TradeDepot receives $ 110 million from IFC, Novastar to expand BNPL service to dealers across Africa

Startups digitizing B2B e-commerce and retail in Africa continue to make headlines after the pandemic paved the way for widespread disruption to offline retail and commerce.

TradeDepot, a Nigeria and US-based company that connects consumer product brands with thousands of retailers and helps distribute them, has initiated a new $ 110 million equity and debt financing round to open more retail stores and now expand its buying. pay later for service across the continent.

Although TradeDepot has not commented on equity’s share of debt, data from the company’s SEC filings put the equity’s equity at nearly $ 42 million.

Series B funding comes almost eighteen months later Collect $ 10 million jointly managed by Partech Africa and the International Finance Corporation (IFC).

IFC led the round this time, while Novastar, Sahel Capital, CDC Group, Make an effort Catalyst and existing investors, Partech and MSA Capital participated. The debt financing was led by Arcadia Funds, a lender specializing in P2P and marketplace lending, as well as insurance-linked securities.

As part of the round, Wale Ayeni, IFC’s Head of Africa Venture Capital Investment, and Brian Odhiambo, Novastar Ventures’ West Africa Director, will join TradeDepot’s board of directors.

TradeDepot operates a B2B marketplace that connects small stores, kiosks and retailers with wholesalers of global consumer brands who have access to food, beverages and personal care products. The company owns its warehouses and driver fleets to carry out the distribution.

Last year the company had over 40,000 dealers on its platform; It now serves more than 100,000 merchants, according to CEO Onyekachi Izukanne. In the call with the CEO, he also mentioned that TradeDepot had increased its GMV five times over that period.

For the past five years, TradeDepot’s main work has focused on building the supply chain with technology, engaging retailers one at a time. The company is now offering a full range of products for the onboarding users adopting digital wallets and financial services, particularly loan or BNPL offerings.

The BNPL offer is embedded within the company’s ShopTopUp platform, where retailers can use the application to access a credit line for all consumer goods.

A TradeDepot warehouse

However, only Like any B2B e-commerce platform that offers BNPL services, TradeDepot does not offer cash advances to these merchants. Instead, it sends the products direct to them while paying in installments. The repayment value is just under 5% per month.

“Are dealers able to double or triple what they do normally Buy only because of this access. We think that these embedded financial services will be an integral part of this narrative: on the one hand the supply chain and on the other hand everything that has to do with financial services to make these companies work, ”said the CEO. “We think they go together. And have been for the past year and a half has been defined by US Focus on bringing more of these embedded financial products to market. “

When the five-year-old company announced it would offer credit in 2020, it built scoring models by using equity to fund loans to retailers from its balance sheets. The company claims its BNPL model resulted in a 200% increase in transaction volume for retail store owners.

Lending to these retailers is on the way (facing theirs to buy History, past repayment performance and other related data points to predict their creditworthiness) for 18 months that TradeDepot establishes a debt structure that can be implemented on a large scale.

A large majority of small and medium-sized businesses in Nigeria and across Africa are offline. These companies have sales of $ 1 trillion yearly and contribute $ 2.6 trillion to the continent’s nominal GDP.

These numbers catch the eye of a growing cohort of startups who see opportunities in providing digital infrastructure and finance to a fragmented distribution network along the value chain. And as long as the jury has not yet decided whether retailers can effectively Using and scaling online methods, prominent players such as Capiter, Sokowatch, Alerzo, MarketForce, Sabi and Omnibiz continue to expand in the most important African markets.

“The informal sector is a large and critical part of the African economy and provides about 80% of the jobs in the region,” said Makhtar Diop, IFC’s Managing Director, in a statement. “We are excited to work with TradeDepot to use technology to help small businesses across the continent, especially the many women-run retailers, access the resources they need to grow and scale. “

TradeDepot’s Series B round is currently the largest for any B2B e-commerce platform in Africa, in terms of both equity and leverage. The company was one of the first to enter the field and started distributing milk to small retailers in Lagos, Nigeria.

Izukanne believes that the emergence of new startups targeting the market at different touchpoints, the inclusion of convenience and innovative pricing have made it easier for investors to see the opportunities of offline retail digitization.

“If you had a conversation with an investor four or five years ago, it took a lot of education to convince them why this was an opportunity and why they should get on board,” said the CEO, who founded the company with Michael Ukpong and Ruke Awaritefe.

I think What we are seeing is that the market is now seizing this opportunity. You have more parties, especially several serious ones come in and try to build this up. It takes many iterations to find the models that work. And more parties you find doing this type of hacking will speed up the innovation in the room, so this is super useful.

TradeDepot is active in 12 cities in Nigeria, Ghana and South Africa (Accra, Johannesburg and ten cities in Nigeria).. Izukanne said the new funding will allow TradeDepot to double its activities in these three countries and expand its presence in Nigeria to capture more of the 5 million SMEs it sees as its target market. The debt financing will help provide the BNPL service to these retailers.

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