After expanding into financial services last year at the back of a $10 million investment from International Finance Corporation (IFC) and Partech, TradeDepot, a Nigerian B2B eCommerce platform, has now raised $110 million in an equity and debt Series B funding round.
The fund will support the delivery of Buy-Now-Pay-Later (BNPL) services to 5 million SME retailers and drive further expansion of its merchant platform across the continent.
IFC returned and led the equity round, with participation from Novastar, Sahel Capital, CDC Group, Endeavor Catalyst and existing investors, Partech and MSA Capital. The debt funding was led by Arcadia Funds.
TradeDepot started as a consulting firm in 2005 before pivoting into a product-led startup in 2016 to aid seamless milk distribution across Nigeria. Now, the platform is connecting consumer goods brands in Africa directly to a target market of several million retail outlets across the continent, and also providing micro-loans to retailers to enable them to buy more products.
According to The World Bank, SMEs represent about 90% of businesses and more than 50% of employment worldwide. In Africa, SME retailers generate $1 trillion in sales annually and contribute $2.6 trillion to the continent’s nominal GDP. But these numbers are only a tiny representation of the sector’s true potential and can’t solve the problem of fragmented distribution networks and lack of access to financing.
Via its ShopTopUp platform, TradeDepot is solving these two major problems, distributing needed goods to retailers and providing them with credit that allows them to stock their inventories and then pay as they sell the goods which have a repayment value of about 5% per month.
TradeDepot has grown from over 40,000 merchants on its platform last year to more than 100,000 merchants. And it says this new funding will further expedite the delivery of its two unique offerings across its operating markets—10 cities in Nigeria including Lagos and Abuja, Accra in Ghana, and Johannesburg in South Africa.
Speaking about the new funding, Onyekachi Izukanne, CEO and co-founder of TradeDepot, said, “We remain super focused on making digital commerce and financing both accessible and affordable to neighbourhood retailers across key cities in Africa. We are delighted to be joined by an elite group of new investors and have IFC’s Wale Ayeni and Brian Odhambo of Novastar joining our Board of Directors, to support us on this journey to drive growth and prosperity across the continent.”
In 2021 alone, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of technology to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic.
“The informal sector is a large and critical part of Africa’s economy, accounting for around 80% of jobs in the region,” said Makhtar Diop, IFC’s Managing Director. “We are excited to work with TradeDepot to leverage technology to help small businesses across the continent, particularly the many retailers led by women, access the resources they need to grow and scale.”
The digitisation of SMEs continues to make headlines in Africa this year as startups in the sector like Nigerian Alerzo, Omnibiz, and Sabi have both raised big institutional funding to capture more market share. Similarly, in Northern Africa, Egypt-based Capiter and Appetito, and Morocco-based Chari are also scaling for more market share across the continent.
It’s a large market, though, and there are still millions of informal businesses that predominantly function offline. But, as for TradeDepot, it wants to capture more than 5 million SMEs as it continues to leverage and expand its BNPL offering in the 12 cities it’s currently operating in.