Tushop raises $3M to scale community group-buying in Kenya

Tushop, a Kenyan social-commerce platform that enables communities in Nairobi to buy groceries more cheaply with free delivery, has secured $3M in the pre-seed round to scale its community group-buying platform.

The investment activity in Africa continues apace - this time 4DX Ventures and Wasoko led a pre-seed round in a startup working to make fresh groceries cheaper for Kenyans. Tushop is a community group-buying company based in Kenya.

Through its platform, Tushop enables communities in Nairobi to buy groceries more cheaply with free delivery. Tushop sources directly from suppliers, leading to lower prices of groceries compared to local retailers, by cutting through middlemen in the supply chain and passing the savings on to the consumer.

Founded in 2021, Tushop’s mission is to make access to groceries more affordable and more convenient for Kenyans and eventually all Africans. Community Group buying is a means in which residents in a specified area can purchase goods in larger numbers for lower prices or with special offers, making it a win-win scenario for buyers and sellers alike.

Tushop works with “Community Leaders” who collate orders from their neighbours and manage door-to-door deliveries. This not only simplifies last mile delivery, but also gives the Community Leaders additional income for coordinating and delivering orders. Similar community group-buying companies in other markets have achieved significant success, such as Nice Tuan in China and Favo in Brazil.

Community group-buying saves consumers up to 60% on groceries compared to buying in supermarkets, while providing the added convenience of free delivery.

At the moment, the status quo is shopping at dukas, “mama mbogas”, supermarkets, open-air markets, or wholesalers, which are often less convenient and more expensive compared to community group-buying.

The problems that this model solves in Africa are significant. For example, Kenyans on average spend 46% of their income on food (compared to 6% in America, 22% in China, and 16% in Brazil), and while community group-buying is still nascent, the market has enormous potential: Africans spend $260B yearly on food.

The pre-seed funding round was led by 4DX Ventures and with participation from JAM Fund, Breyer Capital, Chandaria Capital, TO Ventures, Golden Palm Investments, FirstCheck Africa, and DFS Lab. Wasoko (formerly Sokowatch) also joined to make their first strategic institutional investment into Tushop, signalling confidence in the team’s ability to capture the community group-buying opportunity in Africa.

The oversubscribed round included additional participation from a number of angel investors including GB (CEO, Flutterwave), Raja Kaul (President, Sundial Group), Eli Pollak (CEO, Apollo Agriculture), and Ida Mannoh (Director of Growth, Chipper Cash).

The funds will be deployed to grow Tushop’s team, invest in its technology to make its platform as easy to use as possible, and to further expand across Nairobi before rolling the service out to other cities in Kenya.

Commenting on their rapid growth and strong customer retention, Cathy Chepkemboi, Founder & CEO at Tushop, said, “Tushop is unique in this market because we know the customer – we are our own customers! We have grown up experiencing the problem of unaffordable food on the one hand and the need to have additional ‘side hustles’ on the other because of persistently low incomes.

We also have first hand experience of the difficulties manufacturers face when moving goods through a fragmented supply chain, which creates distance between them and the customers they serve. We are therefore hyper-focused on delivering a superior experience for suppliers, ‘side-hustling’ Community Leaders, as well as our end-customers in an integrated manner.”

“We are stoked to be working with some of the leading investors globally and locally who really understand the African space from a logistics, tech, and payments perspective, and look forward to justifying their faith in us with future growth, commercial success, and meaningful social impact. Wasoko’s investment in us is also a validating signal of the work we’ve done so far and we look forward to working closely with them to scale Tushop.”

Peter Orth, Managing Partner at 4DX added, “We think that the market opportunity for Tushop is incredibly large, and that Cathy is the right founder to go after it given her deep understanding of the market, and impressive execution and growth thus far. We’re thrilled to join such a strong team of other investors and advisors to help Tushop become the dominant player in group-buying across Africa.”

Daniel Yu, CEO of Wasoko commented, “It has been great witnessing Tushop’s incredible growth, driven by strong leadership and a team that embodies a true understanding of consumers and their communities. We are excited to work with a team that shares our vision of affordability and equitable distribution of goods across Africa.”