Startups Transportation & Logistics Uncategorized Venture

Something Ventured Part 3: Sote CEO Looks Beyond Founder Split To A Continent-Sized Opportunity

Photo of Sote CEO Felix Orwa with Something Ventured logo.

Editor’s note: This profile is part of Something Ventured, an ongoing series by Crunchbase News examining diversity and access to capital in the venture-backed startup ecosystem. As part of this project, we’re following seven seed-stage entrepreneurs over the course of several months as they build their businesses. Read our previous profiles of Sote here and here. Access the full project here.

This is the final article in our Something Ventured series on Sote; CEO Felix Orwa declined to participate further as he focuses on the next phase for his company.

Sote CEO Felix Orwa sees an opportunity the size of Africa before him: The chance to build a tech-enabled logistics business that will serve that entire continent’s trade infrastructure.

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It’s a vision he’s working to both turn into reality and sell to potential investors.

But he’s now doing it without the person he’s been working the most closely with for the past five years. Since our recent update on Sote in early July, co-founder and product chief Meka Este-McDonald left the company.

Orwa declined provide details about the split, but shared a statement noting that while “Meka has transitioned out of Sote to a new chapter,” his co-founder “was great and will remain dear to us at Sote.”

“One of the things both Meka and I are particularly proud about and built into the Sote culture is appreciating that this is a marathon, not a sprint,” Orwa added. “So as a company we remain focused on the goal, strategy, and execution. I am very proud of how everyone has handled this as a team, staying calm, supportive, and focused.”

Este-McDonald declined to comment.

It’s worth noting that founder departures are not uncommon for seed-stage startups. That’s typically the time in a young company’s life when the pressure’s on to agree on a strategy and vision and show the kind of traction Series A investors seek.

With that in mind, I spoke with Orwa further about the challenges and opportunities in front of him as Sote prepares for its next round of fundraising.

His company is a logistics platform—or freight forwarder, in industry speak—that helps import and export businesses in Africa manage complex trade operations: Getting shipping containers from point A to point B, navigating customs and other trade regulations, and the like.

Among the biggest venture-backed startups in the space is San Francisco-based Flexport, which has raised $1.3 billion in known funding from the SoftBank Vision Fund and other investors.

Like Sote, Flexport and other tech-enabled freight forwarders aim to modernize the centuries-old business of moving stuff around the world. But Flexport and other big startups in the space have—for now, anyway—generally spurned the massive African market.

For Orwa, that represents an opening to scale up and become the market leader for a continent with some 1.3 billion inhabitants. A Kenyan who first came to the U.S. to train to be a pilot, Orwa had come to realize that for Africa, “the exchange of goods problem is a logistics nightmare,” he explained in an email interview earlier this summer. “And solving it would be particularly important for my continent’s future. The last frontier to unlocking Africa to its full potential.”

Sote raised a $3.6 million seed round led by Los Angeles-based MaC Venture Capital at the end of 2020. Before that, it had raised pre-seed investment from investors including Palo Alto-based Unshackled Ventures, which exclusively backs immigrant startup founders like Orwa.

In Orwa’s case, Unshackled helped him obtain a visa so he could travel back and forth between the U.S. and Kenya as he built his startup. Orwa said he’s primarily living in the U.S. these days while returning to Nairobi frequently to build Sote on the ground.

What follows is from our interview in late August, edited for length and clarity.

Crunchbase News: How many containers on average is Sote processing in a given month these days? When we chatted in late June, it was around 160. Any other growth metrics to share?

Orwa: Sote this year has already grown our customer base by 3x and we’re well on our way to get that to 5x. Today, we have 31 customers and we see ourselves being able to hit 50 customers before the end of the year very comfortably.

Where do you see the biggest growth potential for Sote and how are you pursuing that?

Orwa: We are building a digital freight-forwarding company that is going to cover the entire continent. It gives us a very unique customer base: manufacturers, retailers and distributors.

What we said when we raised our seed was that this customer base was going to give us data that would unlock so many different opportunities.

What are some examples of those opportunities?

Orwa: Some of the obvious ones are insurance solutions, loan solutions, SaaS solutions that we can provide or give access to this customer base in Africa that typically has not really been served by startups or technology companies, despite being one of the most powerful, if not the most powerful, customer bases in Africa.

We’re talking about a customer base that is composed of manufacturers, retailers, distributors. At scale across the continent, we expect it to be 90 percent of the B2B market of Africa.

That’s really what we’re looking at from a growth potential perspective: What would you be able to do if you were naturally already serving 90 percent of the B2B market around Africa, and could you then layer on top of that?

What are your biggest challenges currently as Sote’s CEO?

Orwa: We are gearing up for fundraising, so that will be my biggest challenge—to see us through that fundraising round successfully.

But, generally speaking, at the top of my mind is just our people and where they are, from a cultural standpoint, from a health standpoint.

We are a company that operates physically outside as well as digitally. So we have this dual challenge of making sure we keep people safe, not just in the expected work environment and culture, but also physically outside—out in the elements. There’s COVID out there and COVID is increasing.

We want to grow. Balancing that desire for growth with taking care of our people is one of the biggest challenges.

The last time I checked in, Sote had around 40 employees. What’s that figure now and are you hiring?

Orwa: We’re setting up our strategy for hiring and expanding that will take us beyond Kenya.

For right now, within Kenya, which is where we are operating, we’re keeping the numbers as they are. There are a few people we’ve interviewed. There’s been two or three more people that have joined, but we’re not hiring aggressively.

Right now what’s happening aggressively, or with more meat on it, is this strategy for expansion outside of Kenya—to South Africa, to Nigeria, to Egypt and so forth.

With this sort of mindset of growth and expansion, we are going to have to think about recruiting leaders. You know, when you’re growing operationally, your hiring strategies are mostly around your operational people, whether that’s engineering or logistics or operations.

But as we start thinking about layering on new solutions and going after other markets, we then also have to start thinking about recruiting some of the best minds in Africa, in other markets, and in new spaces.

What’s the story you want to be able to tell investors as you raise your Series A?

Orwa: We want to be able to say that we set out to build a digital logistics company, and we have successfully done that in one market, and we have scaled enough to where we have layered on a new service—a high-margin service—that is increasing our lifetime value of each customer in an almost infinite way.

Illustration: Dom Guzman

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