Kenyan e-commerce platform Copia serves low-income families and is considering laying off hundreds of employees or quitting the business altogether. The company has stated that these actions are necessary to “ensure the sustainability of its operations” following financial difficulties.
The company informed its staff through an online memo that they have been unable to resolve their financial struggles, leading them to the drastic step of reducing more staff or shutting down if reducing staff does not remediate things. The company also assured the staff of a one-month notice as required by the law. While this reorganisation would see the loss of 1,060 jobs, the memo also expresses concern that the company may be unable to pay its employees.
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The controversy surrounding Copia’s shutdown
Copia is regarded as one of the most funded startups in Kenya. It has accumulated $123 million from seven rounds of venture funding.
Across seven rounds, Copia had amassed the following in venture capital as of November 2023: an undisclosed seed round in January 2013 from Savannah Fund, Opes Impact, and Data Collective, DOB Equity invested $4 million in a Seed II round in January 2015, a total of $33.5 million was raised in Series A and B, Goodwell Investments led a $50 million Series C funding round and 20 million dollars for the Series C extension, followed by the appointment of John Lazar, the former CEO of Metaswitch, to its board.
An Angel Investor, CEO and Co-Founder of TheBhub, Granville Wafula, shared his opinion on the news via a LinkedIn post with this remark: “Now shutting down because of Finances? Doesn’t make sense.”
The likely reason for Copia’s struggles
Warning indications were in 2023 when the e-commerce company abruptly terminated operations in Uganda and laid off more than 700 workers just two years after entering the market. Copia would be the latest Kenyan e-commerce startup to go under since the COVID-19 pandemic. Other notable companies shut down include the agritech startup Wefarm and the business-to-business (B2B) platform Zumi, which connects retailers and suppliers.
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Although startups have pointed fingers at a lack of capital and challenging market conditions, experts have proposed other causes for the closures, such as unsustainable business models, inadequate infrastructure, a lack of industry data to guide expansion, and an imbalance in customer trust.
Previously, many have predicted that Africa’s e-commerce sector will be the continent’s next big thing. The continent’s huge, youthful, and tech-savvy population, growing mobile internet penetration, a rapidly expanding middle class, and increasing disposable income are some reasons for the optimism. At the same time, this remains true, with success seen in other African e-commerce companies like Jumia (Nigeria), Takealot (South Africa), and Kilimall (Kenya)—those who strive need to have the right strategy and financial management.
