Kenyan e-commerce pioneer Copia is facing a dire financial situation just months after securing a significant Sh2.6 billion ($20 million) funding boost.
The startup, founded in 2013 by Tracey Turner and Jonathan Lewis, is now considering drastic measures due to financial constraints.
Copia has issued a warning that it may need to cut 1,060 jobs as it struggles to secure additional funding to sustain its operations.
The business-to-consumer (B2C) company, known for providing a platform for rural, middle to low-income consumers to order products conveniently, is facing unprecedented challenges.
In a letter dated May 16 to its employees, Copia expressed the urgency of the situation. Despite efforts to secure additional funding, the startup is contemplating organizational restructuring to ensure its sustainability. If financial challenges persist, the company may even face shutdown.
“Despite our best efforts to navigate this challenge and explore avenues for additional funding, we find ourselves in a position where we must consider a far-reaching organizational restructuring to ensure the sustainability of our operations or even a possible shutting down of operations. While we are working hard to try and overcome the hurdle, it is important to highlight that uncertainties lie ahead. As a result, it is very likely that there will be a reduction in our workforce and it is possible that the payment of salaries could be at risk,” read pert of the letter.
The potential restructuring could result in the elimination of about 1,060 roles within the company. Additionally, if operations cease, all staff will be at risk of termination.
The firm has given its employees a one-month redundancy notice in compliance with local labor laws.
Copia’s business model relies on digitally-enabled, locally-based agents who serve as order and delivery points for consumers. These agents, often local shopkeepers, facilitate product selection and payment from a Copia catalogue.
Orders are confirmed via SMS, and products are delivered to the agent for customer pickup within two days.
This announcement comes as a setback just five months after Copia announced its successful Series C extension round, which saw it secure Sh2.6 billion in funding. Despite this recent injection of capital, the startup finds itself in a precarious position.
Previously, Copia had undergone operational restructuring in July the previous year, resulting in a 25% reduction in its workforce. Economic downturn and constrained capital markets were cited as reasons for this move, affecting approximately 350 of its 1,800 workers at the time.