Tesh Mbaabu and Mesongo Sibuti are the cofounders of MarketForce. Mutethia Mbaabu, commonly known as Tesh Mbaabu is the CEO of MarketForce, a Kenyan fintech startup established in 2019.
Tesh Mbaabu (33 yrs old, at the time of writing this article) was the sole Kenyan in the Forbes 30 Under 30, 2023, list of young entrepreneurs feted in a ceremony held in Gaborone Botswana.
The list of 600 tech savvy entrepreneurs from around the world focuses on a particular theme every year. The 2023 theme focused on technological innovation.
How did Tesh Mbaabu and Mesongo Sibuti create MarketForce?
MarketForce is a Fintech company with over 300 employees. MarketForce raised $40 million in February 2022 as capital investment from VCs.
The company runs the Rejareja App, a B2B ecommerce platform that enables small businesses to order for goods and get delivery within 24 hours.
The app also enables the traders access bookkeeping and stockkeeping services as well as credit facilities through partner banks.
MarketForce currently has 200,000 merchants and 50 manufacturers using the app. MarketForce currently serves five countries: Kenya, Rwanda, Uganda, Tanzania, and Nigeria.
Despite the huge fundraising success, the fintech is yet t start turning a profit but has been growing tremendously.
How it all started
Tesh Mbaabu, who describes himself as an average student, joined the University of Nairobi in 2008 to pursue architecture.
However, while there, something in the tech world caught his attention. FACEBOOK. He was so fascinated by the social media platform that he made up his mind to build something similar, but he would focus on Africa.
He started to read about entrepreneurs and what they were doing and how they did it. He also decided to jump from architecture into computer science, something he did in 2011, even though he had started to learn coding three years earlier.
“Initially, that is what I thought I would study (architecture), because since my time in high school, I knew I wanted to go into the creative space due to my passion for design. But at some point, I learnt about Facebook. There was so much hype around it at the time I was so fascinated by the platform and it is at that point I made a career switch to software engineering so I could build something similar to Facebook,” Tesh told Saturday Nation.
He went to Mutungoni Academy in Athi River. It was a s a freshman in the computer science class where he met fellow freshman and tech enthusiast Mesongo Sibuti.
Because he was way ahead of his peers in coding knowledge, he would spend most of his time looking for gigs.
“I spent most of the time in the streets hustling, away from class. I was already good at coding and programming, something I had already started learning in 2008. I spent most of the time looking for web design gigs for small companies, which were never short because the awareness about online had begun to increase. Social platforms doing business had started to become a thing and at that point I realised my passion was now at the intersection of technology and business. So mine was, how do I help medium sized businesses get into the digital space, sell more and attract more customers? That became my main hustle in campus,” Tesh Mbaabu said.
The big break into technology business for Tesh Mbaabu and Mesongo Sibuti
Most companies paid Tesh between KES 8000 – KES 30000 but that was still good money for a student. He graduated with experience and started attracting bigger clients with time.
“I remember one client paying me KES 200,000. You can imagine how big that was for someone still in campus,” he said.
As you would imagine, such big breaks sow crazy thoughts in the mind of any student. Thin of Bill Gates, Mark Zuckerberg, and all those guys who dropped out of college to pursue their coding.
Tesh shared that he actually wanted to drop out of campus because the cash flow was good.
But sharing his plan with his professor dad changed al that. He wasn’t happy. “You can imagine telling a professor that you wanted to drop out of school because you were making money.”
His dad urged him to stay on course till graduation, regardless of the grades he would score.
Together with Sibuti, they graduated from making websites to creating applications for bigger companies, working on multi-million-shilling projects.
An international NGO paid them KES 2millio to build a software that digitized its internal processes.
A parastatal tender saw them get 6 million and a microfinance that sought easing of loan application processes got them KES 10 million.
The big tenders came immediately after their graduation between 2015 – 2017. “Our rate cards kept changing. If we were to do the projects again, we would charge 5 times the amount,” Mbaabu said.
Most of the projects they got were after applying for tenders as well as networking.
The idea of MarketForce
Tesh Mbaabu and Mesongo Sibuti built their first startup called Cloud9xp, a travel technology company.
They would sell Cloud9xp to HotelOnline for millions of shillings in 2019. It was after this sale that the idea of a second startup, MarketForce, came about.
During their time consulting for large companies, they realised that the SME and microenterprises segment had similar problems but no one had offered them a solution – their businesses lacked reliable information on the performance of their field sales teams, products, and services.
The problem appeared to affect majority of small businesses in all Africa.
“Knowing that these small businesses are the largest contributors to GDP, because most people are not white collars, we wanted to offer a solution. So we came up with an idea of transition from these big businesses that can survive without us and scale this big technology we have built for the bigger companies, for much smaller businesses, the likes of dukas and mama mbogas, who need us more because no one is serving them – hence MarketForce,” Tesh said.
How MarketForce raised funds
MarketForce used a common growth model borrowed from Silicon Valley:
- they had to raise capital from venture capitalists (VCs) first
- then grow to gain market share
- then focus on turning profit.
The startup has succeeded in raising over $40 million (KES 5.3 billion), and has been increasing its market share for the last five years. As stated earlier, it is yet to start turning a profit.
The two entrepreneurs have ceased equity to both individual and institutional investors.
MarketForce first raised $200,000 (KES 27 million) in 2020 after a year of operation from angel investors, friends, and family.
According to Tesh, most of the investors were doing the risky investment for the first time ever.
Fundraising rounds:
- 2020: $200,000 (friends, family, angel investors) first round., $300,000 second round
- 2021: $2 million (for expansion outside Kenya)
- 2022: $40 million (further expansion)
Tesh Mbaabu Net worth
Tesh Mbaabu runs a multimillion-dollar startup MarketForce. He is possible worth millions of Kenya shillings based on his previous projects, but has never made his wealth public. He was the only Kenyan on the Forbes 30 Under 30 list of 2023.
“These are institutions that are similar to banks but focus on backing startups that have high potential to grow. They give you funding based on an idea and a strong business model and a strong team that can execute the idea and the model. This is how companies like Google, Netflix grew very fast by building a market then raising venture capital.”
When MarketForce first started, the growth was slow, the sale cycle slacked and venture capital funding proved elusive.
“We bootstrapped for a year before finally convincing friends, family and angel investors to invest US$200,000 (Sh27 million) in 2020 which for most of them was the first time venturing into venture capital.”
They would raise another US$300,000 to make it a total of US$500,000 (Sh68 million) for 2020. In 2021, MarketForce was able to raise a further $2 million (Sh267 million) in VC to expand into other countries and a further US$40 million (Sh5.3 billion) in 2022.
Despite raising these colossal amounts, Mutethia says it’s a risky venture. “Unlike the traditional way where you start a business and gradually build it using profits generated, the silicon valley model requires you to seize some shares of your company to the investors. It is all about making sacrifices. The idea is owning a smaller part of the large pie rather than owning 100 per cent of the business.
How the platform works is a two way functional unit. One, it is a B2B e-commerce platform (business to business service) enabling the small businesses to use our Rejareja App to order for their goods which are delivered within 24 hours. The second solution is enabling book and stock keeping as well as facilitation of credit advancements by banks which have partnered with the fintech, to the merchants. Currently MarketForce has over 200,000 merchants and 50 consumer manufacturers trading on the platform.
Even though Tesh says the business is not yet profitable, he agrees to the fact that the business growth has been tremendous and fastidious in its five years of existence.
“The reason for that is because we took a different path into entrepreneurship, which is the Silicon Valley type of growth model, where you raise venture capital (VC) to gain market share and then you turn into profitability after gaining the market share. This is what we have done in the last three years”
What this means is, going round pitching and looking for investors who pump money into the startup businesses, in return for a stake into the business.
These investors are always from well-off investors (angel investors), or investment institutions.
“These are institutions that are similar to banks but focus on backing startups that have high potential to grow. They give you funding based on an idea and a strong business model and a strong team that can execute the idea and the model. This is how companies like Google, Netflix grew very fast by building a market then raising venture capital.”
When MarketForce first started, the growth was slow, the sale cycle slacked and venture capital funding proved elusive.
“We bootstrapped for a year before finally convincing friends, family and angel investors to invest US$200,000 (Sh27 million) in 2020 which for most of them was the first time venturing into venture capital.”
They would raise another US$300,000 to make it a total of US$500,000 (Sh68 million) for 2020. In 2021, MarketForce was able to raise a further $2 million (Sh267 million) in VC to expand into other countries and a further US$40 million (Sh5.3 billion) in 2022.
Despite raising these colossal amounts, Mutethia says it’s a risky venture. “Unlike the traditional way where you start a business and gradually build it using profits generated, the silicon valley model requires you to seize some shares of your company to the investors. It is all about making sacrifices. The idea is owning a smaller part of the large pie rather than owning 100 per cent of the business.
