Egyptian B2B e-commerce startup MaxAB and Wasoko, a Kenya-based e-commerce player with operations in Tanzania, Rwanda, Uganda and Zambia, are discussing a potential merger of their operations, multiple sources have exclusively revealed to TechCrunch.
The merger discussions come at a time when B2B e-commerce companies in Africa are facing challenges in securing funding, leading to scaling back of operations. Wasoko is no exception, as it recently conducted its largest round of layoffs, affecting many of its employees in Kenya, including some of its executives. Earlier this year, Wasoko made the decision to withdraw from the markets of Senegal and Ivory Coast, closing its hubs in these countries, including the one in Mombasa, Kenya, in an effort to strive for profitability.
According to our sources, Wasoko raised a $125 million round last year, but the funding was structured so that it would be released as the company achieved certain milestones. However, when the merger talks commenced, it was revealed that only $30 million of the funding had been received. The Series B round was funded by institutional investors such as Tiger Global and Avenir, with a post-money valuation of $625 million.
Similarly, MaxAB, the food and grocery B2B e-commerce and distribution platform serving a vast network of traditional retailers in Egypt and Morocco, has raised over $100 million through several funding rounds. This includes a $55 million Series A and a $40 million pre-Series B last year from DisruptAD, BII, and Silverlake. According to sources, the company was discussing a bridge round with existing investors for this year.
Currently, MaxAB is the leading player in the B2B retail and e-commerce market in Egypt and North Africa. The company expanded into Morocco through the acquisition of YC-backed Waystocap, while its main competitor Capiter closed down due to conflicts between its founders and investors.
There was no indication of any potential merger between MaxAB and Wasoko last year, during discussions with the CEOs Belal El-Megharbel of MaxAB and Daniel Yu of Wasoko. MaxAB’s post-pre-Series B plans focused on utilizing its established network and relationships with suppliers, both local and multinational, with plans for full distribution in Morocco and expansion into Saudi Arabia by the end of the year. Meanwhile, Wasoko aimed to explore possibilities for expansion into West Africa and diversify its product offerings to include point-of-sale merchant systems, bill payments, and social commerce.
Presently, MaxAB is not operating in Saudi Arabia, as indicated on its website. Similarly, Wasoko has yet to expand into the Ivory Coast and Senegal as planned, since it first entered the East African markets of Kenya, Tanzania, Uganda, and Rwanda. The B2B e-commerce company, founded eight years ago, has expanded its operations to Zambia and the Democratic Republic of Congo, solidifying its footprint in the African market.
Stay tuned for more updates on this developing story.
