Tesh Mbaabu, CEO of Marketforce, a Kenyan business-to-business e-commerce that raised $40m in series A funding in 2022, has questioned the approach that Pezesha, a Kenyan startup that offers business loans-as-a-service is taking to resolve a debt crisis.

Pezesha asked a Kenyan court to liquidate Marketforce’s assets over an unpaid debt.

“We have been proactively holding debt restructuring discussions with our creditors through constructive dialogue,” said Tesh Mbaabu, Marketforce’s founder and CEO. “Regrettably, Pezesha chose to prematurely file court proceedings. That said, we remain open and confident about resolving this matter amicably and out of court,” he said.

Mbaabu declined to comment on how much his firm owes Pezesha.

In the petition filed in September, Pezesha says Marketforce owes it a substantial amount but did not provide details on how the debt was incurred or how much it is seeking to recover from Marketforce.

Pezesha did not respond to enquiries at the time of this report. 

In April 2021, Marketforce and Pezesha entered a partnership where Pezesha would offer affordable inventory and wholesale distribution financing to Marketforce merchants. Marketforce, which had up until then raised a total of $500,000 ($150,000 from Y Combinator and $350,000 in seed round), would go on to announce that it had closed $2 million in pre-series A financing. 

While Pezesha did not say in its suit that it was pursuing debt obligations resulting from the 2021 inventory financing arrangement with Marketforce, Mbaabu, Marketforce’s founder and CEO, suggested this. “Pezesha is not really a vendor… they are a debt provider,” he told TechCabal.

According to Mbaabu, Pezesha has enjoyed above-market-rate returns since their partnership started two years ago.

“We have also serviced over half of the debt and intend to fully service the same in due course. I believe any creditor who is in tune with the macroeconomic climate would be more patient with their client, especially after such a long trading partnership. Therefore, I don’t really understand Pezesha’s intention with the filing and how it benefits any party.” he added.

Marketforce and Pezesha share a common investor in Greenhouse Capital, a Lagos-based venture capital firm. On LinkedIn, Greenhouse Capital partner Surabhi Nimkar sits on the board of Pezesha, and according to Pitchbook, Nimkar is also listed on the board of Marketforce. TechCabal could not independently verify if this is still the case.

Funding woes

Founded in 2018 by Tesh Mbaabu and Mesongo Sibuti, Marketforce is one of the B2B e-commerce startups that raised millions of dollars from venture capital investors to digitise the informal corner shops where most African consumers shop daily.

The argument was that digitally augmenting or even replacing the wholesale layer would result in cost savings for informal retail traders. For Marketforce, that thesis led to the launch of RejaReja, a marketplace where informal traders could source goods directly from manufacturers or distributors and pay for orders digitally. RejaReja users could also accept payments for utility bills and access loans to finance their businesses.

Lately, the thesis around retail digitalisation has run into the hard realities of increasing retail prices due to inflation and a sudden unwillingness by venture investors to subsidize high growth costs.

In August 2023, Marketforce announced that it was looking to raise up to $1 million from Wefunder, the US-based crowdfunding platform. Per TechCrunch, Marketforce has raised $42.5 million since its launch, with the latest round being a $40 million series A round led by V8 Capital Partners, a London and Lagos-based venture capital firm. But that round did not close at that amount despite a public announcement, two people with knowledge of the matter told TechCabal.

The lead investor, V8 Capital Partners backed out of the transaction, TechCabal learned. TechCabal did not receive a response from V8 Capital at the time of publication.

Mbaabu, Marketforce’s founder, is now involved in a new startup called Chpter, which has raised $125,000, according to the company’s LinkedIn page. An investor with knowledge of the matter said Marketforce is preparing to acquire a stake in Chpter through its Delaware holding company. Mbaabu is expected to keep his role at Marketforce. According to this investor, a liquidation proceeding against the Kenyan version of Marketforce would not affect the deal as the Kenyan company owns very few assets in the country.