Kola Market

Millions of small businesses across Africa struggle to drive consistent sales, optimally allocate their working capital and make profit sustainably. This means they are unable to meet sales targets, lose already slim margins and cannot access affordable financing and grow sustainably. 

We identified the following: 

1) the average Key Distributor, who has a network of 1,000+ wholesalers and retailers, has 50% of their working capital (average $600k annually)  stuck in unsold inventory. 

2) 60% of wholesalers within this network are willing to return the unsold inventory (on average $10k each) in lieu of cash payment, due to lack of sales

3) there is an average $1.2million worth of credit orders that distributors are unable to fulfill due to working capital constraints, and 

4) distributors, wholesalers and retailers are unable to expand their product portfolio, as a result of an average $2million financing gap. 

At the root of these challenges is the inability of SMEs to accurately project and purchase the right quantity of inventory, easily and cost effectively access their target customers and match the right products to the right customers, quickly.

Kola Market leverages data science methods and other digital tools to provide Sales-as-a-service, Smart Inventory Recommendations and Product Financing to SMEs, enabling them to sell out promptly, stock the right quantities of inventory and expand their product portfolio. 

1. Sales-as-a-service: connecting demand to supply and vice versa. We assess excess inventory from distributors and match excess inventory to wholesalers and retailers in our network. In a recent test, we helped a distributor deplete 60% of the excess inventory of selected products, worth over $30k within 3 days. 

2. Smart Inventory: providing data science driven recommendations on the best products to buy and sell. We leverage the sales data of all customers to determine the products that are guaranteed to sell out over a particular period of time.

3. Product finance : through a buy now, pay later model, we purchase additional inventory for retailers, wholesalers and distributors to expand their product offering and increase sales

4. Customer and credit intelligence : we build profiles for our customers that enable Fintechs, financial institutions and others to offer augmented services to our customers. We combine all the sales and credit data, plus other real world data to build profiles.  

Our services are enabled via a mobile and web app. The app features a marketplace for SMEs to easily receive orders, record sales and manage their customers on the go. We provide direct customer engagement tools such as SMS and WhatsApp, and flexible payment options. Customers can see real-time insights on best products, orders, sales and credit such as conversion rates, best selling product recommendations, total credits due and more. 

We work through close collaboration with key distributors, who are our ecosystem partners, and key points in the supply chain. Each distributor on average has a network of 1,000+ wholesalers and retailers and carries products from 10+ manufacturers. 

Across the African continent, thousands of manufacturers aim to distribute their products and capture a large market share, leveraging key distribution partners, wholesalers and retailers (MSMEs). These MSMEs are responsible for meeting very specific sales targets to earn margins from manufacturers and are also responsible for setting up the delivery operations and borrowing to fund the purchase of products and operations. However, these MSMEs are usually not well equipped to make an optimal decision on working capital allocation and which products to buy, when and how much, leading to overstocking and understocking. With limited and inadequate supplier credit, they are unable to generate consistent sales hence losing already slim margins, are stuck in bad credit cycles, and in most cases shut down. 

Most existing technology solutions are also focused on helping SMEs to purchase additional inventory from manufacturers, to keep track of sales or to access financing. These do not take into account the core problem of inventory misalignment, generating consistent sales and working capital allocation. 

Our solution resolves these by providing a holistic solution that helps SMEs to assess inventory levels, generate consistent sales and access financing that is catalytic for their growth. We leverage both digital and offline tools to unlock new markets so they can sell out their inventory in good time, while digitizing their sales and leveraging the data to predict what products to stock, when and how much to maximize profits . We then provide financing to help them stock optimal levels of inventory, with repayment timelines that are optimal for their growth. This way, MSMEs can build resilient businesses, and grow sustainably, while manufacturers and lenders also significantly increase chances of recovery.

Marie-Reine (co-Founder and CEO) worked for 5+ years in the banking and finance sector in Ghana, seeing first-hand the crippling effects of the inability of traditional financial Institutions to go beyond their rudimentary lending and advisory procedures to support the businesses we were working with to achieve real growth. I developed a cash management system which increased deposits from US$ 13.75 million to US$100 million+, and generated revenue of US$1 million per month within six months of deployment. The system is currently being used across various divisions of the bank and in other banks. This was my first insight into creative ways in which SMEs could be supported to drive growth. I went on to pursue my MBA in Asia to learn more about what they were doing right in general Tech space and return to implement similar concepts. I returned to Ghana as a marketing leader with the largest eCommerce business in Africa(Jumia),  where I witnessed the frustrations of small businesses trying to make sales via the platform. Kola was born as a result of these experiences and a deep passion to build up Africa’s SMEs as the key to our future. 

I lead the creation of the company vision and strategy together with key advisors such as the President of Sundial Group and CEO of Logos Ventures (Raja Kaul), affiliated to New Voices Family, and the CEO of Farmerline Group (Alloysius Attah), who bring a wealth of experience and network to help us grow faster. I also lead partnerships, business development and product development efforts. 

Francis, who is the lead Software Engineer, who is being engaged to be the CTO/Co-Founder. Francis has over 13 years experience building software solutions and leading teams across all the continents to develop award-winning solutions. Marie-Reine have worked together for the last seven months, executing fast and shipping products and features when they are most needed. We are building these solutions with a team of 2 software developers (android and web), product and UX designer, and two full time sales executives who provide technology support to customers in the field. 

We also have 20+ sales representatives who are staff of our distribution partners, supporting us to digitize wholesalers and retailers for a stipend. 

Since starting nine months ago, we have already supported SMEs to buy and sell inventory of over $2million(revenue) and recorded sales in the app of over $3.5million dollars, with over 3000 sign ups and actively serving 300+ customers with product financing and sales service, and digitizing of sales data. 

Although we have a lot more demand, we are currently unable to meet all the demand as we don’t currently have enough financial capacity to do so. We are actively looking to raise more funding to support our work. 

Our engagement with our customers shows that we have helped them increase revenue by over 30% through our holistic services. Distributors and wholesalers have indicated that Kola Market is the best thing that has ever happened to their business. For someone to deeply understand their specific problems and provide a solution that truly helps them grow is more than they could ask for. 50%+ of our direct and indirect (reached through distributors) beneficiaries are women, and we are actively working to grow this number. 

The first thing that interested me about Solve was the access for coaching and strategic advice from experts in the Solve and MIT networks. At the current stage of our growth, I am personally needing coaching on key areas of leadership and growth. As demand for our product grows and we look to scale our impact significantly over the next 12 months and the next 5 years, the expert advice would be very helpful in helping us reach our impact and growth ambitions much faster. Along with the support to build an impact measurement practice. I am very excited for an opportunity to have these in place at the early stages of the business so that we can build a stronger impact-driven business in the long term. 

Since starting to get some exposure to media, I have seen the large impact it has had on driving support in mind to the work we are doing. So I look forward to an opportunity for Solve to give a strong voice to the work we are doing, to help us build stronger partnerships and generate more interest and support for our work. 

The opportunity to be a part of a powerful network across industries and sectors is also very important for us, as personally these have helped me find a “family” on this journey, and so I am enthused about this amazing opportunity to be part of the Solve at MIT network, where I can also share my experiences and expertise with other companies who are driving impact and also gain valuable lessons.

Lastly, I believe all these opportunities will help us, as we are raising our pre-seed round, to put our ideas and solutions in front of many more investors who may be interested in supporting our work and impact, to help us scale our impact faster and provide many more SMEs the opportunity to grow well. 

We believe it is not enough to provide financing or a sales recording system for SMEs. SMEs need support to first have a consistent way of driving sales and then financing on top of that becomes catalytic for growth. There are many solutions that allow SMEs to either digitize sales records or access financing, but very few solutions help SMEs undertake the most important activity to drive their growth: sales and efficient inventory management. This is why Kola exists - to bridge this gap and help SMEs grow well! 

We provide a free app (Mobile first, web enabled and access to selected services via WhatsApp business) that allows us to collect the sales and credit data of SMEs. We then leverage the data, using machine learning to predict profit maximizing stock levels for each SKU, allowing us to extend the adequate financing. This is differentiated from existing offerings that either provide financing or access to inventory and embedded financing, without helping the SMEs to sell. The app also helps SMEs streamline their sales and customer relationship processes, which are currently manual, fragmented and incoherent. 

Our solution is also innovative because we are tackling all sides of the challenge. By guaranteeing and increasing sales, and gathering the data at all levels, we have a holistic idea of the credit worthiness of a particular business, making it easier to extend the accurate needed financial support.

In the next 12 months, we plan to help MSMEs deplete excess inventory of of $1million, and provide financing of at least $2million, reaching 5000+ MSMEs, 

In 5 years, we are looking to have served 500,000+ MSMEs (i.e. using the app to digitize their sales, unlocking smart inventory insights, accessing finance and increasing sales), expanded our products and services to other countries in Sub-Saharan Africa, and offering licensed services to third parties such as financial institutions, social service providers to access the credit and opportunity profiles of  our MSMEs, to provide them augmented financial and other services.

We will achieve this first by developing the technology to enable us automatically match demand to supply based on product type, location and price. We will also run and test various sales and marketing activities and campaigns to generate demand for excess inventory.

Secondly, we will build strong partnerships across our customers' value chain. Firstly, with key distributors to have access to their network of 1000s of wholesalers and retailers. We will leverage their existing knowledge and data to quickly and efficiently profile wholesalers and retailers and extend our services to them.

Currently, we work with some FMCG brands to provide us easier access to their network of distributors. They have long standing relationships with these distributors and have a key interest in understanding what happens to their products  beyond the distributor’s warehouse. By digitizing sales data through the entire value chain, we can provide insights to these brands at an aggregate level. We will continue to build these relationships. 

We also plan to work with financial institutions, and have started engaging them to provide augmented financial services to our customers. They already have the licenses, expertise, and requisite resources to provide working capital, asset and other forms of finance to our customers. We are building the credit and opportunity profile for our customers, and de-risking the opportunity for FIs to easily partner with us. This would help us grow our services well beyond our balance sheet and to scale our impact much faster. 

We measure impact by the rate of growth in revenue and profit of each SME that we work with, the number of female owned or led businesses we support, and their ability to repay due obligations from our product financing solution. We keep track of how much less fuel (diesel) is consumed as a result of digitizing the sales process and aggregating orders. 

So far, we have helped our customers increase sales by a minimum of 30%, with a 99% recovery rate on  over $2million of product financing we have offered. We have also help reduce fuel usage by up to 50%, with 50%+ of our customers being female owned or led businesses. 

A one-stop shop for Data-driven inventory management, sales and marketing to generate consistent sales  and trustworthy credit scores can unlock new levels of growth and profitability for MSMEs, dramatically increase recovery rates, and reduce defaults for lenders. 

Our solutions provide an integrated platform for SMEs to access all these tools. Through the sales service, SMEs sell out their inventory in good time, and are able to make optimal use of their working capital to generate profits. In a recent test, we helped a distributor deplete 60% of the excess inventory of selected products, worth over $30k within 3 days. With the successful test, we estimate to help SMEs sell our over $65 million worth of inventory in 5 years. 

With our smart inventory recommendations, SMEs can buy the profit maximizing levels of each product, which reduces and eliminates waste, and allows them to better manage their working capital so they are more profitable. 

With our product financing service, we help SMEs expand their product portfolio, based on demand and the smart inventory recommendations, to increase sales. In the last eight months, we have provided in excess of $1.5million in product financing to MSMEs with a 99% recovery rate. 

With a combination of these three services, SMEs are guaranteed to sell out inventory and lenders are guaranteed to recover any financing provided with very minimal default, as evidenced by our extensive pilot.

Our full-stack ecommerce platform is a software designed to help Micro, Small and Medium enterprises in Africa generate consistent sales, optimize their inventory management to increase profit and enable easy and affordable access to financing. Our core technology is a mobile app that provides a marketplace, business analytics and inventory management. The app enables SMEs to engage their customers through receiving and processing orders, engaging via WhatsApp and SMS. We are also enabled via a web app to allow for easier and faster upload of bulk data. We have fully integrated with WhatsApp to allow our users sign up and place orders in an easy and intuitive way. 

We are collecting data and developing machine learning modules that will drive our smart inventory management recommendations. Using technology in this manner allows us to be efficient, cost effective and highly scalable in terms of impact. We are working to develop machine learning modules that can predict that right quantity of products to stock within specific periods of time and generate user profiles that can allow our customers access to financial and social services. 

Diversity, equity and inclusivity are fundamental to our work as a team, with our partners and with our customers. Currently 80% of the full time staff are women, and 50% of the part time staff are females. We have identified that females are very much underrepresented in software development in Africa, hence one of our goals for the next year is to recruit at least one mobile developer who is female.

There is a bias towards women owned businesses, even though they form a larger majority of the MSME population in most parts of Africa. Hence by design, our solutions currently benefit over 50% women, and we are looking to grow this number equitably. This involves actively seeking out female owned businesses and providing them additional technical support to drive adoption amongst them.

Our 3 main user groups/customers are retailers, wholesalers and distributors/manufacturers, where the distributors are our ecosystem partners through which we reach the wholesalers and retailers. The Kola app supports small businesses to digitize their entire sales process, from inventory management to sales and credit records. We assess and match excess inventory to and generate demand from wholesalers and retailers in our network, using tools such as bulk SMS and WhatsApp messaging. We leverage the data and other digital tools to forecast profit-maximizing stock levels for each SKU (Smart inventory) and provide the financial support to stock and meet customer demand (embedded finance). 

We operate a freemium model, where we offer the app for free to all customers, and make money via margins on sale of excess inventory, fees on invoices discounted (i.e. customer credit orders that cannot be fulfilled due to working capital constraints), commission on sales through the app and in the future, fees for third parties to access the risk and opportunity profiles of our customers.

We have planned to reach profitability by 2025, by growing our sales service where we remain asset light and simultaneously deliver the most value to our customers and increase our margins. Currently, a bulk of our revenue is from our product financing (buy now, pay later) service, which is 48% p.a return OR 4% monthly gross margins. With the sales service, our average margins are 5% to 10%. We will also start monetizing our credit and customer intelligence licensing to third parties, which will also significantly improve our margins from currently 4% to over 25% in the next 3 years. 

We will also be raiding funds from angel, institutional and impact investors as we grow to help us scale. We have started and will continue to apply for various grants that can also help us scale our impact to reach many more MSMEs. 

All these will work to ensure we are financially sustainable

We are currently raising $1million equity to support and have raised $190k so far from Angels and funds such as Logos Ventures (part of the New Voices Family), Uncommon Ventures LLC, Aztec Synergy and Fund7Studio. We have deployed to working capital and have turned around to achieve over $2million in revenue. 

We have also confirmed additional $200k investment from Madica (a Flourish ventures program), coming in by the end of May, and a pipeline of over $600k in grant and equity funding, where we are engaging venture funds such as First Check Africa.  

We are also finalists for the DeveloPPP ventures programs organized by GIZ, which could bring in a $150k grant. We are currently undergoing due diligence with their team. We have also advanced to the interview stage with Morgan Stanley Inclusive Ventures Lab and Google Black Founders Fund (these are confidential). 

We are raising $500k debt to continue providing our buy now pay later solutions. In addition to the debt financing, we have started engaging financing institutions locally, to support in providing financing to our customers whom we have de-risked. Currently we see 99% recovery rates, which is very enthusing for financial institutions.