Nigeria’s informal trade sector is valued at more than US$244 billion and has more than 40 million micro, small and medium enterprises.

Until a few years ago, startups achieved digitization by providing infrastructure and various e-commerce and financial services, and most of these companies operated offline.

Founded one year old, Sabi is a spin-off of Rensource, an African energy company that provides customers with electricity as a service. It is the latest startup to raise funds for the informal sector. The company confirmed to TechCrunch that it has raised $6 million in bridging financing, led by pan-African venture capital firm CRE Venture Capital.

Sabi's transitional round of financing came one year after CRE Venture Capital, Janngo Capital, Atlantica Ventures, and Waarde Capital completed the $2 million seed round.

Since the company was founded in 2015, Ademola Adesina and Anu Adasolum have been in charge of Rensource; Adesina is the founder and CEO, and Adasolum is the chief operating officer.

By providing power to these small and medium-sized enterprises, Rensource's team began to study other pain points of these small and medium-sized enterprises and find ways to increase the value beyond energy supply.

As the pandemic stopped Rensource's business, the team had time to develop the concept, which became Sabi in October 2020.

Following the company's branch in March, Adasolum led Sabi's efforts as founder and CEO, while Adesina served as co-founder and director. 

Nigeria’s Rensource raised US$20 million to power the African market through solar energy

Sabi tried to platform the informal sector and African trade through various online and offline channels. This means that Sabi is trying to supplement the middlemen (mainly distributors) in the B2B e-commerce retail chain, rather than replacing them. This model is similar to other well-known B2B e-commerce retail startups such as Sokowatch, MaxAB TradeDepot, and Twiga.

"You know, we don't want to be a technology-driven digital distributor. We are not trying to disintermediate a highly specialized market. A decisive feature of the informal sector is that all these middlemen and agents play Very narrow role," Adesina told TechCrunch.

"We believe that specialization is very important to the normal operation of the industry-whether it is aggregation, sales, or special understanding of customers, all these middlemen play a key role. The way we deal with them is that we provide them with a set of tools and Infrastructure on which they can run their business to make it more optimized."

Sabi caters to the needs of manufacturers, distributors, wholesalers and retailers and classifies them all as merchants.

The company adopts a light asset model and does not own vehicles, warehouses or goods. But it provides visibility of these assets across the entire value chain in terms of demand and supply, and they are controlled on a single platform.

Running this model frees Sabi from the limitations that typical B2B e-commerce retail platforms may face when acting as a manufacturer-to-retailer distributor.

Anu Adassoron (Founder and CEO of Sabi)

Anu Adassoron (Founder and CEO of Sabi)

For example, a platform with heavy assets cannot use the same truck to transport goods from two different suppliers, nor can it use the same sales staff when distributing goods from different suppliers to retailers. On the other hand, Sabi does not have such restrictions, so when other platforms try to standardize operations around the off-take of goods, Sabi focuses on off-take monitoring.

"We focus on processes, policies, and monitoring to understand different types of users and monitor how third parties we work with serve them," said CEO Adasolum.

"Therefore, each off-taker’s net experience is different, and it is more suitable for their specific type of business. So I will not go to companies that are accustomed to working in a specific way and change it, but provide them more through our platform. Several other channels I like."

These channels include offline agents, call centers, merchant partners, supplier centers, and mobile applications. Every stakeholder can access tools related to inventory management, sales, tracking, digital invoicing, and analysis on the platform.

"We start with what makes them comfortable, not what we think is the best," the CEO added. 

Merchants on Sabi deal in fast-moving consumer goods and products in other fields such as agriculture, electronics, and chemicals. This category-agnostic platform has more than 175,000 merchants who have conducted B2B transactions, and the annualized GMV operation rate totals more than 200 million US dollars. More than 10,000 agents provide services to these merchants on Sabi's network.

When any merchant makes any sale in the market, Sabi makes money by charging transaction fees. The company also makes profits by providing them with financing.

Adesina said that in the first quarter of 2022, Sabi plans to launch a subscription model, where agents will pay a monthly fee to access the reseller model.

Also in Sabi's pipeline, it provides manufacturers with visibility and data-supported insights, and directly participates in the downstream of the value chain.

Sabi grows an average of 40% per month in Nigeria and intends to replicate its rapid growth in other African countries, Kenya and South Africa.

The company opened a store in Kenya last month, and has just hired some employees in South Africa, and plans to go online early next year. Adesina said that another round of Series A financing may end in time to promote the company's expansion in these two countries.

Pardon Makumbe, co-founder and managing partner of CRE Venture Capital, emphasized in a statement why his company doubled its investment in less than a year. He said: “Sabi provides services to informal businesses Its online and offline methods, coupled with the quality of its platform and service provider curation, have clearly taken root in Nigeria. The company is expected to become one of the fastest-growing African companies in 2021, and there is no sign of slowing down. "

In addition to market demand, Sabi's growth has the background of its founder. Before Sabi and Rensource, CEO Adasolum worked at Jumia, where she was responsible for offline sales in several African countries: Nigeria, Ghana, and Kenya.

She has also worked in commercial operations and merchant acquisitions for this African e-commerce giant. Adesina also has extensive experience working with multinational companies such as Capricorn Investment Group, Rockefeller Foundation and JPMorgan Chase.

Adesina believes that the digitization of the offline process of B2B e-commerce retail will continue, although there are doubts about the reasons for the existence of many participants in this field. He believes that as more and more start-up companies enter the market, more venture capital will follow.

Sabi's monthly GMV numbers are one of the reasons why the co-founders have this belief. Currently, the company claims to be processing monthly GMV of approximately US$12 million.

Although Africa’s largest e-commerce company Jumia recorded this number on average after five years of operation, it took less than a year for Sabi to achieve this feat, which can be attributed to the country’s informal B2B e-commerce retail The size of the market.

"The kind of data we see now, such as real-time understanding of whether people like this product or that product, will accumulate and grow exponentially in the next few years," the co-founder said.

"Then I think that, like the kind of super-digitalization of the very informal economy that people saw in China in the late 1990s, I think it happened faster in Africa than most people realized. I think it's people Did not realize how fast it would happen."