VNV Global, a Swedish investment firm that backs startups in mobility, health and marketplaces, slashed the value of its holding in Wasoko, an African B2B e-commerce startup, by 48%, according to its annual report for 2023. 

In its annual report, VNV set Wasoko’s fair value at around $260 million as of December 2023, the month that Wasoko announced its planned merger with its Egyptian counterpart, MaxAB. The valuation is based on VNV’s 4.2% stake in the startup, which VNV values at $10.9 million.

This is not VNV’s first markdown for Wasoko. In Q4 2022, it valued Wasoko at $501 million, just months after the eight-year-old startup closed a $125 million Series B investment co-led by Tiger Global and Avenir at a $625 million valuation. That round was complicated for other reasons, too: Wasoko disclosed to TechCrunch in December 2023 that it received only $113 million of the total funding raised in that round. VNV Global invested $20 million in that funding round.

VNV Global attributes its fair value estimate to a valuation model based on trading multiples of public peers rather than historical funding rounds.

“Wasoko is proud to have VNV Global as one of our major investors,” the Tiger-backed company told TechCrunch in response to the new development. “VNV has not reduced its shareholding in Wasoko whatsoever and continues to remain active and supportive of the company, including through our landmark merger with MaxAB. Wasoko is not involved in VNV’s internal reporting but sees VNV’s continued holdings of Wasoko as a clear signal of expected long-term value growth.”

The report from VNV Global, which also backs Blablacar and Gett, preceded the MaxAB merger announcement. The investment firm — previously known as Vostok New Ventures, backing a number of Russian startups (from which it has now divested) — said it plans to hold on to its stake in Wasoko post-merger. “With VNVs permanent capital structure, we are typically very long-term investors (our best investments have all been 10+ years of holdings) and believe the combined company has the potential to become a very sizeable and valuable business over the coming years,” the firm’s spokesperson said in an email to TechCrunch.

As one of Africa’s largest B2B grocery marketplaces, Nairobi-based Wasoko secures agreements with major suppliers like P&G and Unilever, bypassing intermediaries and offering goods at competitive prices. Founded by Daniel Yu in 2014, the company experienced consistent growth, expanding from Kenya to six additional African markets by 2022. During this period, Wasoko reported $300 million in Gross Merchandise Value (GMV) on an annualized basis. By 2023, it boasted a customer base of over 200,000 small retailers using its app to order groceries and household items on-demand for their respective stores.

B2C e-commerce is a tiny proportion of retail across Africa, less than 1% according to this study from Mastercard. (Point of comparison: in the U.S. last quarter e-commerce was 15.6% of all retail sales, according to the U.S. Census Bureau.) But physical retailers need to source goods, and e-commerce has proven to be a very popular channel for that. Funding and interest in B2B startups took off in the last decade and saw a bump in the wake of COVID-19.

But more recently, B2B e-commerce startups’ business models have come under pressure: challenging unit economics and high costs have made profit elusive; and funding has been especially constrained in developing markets, shortening startups’ runways further. African startups, including B2B e-commerce platforms like Wasoko, have followed the same playbook as their counterparts further afield: layoffs; cost cuts; and closures are not uncommon.

Wasoko was among those hit. In recent times, it has pivoted its focus from aggressive expansion to profitability, implementing cost-saving measures accordingly.

In the lead-up to its merger with MaxAB, Wasoko shuttered hubs in Senegal and Ivory Coast and laid off staff in Kenya. Between December 2023, when the companies announced the merger and March of this year, Wasoko parted ways with key executives to streamline overlap with MaxAB’s business structure. Operations were also temporarily halted in Uganda and Zambia (in which Wasoko expanded in Q2 2023), local media TechCabal reported.

Meanwhile, Wasoko also offers financial services to its merchants, and it continues to operate in its three largest GMV markets — Kenya, Rwanda and Tanzania. It has said that it expects to finalize its merger with Cairo-based MaxAB by the end of this month.

For its part, MaxAB has also been on a bumpy road to consolidation. It operates a food and grocery B2B e-commerce platform in Egypt and Morocco, expanding to the latter following its acquisition of YC-backed WaystoCap in 2021.

But despite raising over $100 million from Silverlake, British International Investment, and others, MaxAB found itself in financial peril last year.

The structure of the new combined entity still remains unclear, but MaxAB and Wasoko anticipate that together, they will be able to offer a fresh lifeline to their pursuit to lead the continent’s B2B e-commerce industry, profitably.