market, Copia utilizes a network of local agents and logistics. The company currently boasts over 50,000 agents, most of whom are small business owners operating in towns and villages across Kenya. These agents have helped serve over 2 million consumers, with most orders placed offline through agents’ shops, USSD, or by phone.
However, with the reduction in data costs and a significant increase in smartphone penetration (73% of middle- and low-income Kenyan consumers now own smartphones, a significant increase from under 10% a decade ago), Copia has recently shifted its focus towards digitizing its network of agents. In just one year, the company has seen a massive jump in its agents’ usage of the Copia app, from 5% to 80%. Digitized agents have the potential to double their incomes, and Copia plans to continue this digitization effort by exploring smartphone financing models for its millions of consumers.
“I’ve long been impressed by Copia’s impressive growth and operations. We see a perfect opportunity to partner with them and help them continue on this trajectory,” says Lazar. “E-commerce companies are facing some challenges at the moment, but the move towards digitization feels like a turning point and will have a significant impact on unit economics and efficiency.”
Lazar, who was awarded a CBE for his services to engineering in 2016 by the U.K. government, also emphasizes his three main priorities in joining Copia’s board: tapping into his vast tech experience and network to aid in talent acquisition, providing valuable insights for sales and revenue strategies, and acting as a sounding board for the executive team.
Adapting to a Changing Landscape
Copia’s annual growth rate has been at a steady 100% over the past couple of years, with scaling and rapid expansion being crucial objectives for the company. However, with the global capital markets experiencing a downturn and investors shifting their focus from scaling to demonstrating healthy unit economics, Copia has had to adapt to this changing landscape.
In response, the e-commerce company, which has received over $120 million in funding since its inception, has slowed its expansion plans and implemented significant workforce reductions this year. This includes reducing its workforce by at least 700 employees, a 25% reduction in its Kenyan headcount in July, and the closure of its Uganda business a few months prior.
“It’s been a challenging year for many companies, and we recognized the need to adjust our operations to align with the current market conditions,” says Turner. “We’ve had to reassess our approach to our operations in Kenya and Uganda, but we remain confident about the future of our business.”
She also notes that Copia’s shift towards profitability in Kenya reflects a strategy similar to that of Jumia, where both companies have had to focus on minimizing losses and achieving a healthy bottom line. Despite these challenges, Copia’s annual revenue is projected to exceed $60 million by the end of 2023.
The Road Ahead
Despite current setbacks, Turner remains optimistic about Copia’s future and maintains the company’s Pan-African ambitions, with plans to expand operations to 14 additional countries once profitability is achieved in Kenya.
“Right now, we’re focused on achieving profitability in Kenya, and we won’t deviate from that goal,” says Turner. “We’ll continue to identify new opportunities, and our international rollout plan will come after we reach our profitability milestone.”
Both Copia and Jumia, with their decade-long operations, face distinct challenges in the e-commerce market in Africa. And while the road to profitability may not be without obstacles, the executives at both companies remain confident that their businesses, which now offer financial services in addition to e-commerce, will see success in the future. As John Lazar aptly puts it, “The potential for growth and profitability in Africa is too great to ignore.”