Copia, a Kenya-based B2C e-commerce platform serving low- and middle-income consumers in Africa, has formally decided to liquidate its assets and repay its creditors, ending its restructuring efforts.
The decision came after a series of attempts to save the business and find a viable path forward for the company. The liquidation process would include laying off all employees and selling the company's assets, including delivery trucks, warehouses and other equipment, to raise the funds needed to repay outstanding debts.
“This action is intended to compensate creditors as fairly as possible. However, the tough decision to liquidate was not taken lightly and reflects a recognition of the insurmountable obstacles the company faced in its efforts to achieve profitability and sustainability.
Tekedia Mini MBA Edition 15 (September 9th to December 7th, 2024) Registration is now open. Register now to receive the early bird discount.
Tekedia AI in Business Masterclass Registration begins here.
Join the Tekedia Capital Syndicate And meInvesting in great African startups here.
In an email sent to staff, as reported by TechCabal, Copia administrator Makenzi Muthusi wrote:
“It was expected that Copia's business would be maintained as a going concern, albeit with a significant wind-down of operations in order to attract much-needed talent through the new company to enable the business to continue. Unfortunately, this has not been successful and it is clear that the company's options are now limited to the third objective of administration as provided for in the Insolvency Act 2015, namely the liquidation of assets to settle creditors' claims.”
Employees were given severance pay on July 4, the memo said. The company also notified creditors that it would meet on July 14 to give instructions regarding their respective claims.
Background story
Copia was founded in 2013 with a mission to provide convenient and affordable online shopping options to underserved, low- and middle-income consumers in rural areas. Leveraging a unique model that combines technology with a network of local agents, the company aimed to bridge the gap between urban e-commerce and rural consumers who traditionally did not have access to such services.
The company has established a strong foothold in Kenya where it operates and earned a reputation as a pioneering e-commerce platform catering to the needs of the underserved. Despite its innovative approach, Copia faced several financial challenges, including a tough economic environment, high costs of maintaining logistics, and limited purchasing power.
In April 2023, the company halted its expansion plans in Africa and suspended its operations in Uganda. The company cited unfavorable economic conditions and capital market constraints as the reasons for the decision. Copia will cut 350 employees in July 2023. The company cut 50 employees earlier this year, saying it was doing so as a way to reduce labor costs while keeping profitability in mind.
In December 2023, Copia announced its plans and then secured $20 million in Series C funding. The company is looking to raise $1.2 billion to focus on its operations in Kenya.
“We are now fully focused on Kenya and will not lift our heads until we achieve that milestone. We are doing a lot of scouting work and planning on where to go next and our international expansion plans will come after we achieve profitability in Kenya.”
However, in May 2024, Copia entered bankruptcy proceedings after failing to secure additional funding. The B2C e-commerce company appointed KPMG's Makenzi Mutusi and Julius Ngonga to lead the proceedings. Despite their efforts, the company was unable to raise new capital on terms favorable to all parties involved.
As a result, the company announced a switch from physical order processing to an online fulfillment model using a mobile app to reduce expenses and streamline operations in the digital age. Under management's guidance, the company sought to drive a lower burn rate to reach profitability faster and meet the needs of increasingly digital consumers.
Unfortunately, Copia's financial situation became unsustainable, leading the company's management to make the difficult decision to liquidate its assets. The company's closure highlights the challenges faced by startups, especially those operating in underserved markets.
While the company's innovative approach and vision for comprehensive e-commerce is commendable, the financial and operational hurdles proved too great to overcome.
