Sabi, a one-year-old retail platform that is a spinoff from Rensource (an African energy firm that provides consumers with power-as-a-service) is the latest company to raise financing to serve the informal sector. The startup has closed a $6 million bridge deal led by CRE Ventures, a pan-African VC fund.
Sabi’s bridge investment comes a year after the company raised $2 million from CRE Ventures, Jaango Capital, Atlantica Ventures, and Waarde Capital in a seed round.
Sabi’s monthly GMV figures are one of the reasons investors trooped in in this round. The company claims to be on the verge of processing $12 million in monthly GMV right now. While Jumia, Africa’s largest e-commerce company, achieves this amount on average after five years in operation, Sabi achieved it in less than a year, owing to the scale of the country’s informal B2B e-commerce retail industry. Also, more than 175,000 merchants use the category-agnostic platform, with B2B transactions totaling more than $200 million in annualized GMV run rate. On Sabi’s network, more than 10,000 agents service these merchants. The company is also growing on an average of 40% month on month in Nigeria.
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The backgrounds of the founders also influenced the latest round to a great extent. Prior to joining Sabi and Rensource, CEO Adasolum worked at Jumia, where she was in charge of offline sales in Nigeria, Ghana, and Kenya.
She has also worked for the African e-commerce behemoth in commercial operations and merchant acquisition. Co-founder Adesina has extensive expertise dealing with international corporations, working with organizations, such as the Capricorn Investment Group, the Rockefeller Foundation, and JP Morgan.
“Sabi’s online and offline approach to serving informal businesses, combined with the quality of its platform and service provider curation, has clearly taken root in Nigeria. The company is on track to be one of the fastest-growing African companies of 2021 and is showing no signs of slowing down,” Pardon Makumbe, co-founder and managing partner of CRE Venture Capital said.
“We’re not trying to be, you know, a tech-enabled digital distributor. We’re not trying to disintermediate a market full of hyper-specialization where one of the defining characteristics of the informal sector is you have all these middlemen and agents performing a very narrow role,” Founder and CEO Sabi Ademola Adesina said.
“We think that specialization is important for the sector to work properly — whether it’s aggregation, making a sale, knowing the customer especially well, all these middlemen play a key role. And the way we deal with them is we give them a set of tools and an infrastructure they can run their business on to make it more optimized.”
What You Need To Know About Sabi
Sabi was spawned out of Rensource which has been led by Ademola Adesina and Anu Adasolum since its inception in 2015 (with Adesina serving as founder and CEO and Adasolum as COO), after the founders investigated the additional issues that their Rensource customers were experiencing, beyond energy. Sabi was birthed in October 2020, with Rensource’s business halted by the epidemic.
Following Sabi’s branch out, Adasolum serves as the company’s founder and CEO, while Adesina serves as a co-founder and director.
Sabi is an attempt to use multiple online and offline platforms to platform the informal sector and African trade. This implies Sabi aims to supplement rather than replace the middlemen (mostly distributors) in the B2B e-commerce retail chain, a model similar to that of other well-known B2B e-commerce retail businesses such as Sokowatch, MaxAB TradeDepot, and Twiga.
Sabi provides services to manufacturers, distributors, wholesalers, and retailers, classifying them all as merchants.
The company uses an asset-light approach, which means it doesn’t own any trucks, warehouses, or inventory. However, it enables visibility into these assets from both the demand and supply sides, as well as controls, on a single platform.
Sabi is free of the limits that a conventional B2B e-commerce retail platform could encounter while operating as a distributor for manufacturers to retailers when using this approach.
Sabi earns money by charging merchants a transaction charge when they make a sale on the marketplace. By providing customers with financing, the corporation gets a profit.
Last month, the company opened its doors in Kenya, and it has recently made a few hires in South Africa, with plans to go online early next year.
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