The rise and fall of Africa's first Unicorn

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Jumia is an African Tech OG. It paved the way for Africa’s tech ecosystem in a series of firsts.

Africa’s first tech unicorn (billion-dollar company) and first African tech company to go public.

It’s one of Africa’s most important companies, and it taught us some hard-learned lessons.

Today we’re diving into Jumia’s come-up, Jumia’s parents and what we can learn from Jumia’s story. But first..

What’s a Jumia?

Jumia was born in 2012 by Jeremy Hodara, Sacha Poignonnec (two French ex-McKinsey Consultants), Tunde Kehinde, and Raphael Afaedor.

The context: e-commerce was new on the scene and it was taking off worldwide.

Jumia saw an opportunity to build an e-commerce marketplace for the African continent.

They started as ‘Africa Internet Group’ (AIG) and started with a mission to ‘accelerate the development of e-commerce in Africa.’

Jumia had a three-pronged approach:

1. Build the hub for online retail, and allow third parties to sell their goods.

2. Provide a logistics platform that manages and coordinates shipments and deliveries.

3. Process payments to make transactions swift and secure.

Which company does this sound like? There’s no secret - Jumia’s goal was to become the Amazon of Africa.

And when they launched in Nigeria in 2012, they were on a tear.

Jumia blitz-scaled to 14 countries, and soon you could do anything on Jumia.

Hungry? Get some Jumia Food delivered to your door.

Want to travel? Book your plane with Jumia Flights

Want a good deal on your next car? Jumia Deals has you sorted.

In 2018 alone Jumia processed more than 13 million packages. And by 2019, Jumia had 80,000 active sellers on its platforms.

Investors loved it. And they ate it up.

Between 2012 to 2016, Jumia raised Series A, B, and C rounds of $45 million, $300 million (in two Series B rounds) and $400 million, respectively.

That’s a lot of money today. In the 2010s, that was never seen before in Africa.

They managed to scoop up local and global investors like MTN Group, Orange, Goldman Sachs, CDC Group, and AXA Group. The big guys.

And along the way, Jumia made history hitting ‘Unicorn’ status - the first tech company to be valued at $1 billion dollars on the continent.

Jumia’s rise hit its peak at its New York Stock Exchange (NYSE) listing in April 2019.

They made history AGAIN as the African tech first company to go public on a US stock market.

On its first day, it listed at $14.5 a share - valuing the company at $1.1 billion.

Four days later Jumia rallied to $49.77, becoming Africa’s most valued startup (ever?) at $3.8 billion

It was an African fairytale. But it didn’t take long for reality to set in.

Four months later in August 2019, Jumia’s stock dropped to $2.15 a share.

And today, Jumia isn’t an African darling. It’s a company fighting to survive.

Let’s dig deeper into who gave birth to Jumia, and where they ran into some trouble.

Who’s your daddy?

Before we get to know Jumia, it’s important to get to know the parent company behind Jumia - Rocket Internet.

Rocket Internet (AKA ‘The Clone Factory’) was started by the Samwer brothers - Olivier, Alex and Marc from Germany.

They say great artists steal. The Samwer brothers have no reservations about copying a business model and executing it in a different market.

And Rocket Internet is their venture builder (or Cloning Lab) to build those companies.

Aryaansh from Market Munch tells the story of how the Samwer brother asked if they could lead Ebay’s European division.

After getting a rejection, they built their own eBay for the German market called Alando.

It took off and forced eBay to pay attention. Less than 100 days into starting Alando, eBay bought it - for $43 million dollars.

It’s a wild story - but also important context.

Rocket Internet ‘copies’ businesses and places them in different markets. This tended to work for them.

"Africa Internet Group" (AIG) was Rocket Internet’s African Holding company.

And Jumia started as one of Africa Internet Group’s brands. That makes Rocket Internet its daddy.

Note: Africa Internet Group eventually rebranded to Jumia, consolidating all brands under Jumia.

And we now know Rocket Internet replicates known models, blitzscales and then goes public or sells.

Suddenly, Jumia’s explosive growth and raising cycle make sense.

And it makes us ask the question..

Does Africa actually need an Amazon?

There is a plethora of debates on why Jumia is struggling in Africa. And there are a lot of right answers to that question.

Logistics infrastructure in Africa, bad unit economics, pricing changes.

But the moral of this story is: markets are king.

I can imagine the Samwer brothers in Berlin brainstorming ideas.

One of them yelling: ‘Amazon - but in Africa!’ the other two patting him on the back. This is definitely not how it happened but let me make my point.

Instead of finding a model and pointing it at a continent or country, it helps to know about market realities.

Especially in Africa.

If you’re building direct-to-consumer in Africa and it’s not a core need (ie, food, transport, shelter, health) then you’re building for the top 1-5% of the population.

If not, you’re going for a very small wallet size. And your competition isn’t the old incumbent company. Your competition is the bus, the power bill or two-minute noodles.

Dr Ola Brown released ‘The Nigerian Consumer Startup Pack’ in 2019, and lays this out well below.

This mirrors a lot of Africa’s wealth distribution - a pyramid where the top 1-5% may have the money for the latest iPhone.

The rest? They are more concerned about their transport, shelter or food than getting new Nikes with next-day delivery.

Jumia also fought against consumer behaviour.

In Africa, e-commerce transactions are social and trust-based.

You would rather buy from someone you trust than from a brand that appears on social media.

And these transactions happen on groups like WhatsApp, Facebook and Instagram in what is called social commerce.

In 2020, a survey found that 92% of small and medium enterprises (SMEs) in Kenya use social commerce to sell products.

Social commerce is a lot closer to where African e-commerce is going, and while Africa is early, we have seen big wins in India with social commerce infrastructure play Meesho (last valued at 4.9 billion).

Maybe instead of cloning, we can ask - do African consumers want an Amazon? Or would they prefer a Meesho instead?

And as the cycle of low market understanding continues, the downturn has shown us other startups meeting the same fate.

Robin Reecht took a trip to Kenya in November 2020 from France.

He declared on Tech Crunch ‘After three days of coming into Kenya, I asked where I can get great food at a cheap price, and everybody tells me it’s impossible.’

Locals were confused. And they responded.

But Robin was confident. Investors liked that. He raised $1 million to start Kune Food and make ready-to-eat meals.

Operations kicked off in February 2022.

Four months later, Robin wrote a post on LinkedIn that started like this.

Ouch. But it’s not just Kune.

Sky.Garden, a Kenyan online marketplace that raised $4 million to build Amazon in Kenya failed to secure funding and closed up shop.

Zumi, an e-commerce marketplace, met the same fate in March after making $20 million in sales and acquiring 5,000 customers.

Hats off to anyone who starts a company - it’s hard. I have a lot of respect for any founder starting something from scratch.

And Jumia helped the ecosystem - pioneering e-commerce in Africa, empowering digital entrepreneurship and spawning some incredible founders.

But Jumia also teaches us a few lessons.

Exporting business models, experience and cash to Africa might see you grow quickly, but it’s not sustainable.

And it’s not about how you start or how much you raise. It’s about where you end up.

What do you think of Jumia’s epic rise and fall in Africa? Did you learn something new? Let me know on LinkedIn here.

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👋🏾 Calebumi