Alerzo, a business-to-business technology and services platform focused on Nigeria’s informal retail sector announced US$10.5 million in Series A funding, bringing total funding to more than $20 million.
The round was led by Nosara Capital, with participation by Galaxy Digital, the family office of Michael Novogratz, FJ Labs, and several prominent family offices from the US, Europe and Asia.
Launched in 2019 by Adewale Opaleye, Alerzo is a technology and services platform built with the sole mission of empowering informal retailers.
Opaleye’s vision for Alerzo was inspired by his childhood; growing up in Ibadan where he experienced first-hand, the many challenges faced by his single mother, who struggled to provide for her four children by operating two informal retail stores.
Opaleye’s mother is part of the $100 billion informal retail sector that represents the backbone of consumer commerce in Nigeria. These retailers are beholden to an inefficient distribution system that results in inconsistent inventory availability, opaque pricing, and limited access to formal financial and banking services.
He founded the company after returning from China where he observed how the Chinese platform technology companies combined offline logistics, software and financial services to empower neighbourhood retailers.
“I came home to Nigeria to build a company that would improve the lives of women like my mother. Our business is focused on creating a physical and digital infrastructure that these incredible women can leverage to run their businesses more profitably” Opaleye said.
Currently, Alerzo customers can order products via phone call, USSD text message or via whatsapp. Once an order is received, Alerzo’s internal order management app transfers the order to the appropriate warehouse and the internal logistics team delivers the order to the customer, usually within 4 hours. Customers only pay upon receiving the products at their store, unlike most delivery services that require payment upfront.
Alerzo serves more than 80,000 informal retail stores across South-West Nigeria, where the Company is exclusively focused on the country’s tier two to tier-four cities. Alerzo estimates their customer base to be 90% women, 80% of whom are working mothers, while 70% are the primary breadwinners for their families. Alerzo’s mission is to focus on supporting these entrepreneurs, who are pillars in their respective communities.
Ian Loizeaux, Managing Partner of Nosara Capital who led the Series A said, “We’ve studied informal retail marketplaces globally over the last couple of years and Alerzo really stood out to us due to a strong management team led by a founder with a unique understanding of his customer and an attractive business model with exceptional unit economics. The company is at the beginning of a compelling multi-decade opportunity to streamline and digitize Nigeria’s retail supply chain while delivering on a strong social mission to support small business owners.”
This Series A funding round will be used to expand geographically to Northern Nigeria which will double Alerzo’s service area and launch both AlerzoPay, the company’s cashless payments and lending platform, as well as a portfolio for new business support services.
Next month the company will launch their retailer app that will enable customers with smartphones to order online. Opayele noted, “The reason we intentionally delayed the launch of a smartphone app is because the majority of our informal retail customers do not have smartphones, and thus we focused on meeting the customer where they currently are, instead of requiring them to purchase a smartphone to access our services. Our business was founded to serve all informal retailers, particularly those most marginalized by the current distribution ecosystem, and we can only do by designing products and services that she can actually use.”
Additionally, Alerzo’s core service offering will soon be expanded to include cashless payments. “Our customers will soon be able to purchase and access a suite of digital services through Alerzo, including mobile airtime and data top-ups, bill payment (utilities, TV, etc.) and even process peer to peer cash transfers,” Opayele explained.
Kevin Jung and Harish Venkatesh, the co-founders of Signal Hill and early investors of Alerzo said, “What sets Alerzo apart is the team’s proven ability to scale complex businesses in Nigeria; the focus on the informal retail sector outside of Lagos and the Company’s orientation towards Asia, which we think serve as the best reference point for this new emerging business model.”
Opaleye said that Alerzo currently has approximately 100k onboarded customers. “We plan to more than double the number of total customers over the next 4 months by further deepening our penetration in the in the South West and Middle Belt and expanding to the North.”
In June, Alerzo opened a second headquarters in Singapore so that its operations in Nigeria can more quickly identify and implement relevant emerging new trends and best practices from peers operating in Southeast Asia and India.