Tesh Mbaabu, co-founder of the Kenyan tech startup MarketForce, recently penned a heartfelt blog post reflecting on the company’s journey, marked by both triumphs and stumbles.
MarketForce, initially envisioned as a sales force automation solution for consumer brands, has undergone a significant pivot, emerging as a key player in Africa’s booming social commerce landscape.
Mr Mbaabu describes the initial iteration of MarketForce, launched in 2018, as a struggle. While the concept held promise, the business model proved unsustainable due to slow growth, lengthy sales cycles, and a reliance on venture capital in a difficult funding environment.
“We bootstrapped for a year and a half before finally convincing friends, family, and angels to inject $200K in seed capital — most of them entering the world of venture capital (VC) investing for the first time. Just as we finished raising, the world went into crisis around COVID-19, nearly killing our business,” the co-founder noted, adding: “We lost most of our recurring revenue when the pandemic hit, and our largest client threatened to pull out in favour of building the software internally to reduce costs. When we weighed the options, we knew we would only survive if we redefined the business. We pivoted from a SaaS company selling enterprise software to large FMCGs/Financial Institutions to a B2B marketplace directly serving neighbourhood merchants.”
Faced with these challenges, Mr Mbaabu and his co-founder Mesongo Sibuti made a bold decision in 2020. They pivoted the company from B2B enterprise software to a B2B marketplace platform called RejaReja, catering directly to neighborhood merchants.
This shift proved successful, attracting investment from Y Combinator and enabling rapid expansion.
“This gave us the much-needed boost to officially launch RejaReja, our B2B e-commerce platform that rapidly grew and enabled us to raise an additional $2M for product development and geographic expansion in 2021, followed by a significant Series A investment in 2022.”
RejaReja empowered merchants by transforming them into one-stop financial service shops, boosting their earnings and tackling last-mile distribution hurdles.
“In just 3 years, we expanded our footprint to 21 cities across 5 countries: Kenya, Nigeria, Uganda, Tanzania, and Rwanda, creating over 800 jobs and serving over 270,000 merchants. During that period, we have delivered just shy of 1 million orders, amounting to over $160 million in gross transaction volume on RejaReja alone.”
However, even RejaReja encountered difficulties.
The B2B distribution segment’s razor-thin margins and fierce price competition threatened profitability.
After attempting various tweaks, Mr Mbaabu and Mr Sibuti were forced to acknowledge the limitations of the model.
The story doesn’t end there. Mr Mbaabu emphasizes the importance of learning from failures and highlights the valuable lessons gleaned from the RejaReja experience.
He acknowledges missteps regarding venture capital dependence and the need for a laser focus on customer dollars.
“But in our bid to scale quickly, we did not realise that we were treading in new territory or anticipate the “funding winter” that would strike later that year. This taught us a very hard, painful lesson. Venture capital is not for good, or even great, companies. It’s for companies that are so excellent that they produce outsized returns at the right time in the right market. We got this completely wrong, and it hurt us when the committed capital didn’t fully come through. Now we know that every dollar a startup can raise is a gift. It should never be the life-blood of the business.”
This brings us to the “next chapter” for Mbaabu and Sibuti.
Leveraging their expertise and the learnings from MarketForce, they’ve joined forces with another startup, Chpter.
Founded in 2021 by Mark Muchiri and Kuria Gakuru, Chpter provides an AI-powered conversational commerce platform specifically designed for social media merchants.
Mr Mbaabu recognizes the massive potential of social commerce in Africa, where platforms like Facebook, Instagram, and WhatsApp are dominant e-commerce channels.
However, he highlights the inefficiencies inherent in these platforms for managing the entire online shopping experience.
Chpter aims to bridge this gap by offering features like automated conversations, marketing tools, and integrated payments, all within a single platform.
With Chpter, Mbaabu and Sibuti are on a mission to empower one million African merchants to maximize profits and thrive in the digital age.
Currently operational in Kenya and South Africa, Chpter has already seen success in boosting merchants’ revenue through social media channels.
Mbaabu’s story offers valuable insights for aspiring entrepreneurs. He underscores the importance of resilience, embracing failure as a learning opportunity, and the courage to pivot when necessary.
MarketForce’s evolution exemplifies the adaptability required to navigate the dynamic African tech scene and the significant potential of social commerce in empowering African businesses.