TradeDepot raises $110 million in equity and debt financing round to scale BNPL service

TradeDepot has secured $110 million investment through equity and debt financing to support its buy now, pay later service and expand its merchant platform across Africa.

TradeDepot is a business-to-business (B2B) e-commerce and embedded finance startup founded in 2016 by Onyekachi Izukanne (CEO), Michael Ukpong (CTO) and Ruke Awaritefe. It's actively operational in Accra, Johannesburg and 10 cities across Nigeria.

After operating as a platform that enables the distribution of consumer goods from factories to retailers for four years, TradeDepot announced its foray into financial services and credit offerings for retailers in July 2020.

Through its merchant mobile app — ShopTopUp which was released in December 2017 — retailers can buy up to ₦500,000 worth of goods and pay for it later in 14 days or 28 days on a weekly or bi-weekly basis. There's also a payment solution for ShopTopUp retail customers and businesses called ShopTopUp Pay. Businesses can sign also up to become a ShopTopUp Distro (distributor).

TradeDepot said the fresh funding will expedite the delivery these services to more retailers. "We use our data, technology and logistics operation to connect retailers with suppliers and unlock financing to fund inventory purchases for retailers, [thereby] enabling increased sales, higher margins and other value-added services for all parties", it said.

"We've built a network of leading consumer goods brands and SME [small and medium enterprises] retailers across Africa, and created a proprietary risk scoring engine that uses retailers' purchase history, previous repayment performance and other related data points to predict their creditworthiness".

This game-changing financing model coupled with our industry-leading technology to support logistics operations has led to a 200% increase in transaction volumes for retail store owners, TradeDepot added.

TradeDepot told Benjamindada.com in an interview last year that 98% of retailers who had participated in the ShopTopUp credit facility pilot repaid their loans and became repeat borrowers.

Onyekachi told TechCrunch that the number of merchants using TradeDepot has increased from over 40,000 merchants last year to 100,000, and they also recorded 5x growth in their gross merchandise value in past one year.

The $110 million investment is split between venture or equity and debt financing. The venture round led by the International Finance Corporation (IFC) account for 38% or $42 million of the fresh funding. And the remaining 62% or $68 million was raised through debt financing led by Arcadia Funds.

Novastar, Sahel Capital, CDC Group, and Endeavor Catalyst participated in the $42 million equity round, as well as extant investors Partech and MSA Capital who co-led TradeDepot's $10 million Series B funding last year. TradeDepot said the $42 million raised through the equity round is part of its Series B funding, bringing the total to $52 million.

London-based financial advisory firm Royal Park Partners said it acted as the financial and strategic advisor to TradeDepot and its shareholders throughout the equity funding round. "This transaction highlights Royal Park Partners' extensive experience in the embedded finance space, and supporting high-growth African fintech platforms in accessing funding".

Lagos-based law firm Balogun Harold said it provided the sell-side due-diligence, investment preparedness, investment documentation and transaction support for TradeDepot.

"We remain focused on making digital commerce and financing both accessible and affordable to neighbourhood retailers across key cities in Africa", TradeDepot CEO Onyekachi Izukanne said. "We're delighted to be joined by an elite group of new investors and have IFC's Wale Ayeni and Brian Odhambo of Novastar joining our Board of Directors, to support us on this journey to drive growth and prosperity across the continent".

The Managing Director of IFC — a sister organization of the World Bank and member of the World Bank Group — Makhtar Diop said: "The informal sector is a large and critical part of Africa’s economy, accounting for around 80% of jobs in the region. We are excited to work with TradeDepot to leverage technology to help small businesses across the continent, particularly the many retailers led by women, access the resources they need to grow and scale".