A pre-seed fundraising round brought in $3 million for Tushop, a social-commerce network based in Nairobi that helps communities buy food at lower prices and receive free delivery of their orders.
JAM Fund, Breyer Capital, Chandaria Capital, TO Ventures, Golden Palm Investments, and DFS Lab were among the investors who took part in this funding round, which was led by 4DX Ventures and co-led by DFS Lab.
Wasoko, which used to be called Sokowatch, also joined to make their first strategic institutional investment in Tushop. This shows that they believe the team can take advantage of the chance that comes with community group purchasing in Africa.
Angel investors like GB (CEO of Flutterwave), Raja Kaul (President of Sundial Group), Eli Pollak (CEO of Apollo Agriculture), and Ida Mannoh gave the company more money. The round was oversubscribed (Director of Growth, Chipper Cash).
The money will be used to increase the size of Tushop’s workforce, make technological investments to make the company’s platform as intuitive and user-friendly as is humanly possible, and expand further inside the city of Nairobi before bringing the service to other cities in Kenya.
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Tushop makes shopping easier and cheaper for Kenyans
The main reason Tushop was started in 2021 was to make it easier and cheaper for Kenyans and, eventually, all Africans to get the food and household goods they needed. Community group purchasing can save people up to 60% on food items compared to shopping for groceries in supermarkets, dukas, or “mama mbogas.” It is also more convenient because it offers free delivery.
Tushop employs people they call “Community Leaders,” who are responsible for managing door-to-door deliveries and compiling orders from their neighbours. This not only makes the delivery of the last mile easier, but it also provides the community leaders with an extra revenue stream for coordinating and delivering orders. Community group-buying businesses like Nice Tuan in China and Favo in Brazil have done very well in other places. Nice Tuan is one such company, while Favo is another.
Significant challenges exist in Africa that can be addressed by applying this paradigm. For instance, Kenyans spend an average of 46% of their income on food, which compares to 6% in the United States, 22% in China, and 16% in Brazil.
Even though community group buying is just starting out, the market has a huge amount of potential because Africans spend $260 billion a year on food. Shopping at dukas, “mama mbogas,” supermarkets, open-air markets, or wholesalers is the status quo at the moment. However, shopping at these places is usually less convenient and more expensive than buying things as a group.
Tushop’s ability to relate with customers makes them stand out
Tushop’s founder and CEO, Cathy Chepkemboi, said the following in response to the company’s rapid growth and high rate of customer retention: “Tushop is unique in this industry because we know the customer—we are our customers! Because of our consistently low earnings, we have had to find other ways to make money throughout our lives.
Because of this, we have gotten used to the challenge of having to buy food that is too expensive for us. We also know from experience how hard it is for manufacturers to move items through a supply chain that isn’t well-connected. This creates a distance between the producers and the customers they serve. Therefore, we are hyper-focused on providing an exceptional experience for both our end customers and our suppliers and the community leaders working on the side. This will be accomplished in an integrated manner.
“We are happy to be working with some of the best investors in Africa and around the world who understand logistics, technology, and payments. We look forward to living up to their faith in us through future growth, business success, and positive social impact.” Wasoko’s investment in us is also a validating signal of the work that we have done up until this point, and we look forward to working closely with them to scale Tushop.
Peter Orth, the Managing Partner at 4DX, said, “We think the market opportunity for Tushop is huge, and we think Cathy is the perfect founder to go after it, given her deep knowledge of the industry and her great execution and growth, so far.” ” We are overjoyed to be joining such a formidable group of other investors and consultants to assist Tushop in establishing itself as the preeminent group-buying platform across Africa.”
Wasoko’s Chief Executive Officer, Daniel Yu, had this to say about Tushop: “It has been an incredible pleasure to witness Tushop’s incredible growth, which has been driven by strong leadership and a team that embodies a true understanding of consumers and the communities in which they live.” We are thrilled to be working with a group that shares our goal of making items available across Africa at prices that are affordable to the local population.
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About Tushop
Tushop was established in 2021 to allow our community leaders to earn additional revenue while simultaneously lowering the prices of food to provide our communities with a greater value for their consumables.