Kenyan e-commerce and fintech platform for mass market consumers copia global appointed John Lazarthe former CEO of Microsoft subsidiary Metaswitch, has joined the company’s board of directors on the back of $20 million in new funding.
Enza Capital, the pan-African venture capital firm co-founded by Lazar in 2019, is one of the larger participants in the Series C extension round, including global private bank LGT, investment firm Goodwell Investments, Also included is the U.S. International Development Finance Corporation (DFC). ), German financial services provider DEG, Swiss impact fund Elea, Perivoli Foundation and Sorenson Foundation.
Lazar has extensive experience building and managing businesses. He joined Metaswitch Networks in 1987 as a software engineer and later became Chairman and CEO as the company established its leadership in cloud communications software with investment support from Francisco Partners and Sequoia Capital. I was appointed CEO. Lazar, who resigned from both roles in 2016, four years before Microsoft acquired the company, is also chairman of the UK-based charity Raspberry Pi Foundation, and is an angel investor and investor in the UK and Africa. He is also a mentor to over 40 pre-seed and seed investors. investment.
In a conversation with TechCrunch, Lazar said he has a long-standing professional relationship with the Copia team that has impressed Enza Capital with its fulfillment network over the years and increased digital adoption from consumers. , admitted that this is one of the reasons to support e-commerce in Kenya. Clothes.
According to the International Monetary Fund (IMF), personal consumption in Africa is expected to exceed $2 trillion Over the next three years, the continent’s burgeoning middle class will drive this growth. Copia, which has been around for 10 years, targets rural, middle- and low-income African consumers. These consumers enjoy more choice, price, and access to goods and services compared to urban and high-income consumers who use Western-style or African-focused platforms such as Jumia and Takealot. , faces challenges in terms of reliability. Therefore, although this target market may be difficult to find and its wallet size may be small, Copia is approaching it with a hyper-local strategy, reaching a significant number of approximately 750 million people across Africa. We believe there is an opportunity given the collective purchasing power of
Copia leverages its local agent and logistics network to tap into this market. The company boasts a strong network of over 50,000 agents who are small business owners in towns and villages across Kenya and has served over 2 million consumers. Most of these orders executed through Copia’s distributor network are made offline, with customers ordering household goods, electronics, or food products in person at the distributor’s store, via USSD, or by phone. Ta.
However, driven by falling data costs and increasing smartphone penetration and ownership in Kenya (73% of low- and middle-income Kenyan consumers now own a smartphone, down from 10% a decade ago), A 10-year-old e-commerce company recently ran a campaign to digitize its agent network, increasing app usage from 5% to 80% in one year. Copia said in a statement that digitized agents can double their revenue, and by exploring smartphone financing models, they can focus their subsequent digitization efforts on millions of consumers. This will allow companies like M-KOPA to enter a thriving market.
“I have respected this company for a long time and think the conditions are right. E-commerce companies are facing some difficulties at the moment, but a kind of push towards digitalization is a good thing for us. It feels like a tipping point and just changes the game in unit economics and efficiency,” said Mr Lazar, who was awarded a CBE for services. “So when Tracy called us and told us they had this internal round and wanted to bring on additional partners, we were very excited to participate.”
Copia has recorded 100% annual growth over the past few years, with founder and chairman highlighting scale and rapid expansion as key objectives for profitability. tracy turner explained on the same call with TechCrunch. However, as global capital markets have experienced a downturn and investor focus has shifted from models that rely on scale for profitability, to now emphasize the importance of demonstrating sound unit economics. In response, Copia underwent fundamental changes last year.
The e-commerce company has secured more than $120 million in funding since its inception, including a $50 million Series C round in January, but this year it scaled back its expansion plans and implemented significant layoffs. . At least 700 roles will be eliminated. Reduce number of Kenyan employees by 25% July and Closed Uganda operations Similar to three months ago, this move is in line with broader trends seen across industries this year, with many companies considering reducing labor costs as their first strategy when adopting cost-cutting measures. are doing.
“We recognized in the capital markets environment that we did not want to continue operating in Uganda, which is a great market and opportunity. We did not have the funds to make it profitable, so it made sense to hold off there. Then we looked at our Kenyan operations and realized we needed to streamline there as well,” Turner said. “And the fact that our customers have become digital so rapidly, our current shift to a digital focus means we need to change the way we operate in Kenya. So we did this to focus our business on digital relationships with our customers, which is completely different than it was just a year ago.”
Copia’s shift in focus from simply growing sales to achieving profitability in Kenya has helped it minimize losses since new management took over in Q4 2022. It reflects a strategy similar to Jumia’s approach of slowing growth. Both companies face headwinds that call into question the sustainability of B2C electronic services. Commerce takes place in Africa, albeit with different e-commerce models operating. It is worth noting that B2B e-commerce platforms are also grappling with a series of challenges in the market.
Despite the challenges, executives from both e-commerce companies, which have been in business for 10 years, said in separate conversations with TechCrunch that the companies, which now offer financial services alongside e-commerce, are stable. We have unwavering confidence in our ability to achieve the same profitability. They argue that it is only a matter of time before these challenges are overcome and are optimistic about the future profitability of the business. However, both platforms face distinct goals. While Copia strives to achieve profitability in a single market, Kenya, Jumia has to compete across 11 markets.
But Turner said Copia, which will have annual revenue of more than $60 million by the end of 2023, maintains pan-African ambitions despite its focus on making money in Kenya. Point out. The founder and chairman said that once the e-commerce company achieves profitability in the East African market, it plans to expand to 14 other strategically planned countries. “We are keeping our heads down right now and focusing on Kenya and will not look up until we achieve that milestone. We have done a lot of scouting work and are planning where to go next. However, our international expansion plans will take place once we achieve profitability in Kenya,” she said.
As for John, as he said in the interview, three things remain of paramount importance to him now that he has joined the company’s board of directors. These include leveraging the experience and network of technical operators to support talent, providing sales and revenue generation strategies, and acting as a sounding board. To management.
Source: techcrunch.com
