Word in the streets has it that one of Kenya’s most popular e-commerce marketplace Sky.Garden may be closing down after failing to raise a much-needed funding round.
According to technology publication TechCrunch, Sky.Garden’s co-founder Martin Majlund has already served employees with termination notices, after indicating earlier that the company was running out of money. October 16th is slated as the last day for the employees at the firm.
Sky.Garden started operations in 2017 but has seemingly failed to raise enough revenue to become profitable or support its business model. The platform connects small businesses to buyers in an end-to-end system that encourages DIY process. It gains revenue by charging 8% on every successful transaction.
The CEO says that the company is pursuing other avenues to help sustain its foothold. Mr. Majlund told TechCrunch that there are ongoing talks with investors and potential buyers who could rescue the Jumia competitor from extinction.
“Sky Garden Limited is still solvent and operations are still ongoing. We are in dialogue with potential investors and acquirers but as we have to be diligent about doing things the right way, we chose on September 16th to give our staff 30 days’ notice while working on our opportunities,”
It’s been a tough year for startups in Africa despite increased interest from investors and some record-breaking cash pumping in some cases.
This year, food-delivery startup Kune shut down unceremoniously, despite raising $1 million in pre-seed funding just last year.
Sky.Garden has so far raised a total of $5.2 million from venture capitalists. The company raised $4 million in a Series A round of funding last year and has gained considerable popularity amongst competitors.
But it’s not surprising that the company isn’t doing very well. Jumia, Africa’s largest e-commerce marketplace and a New York Stock Exchange(NYSE) listed company is yet to make profit, more than a decade since it commenced operations.
There are several factors leading the e-commerce business in Kenya to slow down. Majlund blames the challenging situation on “rising prices, inflation, the war in Ukraine and increased interest rates.”
‘’But we are not the only ones being hurt by the macroeconomic contractions which have had a negative implication on the timeline of these conversations leaving us in the above-mentioned situation,” he said.
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