Nigerian B2B grocery buying platform Betastore has raised $2.5m in funding to expand its operations. The company, which was founded in 2020 and raised a $700,000 round in 2021, plans to expand in West and Central Africa.
Betastore has raised its $2.5m pre-series A funding from 500 Global, VestedWorld and Loyal VC. To date it has raised $3.2m in funding.
Betastore operates an asset light online model (i.e. it does not own or operate its own logistics, it is a service that connects buyers and suppliers through third parties). The primary benefit of asset light models is that they enable faster scaling, but it comes at the expense of control over the quality and timeliness of the service. The model tends to be seen more in markets with larger and more mature wholesale sectors, such as Egypt. The model is largely untested in Nigeria apart from Betastore.
Betastore has three core services:
- Buying platform – connecting informal retailers with suppliers (in this case, primarily distributors)
- Financing and trade credit – to enable informal retailers to scale (launching in July 2022)
- Sales analytics – add on services to retailers and manufacturers
A key part of Betastore’s proposition is helping retailers reduce out of stocks – a major driver of uptake of buying platform apps as supply chain disruption and price increases bite. Betastore promises delivery within 24 hours.
Betastore has made some extremely bold statements about its reach. It plans to operate in more than 100 cities in Nigeria as well as Côte d’Ivoire and Senegal by the end of 2022. It is also planning to expand into Ghana, DRC and Cameroon. Betastore has not released any information about how many retailers it currently works with or where they are. It does say that on average its retailers make 4.4 orders per month.
It is not the first Nigerian B2B company to make big claims. In August 2021, B2B platform Sabi raised a seed funding round and claimed to have signed up 150,000 retailers. To put this in context, the market leader in Nigeria, TradeDepot, had around 100,000 retailers using its platform five years after it was founded and at the time it raised a $110m Series B funding round in December 2021. It also operated in just 12 cities in Nigeria and had just begun operations in Ghana.
Still, one can read something into Betastore’s ambition. CEO and co-founder Steve Dakayi-Kamga is ex-Jumia. We think his pitch to investors is likely to have highlighted how Betastore’s asset light model not only enables rapid scaling but also entry into two markets that none of the Tier 1 online buying platforms (such as Twiga, Copia, Wasoko, MaxAB, Marketforce, Chari) have publicly identified as near term targets: Cameroon and DRC.
Both markets are challenging in their own ways. National distribution in Cameroon can be challenging and distributors and retailers face strong competition in the north from informal trade via Nigeria. DRC is notoriously hard to trade in, especially for international retailers.
But these two companies represent the next big expansion markets in West and Central Africa. To us, the reference to these two markets is an indicator that investors want to back a business willing to go into untouched territory. Even if Betastore does find international expansion takes longer than it plans for, we expect a major entrant into one of these two markets within the next 12-18 months.
