Ex-Metaswitch PDG John Lazar rejoint le conseil d’administration de Copia alors que la tenue de commerce électronique kenyane râte en 20 M$ pour pousser vers la rentabilité

Copia Global a nommé John Lazar, l’ancien directeur général de Metaswitch, à son conseil d’administration à l’arrière de 20 millions de dollars en nouveaux fonds.

Kenyan e-commerce and fintech platform for mass market consumers Copia Global has appointed John Lazar, the ex-CEO of Metaswitch, a Microsoft subsidiary, to its board off the back of $20 million in new funding.

Enza Capital, the Pan-African VC firm that Lazar co-founded in 2019, was among the large participants in the Series C extension round, which also includes global private bank LGT, investment firm Goodwell Investments, the U.S. International Development Finance Corporation (DFC), German financial service provider DEG, Swiss impact fund Elea, Perivoli Foundation and Sorenson Foundation.

Lazar has deep experience building and managing businesses. He joined Metaswitch Networks in 1987 as a software engineer before becoming chairman and CEO as the company established its leadership in cloud communications software, with investment backing from Francisco Partners and Sequoia Capital. Lazar, who stepped down from both roles in 2016, four years before Microsoft acquired the company, also chairs the U.K.-based charity Raspberry Pi Foundation and is an angel investor and mentor in the U.K. and Africa, with over 40 pre-seed and seed investments.

In a conversation with TechCrunch, Lazar admits that having a long-standing professional relationship with the Copia team, who have impressed Enza Capital with its fulfillment network over the years and increasing digital adoption from consumers, is one reason for backing the Kenyan e-commerce outfit.

According to the International Monetary Fund (IMF), consumer spending in Africa is anticipated to surpass $2 trillion in the next three years, with the continent’s burgeoning middle class driving this growth. The decade-old Copia targets mid- and low-income African consumers in rural areas. These consumers face challenges accessing goods and services regarding choice, price value, and reliability compared to their urban or higher-income counterparts who utilize Western-style and Africa-focused platforms like Jumia and Takealot. Thus, despite the difficulties in locating this target market and their potentially smaller wallet sizes, Copia sees an opportunity given the substantial number — approximately 750 million people across Africa — and the collective purchasing power when approached with a hyperlocal strategy.

Copia uses a network of local agents and logistics to reach this market. The company boasts a robust network of over 50,000 agents who are small business owners in towns and villages across Kenya that have served over 2 million consumers. Most of these orders executed through Copia’s agent network have happened offline as customers place orders for household items, electronics, or food items in person at agents’ shops, via USSD, or by phone.

However, buoyed by the reduction in data cost and increase in smartphone penetration and ownership in Kenya (73% of middle- and low-income Kenyan consumers now own smartphones, a leap from under 10% a decade ago), the 10-year-old e-commerce company recently ran a campaign to digitize its network of agents, increasing their app usage from 5% to 80% in a year. Copia, which, in a statement, notes that digitized agents can double their income, will focus its subsequent digitizing efforts on its millions of consumers by exploring smartphone financing models, thereby tapping into a market where the likes of M-KOPA are thriving.

“I’ve admired this company for a long time, and we think the conditions are right. E-commerce companies are facing some difficulties at the moment, but the kind of push towards digitization feels like an inflection point for us and it just changes the game on unit economics and efficiencies,” said Lazar, who was awarded a CBE for services to engineering by the U.K. in 2016. “So when Tracey called us to say they had this internal round and they’d love to bring an additional partner in, we were super excited to join.”

Copia experienced annual growth of 100% for the last couple of years, emphasizing scale and swift expansion as critical objectives for profitability, founder and chair Tracey Turner explained on the same call with TechCrunch. However, with the global capital markets experiencing a downturn and investor focus shifting away from models reliant on scale for profitability to emphasizing the importance of demonstrating healthy unit economics in the present, Copia underwent a fundamental shift in the past year in response.

The e-commerce company, having secured over $120 million in funding since its inception, including a $50 million Series C round in January, dialed back its expansion plans and implemented significant workforce reductions this year. With at least 700 roles cut, including a 25% reduction in its Kenyan headcount in July and the closure of its Uganda business three months earlier, the move aligns with a broader trend seen across various industries this year where many companies view reduced labor costs as the first strategy when employing cost-cutting measures.

“We recognized in our capital markets environment that we didn’t want to continue the Ugandan operation, which was a great market and opportunity. Without the capital to get it all the way to profitability, it made sense to hold off there. Then, we looked at the Kenyan operation and knew we had to streamline Kenya as well,” said Turner. “And our shift to focusing on the digital now coming from the fact that our customers have digitized so quickly means we needed to change how we operate in Kenya. And so we’ve done that to focus the business on the digital relationship with the customer, which is quite different from what it was just a year ago.”

Copia’s shift in focus from solely boosting the top line to achieving profitability in Kenya reflects a strategy akin to Jumia’s approach of minimizing losses and slowing growth since new management assumed control in Q4 2022. Both companies have encountered headwinds that question the sustainability of B2C e-commerce in Africa even though they operate different e-commerce models. It’s worth noting that B2B e-commerce platforms are also grappling with their set of challenges in the market.

Despite the challenges, executives at both e-commerce companies (with decade-long operations), in separate conversations with TechCrunch, are unwavering in their confidence that their companies, now offering financial services alongside e-commerce, can achieve consistent profitability. They argue that overcoming these challenges is only a matter of time, expressing optimism about the future profitability of their businesses. However, both platforms are confronted with distinct objectives: Copia strives to achieve profitability in a single market, Kenya, while Jumia has to battle it out across 11 markets.

Yet, Turner points out that Copia, whose annual revenues will exceed $60 million by the end of 2023, maintains Pan-African ambitions despite its focus on becoming profitable in Kenya. The founder and chairman noted that once the e-commerce company achieves profitability in the East African market, it plans to extend operations to 14 other countries it has strategically mapped out. “We’re all heads down and focused on Kenya right now, and we won’t pick up our heads until after we hit that milestone. We’ve done a lot of reconnaissance work and planning for where we’ll go next and the international rollout plan will come after we reach profitability in Kenya,” she said.

As for John, three things remain paramount now that he’s joined the company’s board, as he noted in the interview: drawing on his tech operator experience and network to help with talent, providing sales strategy and revenue generation strategies, and acting as a sounding board to the executive team.

 

Laisser un commentaire

Votre adresse e-mail ne sera pas publiée. Les champs obligatoires sont indiqués avec *

WP Radio
WP Radio
OFFLINE LIVE
fr_FRFrench