Kenya has the largest and most thriving furniture industry in East Africa, but the sector’s potential is hampered by several challenges, including production inefficiencies and quality issues, forcing most major retailers to opt for imports.
MoKo Home + Living, a Kenya-based home furniture manufacturer and omnichannel retailer, saw this gap and sought to bridge it over several years through quality and guarantees. The company is now looking to the next phase of growth, following a $6.5 million Series B debt-equity financing round co-led by US-based investment fund Talanton and Swiss investor AlphaMundi Group.
Novastar Ventures, which co-led the company’s Series A round, and Blink CV also made follow-up investments. Kenya’s Victoria Commercial Bank offered $3 million in debt financing, of which $1 million is mezzanine financing – debt convertible to equity.
“We entered this market because we saw a real opportunity to guarantee and supply quality furniture. We also wanted to bring convenience to customers by making it easy for them to buy furniture, which is the greatest asset for most families in Kenya,” Eric Kouskalisdirector of MoKo, co-founder of the startup with Fiorenzo Conteatold londonbusinessblog.com.
MoKo was founded in 2014, initially as Watervale Investment Limited, an entity that sought to solve raw material supply problems for furniture manufacturers. However, in 2017 it turned around and started a pilot for its first consumer product (a mattress), and a year later launched the MoKo Home + Living brand to serve the mass market.
The startup says it has grown fivefold in the past three years and its products are currently in more than 370,000 homes in Kenya. It hopes to sell to millions of homes in the coming years as it begins to scale production and expand its product line. One of the current products is the popular MoKo mattress.
“We plan to have an offering for every major piece of furniture in a typical home – bed frame, TV cabinet, coffee table, carpet. We are also developing even more affordable products in existing product categories – sofas and mattresses,” said Kouskalis.
MoKo also plans to use the funding to increase its growth and presence in Kenya by tapping its online channels, building more partnerships with retailers and points of sale to increase offline sales. It plans to purchase more equipment as well.
MoKo already uses digital technology in its production lines and has invested in “equipment that can take complex woodworking designs programmed by our engineers and execute them precisely in seconds.” This has helped the team to work efficiently and increase production. The “automated recycling technology and software that calculates the optimal use of resources” has also helped them to reduce waste.
“We were impressed by MoKo’s climate-friendly local production capabilities. The company is a leading innovator in the industry because they have turned sustainability into a remarkable commercial advantage. Every step they have taken in this area not only protects the environment, but also improves the sustainability or affordability of MoKo’s offerings to its customers,” said Miriam Atuya of AlphaMundi Group.
MoKo aims to enter three new markets and reach a broad customer base by 2025 as furniture demand continues to grow on the continent, driven by population growth, urbanization and increasing purchasing power.
“The growth potential is what fascinates us most. There is still so much room to better serve millions of families in Kenya. That’s just the beginning – MoKo’s model is relevant to most markets in Africa, where families face similar obstacles in creating comfortable, welcoming homes,” said Kouskalis.