Kapu, a Kenyan e-commerce startup targeting low-income consumers, has secured pre-Series A funding from BlackWood and existing investors to scale its operations across Africa. The company aims to reduce the cost of living for mass-market consumers by offering essential goods through a network of local agents, addressing the challenges of fragmented retail and logistical complexities in the region.

The funding round, which includes participation from Giant Ventures, firstminute capital, Norrsken VC, Founder Collective, Hesabu Capital, and Base Capital, will be used to bolster Kapu’s go-to-market strategy, strengthen its logistics network, and introduce new fintech features. While the specific amount raised was not disclosed, it follows an $8m seed round in 2022.

Kapu’s business model focuses on a neighbourhood-based approach, initially concentrated in Nairobi. By partnering with local “Kommando” agents and small-format stores, the company aims to optimise logistics and operations within specific urban and peri-urban areas. This micro-market strategy aims to prove profitability before expanding city-wide and eventually across the continent.

Sam Chappatte, Kapu’s chief executive and a former Jumia executive, highlighted the company’s ambition to build a new retail model for Africa’s mass market. He emphasised the importance of investors who provide both operational space and strategic support.

Bastian R. Larsen, chief executive of BlackWood, cited Kapu’s potential to scale efficiently within Kenya’s fragmented retail landscape and its focus on Africa’s $500bn total addressable market as key investment drivers. He also pointed to the team’s experience at established players like Jumia and Grab as a significant asset.

Kapu reports serving 100,000 households per month and processing 2 million customer orders annually, claiming to have delivered $1m in savings to consumers. The company’s stated goal is to save African consumers $1bn over the next 10 years, addressing the significant proportion of income — estimated at 46 per cent — spent on groceries, which limits disposable income for other essential needs like education and investment.

The company was founded in 2022 by Mr Chappatte, along with Stanislas Barth, chief growth officer, and Meera Dhanani, head of marketing. The founding team’s experience at Jumia, a prominent African e-commerce platform, is seen as crucial to navigating the complexities of the market.

Kapu’s model echoes elements of social commerce, leveraging local networks for distribution and sales. This approach is designed to overcome challenges associated with last-mile delivery and limited digital literacy in some segments of the population.

The company’s early backers also include investors with experience in similar models in other markets, such as Meesho and Facily, alongside African family offices and prominent individual investors including Biz Stone, Ilkka Paananen, Tom Blomfield, and Alexander Rittweger.

While Kapu ’s focus on affordability and accessibility addresses a critical need in the African market, the company faces challenges including competition from established retailers and other emerging e-commerce players, as well as the need to build robust and efficient logistics networks in diverse and often challenging environments. The success of its micro-market strategy and its ability to scale sustainably will be key to its long-term growth prospects.