Zinox acquires Konga


#1

I saw this story first on LIB (don’t judge me) and thought it was a joke. The most surprising aspect of this news is its secrecy. I remember seeing Interswitch bandied as a possible suitor but never in a million years imagined Yudala would have the wherewithal to pursue a much larger competitor.

This is great news for Kinnevik et al - they get to cut their losses and move on - but I can’t say the same for Zinox. They will still have to burn a lot of cash before they can steady the Konga ship. Going by what they’ve achieved with Yudala - good but not great, 6/10 at best - it’s hard to believe that they can run Konga much better than the previous owners. I just hope they don’t make the grave mistake of integrating the Konga brand into Yudala by redirecting konga.com traffic to yudala.com. That will put off a lot of Konga users.

Maybe they’re hoping they can hold on to it long enough till Amazon or Alibaba comes knocking. That will be a really long wait. I know about Mr Ekeh’s wealth first hand and I’m sure he has the financial muscle to last the marathon but it will still be a painful marathon nonetheless. Oh well.

Definitely a historic moment for e-commerce and the Nigerian tech space.


#2

I remember amazon and co had to struggle for many years before they start making profits. same also with alibaba. I think konga giveup too early.


#3

i am sure zinox used bank loans to finance this deal,i hope they dont run down the site


#4

Bank loans for 10M$ :smile:


#5

Zinox can leverage equity or assets to secure a line of credit or obtain a secured business loan for the deal.
every big business do that

they can either do loans or debt financing for $10m,it is up to them,i dont know their strategy


#6

Why is the means of financing relevant ? You obviously don’t know anything about Nigerian banks. None of them would touch a startup with a barge pole.

This $10m figure is an unconfirmed rumor. If it’s correct it doesn’t surprise me that Leo Stan could pay that in cash.


#8

Zinox is not a startup but a real company with lot of credibility and history with Nigerian banks.

from what i understand yadula is part of zinox,so they have good experience in running an eCommerce site

konga starts a new beginning with new owners,wish them goodluck


#9

I have an inclination to believe that the $10 million figure is true. Remember I told you guys some time back that all these acquisitions in Africa are like Hail Mary deals to save face for the owners. Nobody gets rich in them. At $10m exit after raising $75m Sim will probably get peanuts if anything. Anyway I will use my connections to find out the details and report here. Meanwhile fellow Radarians I will tell you one again, forget about Silicon Valley model in Africa. Build companies with modest revenue but good cash flow which can sustain a good lifestyle. That is a more practical goal


#10

I don’t even know what to comment. To me the recession is killing everything.


#11

Interestingly enough, the Zinox group owns Yudala as well. i foresee a merger


#12

that’s exactly what’s happening nah!


#13

Odd that TechCabal isn’t following this story, I think Techpoint is doing a good job at that.
And someone said the Nigerian tech-space was not exciting :sleeping:
2018 looking lit, no?


#14

Techcabal is dead, long live the cabals


#15

You are very correct. A lot of startups around here are vanity projects that do not have solid products.
Better to do a normal business with modest revenue and good cashflow like you said.
Like Otunba Akin Alabi is doing.
All this exit thing doesn’t work around here. I have read the history of Mark Cuban and he was simply lucky somebody wanted to buy what he had to sell.


#16

Great point.


#17

Perhaps the driver for the acquisition is KongaPay. There are significant synergies to be gained from the technology and brand goodwill.


#18

I just noticed that I don’t see Konga on Google Ads anymore. It seems Konga turned it off in December (perhaps because they knew a sale was imminent?) and they’re now witnessing a decline in traffic.

This is a site that was usually steady in the top 20. It’s ridiculous that after FIVE years of aggressive marketing spend, the site can’t organically sustain its traffic levels. I highly doubt Zinox will match the marketing spend of Naspers et al; this decline may continue.

This says a lot about the true state of e-commerce in Nigeria today. We’re lightyears away from any sort of eureka moment. Time for investors to put their money in another sector.