Why we Invested: LENGO - Stop guessing Africa

When we met Max and Ismaila in Dakar Senegal, they had a simple pitch: “we’re building a company that will make brands stop guessing Africa”. We resonate with this mission. Data gaps and information imbalances is a crucial infrastructural challenge in Africa. We have been actively searching for a team that has the ambition, appetite, and ability to tackle this as the core of their product offering and not just as an adjacent value proposition. We found that team in Lengo.

More than 90% of consumer packaged goods (CPG) in Africa are sold through informal retail shops. These shops rarely keep track of their own purchase, sale, and inventory data. Even if they do, there is a significant disconnect between CPG manufacturers and these retail shops.

Africa's consumer markets hold tremendous potential, but the lack of detailed data on informal retail purchasing poses a significant challenge for consumer brands. Existing sources of data are scarce, inaccurate, and inadequate for making strategic decisions. Market research firms like Nielsen provide some consumer panel data focused on modern trade in Africa, but they have minimal point-of-sale (POS) data on the massive informal retail sector, making estimates unreliable.

Distributors selling to informal shops have limited visibility beyond their own Stock Keeping Units (SKUs). There is limited insight into African consumers' purchasing behaviors, needs, and pain points.

One unexpected consequence of Africa's data void is the proliferation of counterfeit consumer goods. In certain categories, such as detergents, these counterfeit products can make up to 35% of the market, damaging consumer brands and their reputation. Digital product verification solutions have been unsuccessful due to a lack of internet connectivity in many shops.

Meet Lengo.ai

Lengo is the first AI-Driven Intelligence Platform for FMCG companies in Africa. Founded in 2022 by Max Smith and Xavier Macia, Lengo pioneers mobile crowdsourcing to map the continent's largely undocumented MSME retailers. The company incentivizes shopkeepers to share inventory, pricing, and sales data through a network of field agents called Eagles. But it doesn't stop there. Lengo's breakthrough involves automating data collection at scale through a WhatsApp chatbot named Sadio AI. The AI prompts retailers to share critical sales data. This mobile automation approach dramatically reduces data collection costs as Lengo expands into new African markets. At the same time, it delights retailers by meeting them where they already are and provides useful business insights in return for the data they provide.

By aggregating information from thousands of stores, Lengo pieces together localized demand trends, stockout risks, and consumer insights. These analytics are then packaged into a self-serve SaaS platform where brands can finally "stop guessing" the African market.

Lengo leverages mobile crowdsourcing to unlock POS data from informal retailers at scale. By aggregating information from thousands of stores, Lengo pieces together localized demand trends, stockout risks, and consumer insights. The company's mantra of "stop guessing Africa" encapsulates the immense value of detailed retail data in reducing the risk of speculation for consumer brands.

Furthermore, Lengo's data platform provides an alternate method for brands to map the prevalence of fake brands. By analyzing stock levels, prices, and sales velocities at the point of sale, it's possible to determine where counterfeit products are most likely to be found. This information enables brands to take swift action to prevent the spread of counterfeit goods. Additionally, pinpointing areas with high counterfeit rates presents an opportunity to increase legitimate market share through targeted distribution and sizing.

The Impact So Far

The results thus far have been outstanding. With a team of just 25 field agents, Lengo has managed to map over 21,000 shops in Senegal alone. These numbers are more than just statistics; they represent a change in how data is collected and utilized.

Lengo has already secured 27 paying enterprise customers, and these are not just any customers – major brands like Unilever and Nestle have embraced Lengo's platform, as well as family-owned businesses. One key metric that highlights Lengo's impact is the fact that 100% of its clients have experienced increased distribution since leveraging Lengo's insights. This is a game-changer for businesses looking to expand their reach and make data-driven decisions.

Yet this is just the beginning. What sets Lengo apart is its light-touch model, which cost-effectively scales data collection across informal retailers – a feat that legacy firms struggle to match.

The Why - Our Investment Decision

At Ventures Platform, we believe in investing not only in innovative ideas but also in the people driving those ideas forward. Lengo, with its compelling vision and disruptive potential, caught our attention.

The remarkable founding team behind Lengo was a significant factor in our decision. Lengo's lean founding team combines a deep understanding of African consumers with complementary skills spanning operations, sales, and engineering. This harmonious blend of expertise positions them well to effectively tackle the challenges of the African market. Max Smith, the CEO, brings a unique blend of academic research on African digital consumers and hands-on operating experience in research. Roger-Xavier Macia, the CCO, has honed his analytical, sales, and leadership skills through his prior experience at Jumia. His track record includes mapping Senegal's informal retail landscape and securing Lengo's first paying enterprise clients. With Ismaila Seck as co-founder and CTO, Lengo has significantly augmented its technical firepower. Ismaila's Ph.D. in Computer Science, Deep Learning, and Machine Learning positions him as a critical asset in building Lengo's mobile crowdsourcing stack.

Lengo positions itself at the intersection of data-starved consumer brands and retailers in Africa, creating opportunities for network effects. The company has demonstrated promising early traction and a mobile-first model that unlocks crowdsourced data. Lengo's founders possess strong founder-market fit and deep knowledge of African consumers.

Founders Max, Xavier, and Ismaila envision Lengo evolving into a digital operating system connecting retailers, distributors, and consumer brands across Africa's informal value chains. Lengo is developing the AI portion of its product to connect with stores at scale, improving UX and real-time analytics on their platform for Consumer Packaged Goods (CPGs), and expanding their coverage to many new cities.

As investors, we are excited about the incredible potential that Lengo holds and proud to be a part of its journey.

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