Badili, a Kenya-based smartphone re-commerce startup, has raised $2.1 million in pre-seed funding to scale its business in Africa; one of the fastest growing mobile phone market in the world.

The Venture Catalysts, V&R Africa, Grenfell Holdings and SOSV participated in the round, as did family offices and Angel Investors from Kenya, Nigeria, South Africa and India.

Buoyed by the new funding, Badili plans to explore new growth opportunities in West Africa, where it hopes to meet an increasing demand for affordable pre-owned smartphones even as it scales its operations in Kenya, Uganda and Tanzania.

“We are starting in Uganda and Tanzania and have built strong partnerships with Original Equipment Manufacturers (OEMs). Within the next six months, we will be expanding into a few West African markets to get a foothold in some of the most important markets in Africa,” said Rishabh Lawania (CEO), who co-founded the startup with Keshu Dubey (CTO) early this year.

Badili carries out purchases and buybacks on behalf of major OEMs and phone dealers, and has so far established partnerships with major brands such as Samsung. It also buys appliances from individuals.

Lawania told australiabusinessblog.com that he launched the startup after noticing that re-commerce did not exist in Kenya as a legitimate and reliable industry, but that the demand for pre-owned devices was high.

“One of my ex-employees in Kenya was arrested for buying a stolen phone, and I noticed that most people here can’t really buy second-hand electronics because the only option they have is the gray market, which is risky . That’s when Badili’s idea started. I felt that something really needed to change,” says Lawania, also the founder of Wee Media (parent company of WeeTracker news site) and gadgets Africa.

Lawania said 60% of Badili customers are individuals upgrading from a feature to a smartphone, adding that devices sold by the startup cost less than half their original price.

“We offer an alternative for people who don’t want to pay full price for a device, and I’m more excited about the fact that we can help many consumers buy their first smartphone,” said Lawania.

Affordability remains a major barrier to smartphone penetration, which is essential to powering Africa’s digital economy, in most countries in Africa, including Kenya, where feature phones still dominate the mobile phone market. Recent data from the Communications Authority of Kenya indicates that as smartphone penetration deepens, the market share of feature phones currently stands at 55.1 percent.

All over Africa, last data from International Data Corporation (IDC) also shows that consumers chose cheaper options as feature phone shipments increased by 10.6% while smartphone shipments fell 7.9% in the second quarter of the year due to rising inflation and deteriorating economic outlook.

While the report predicted smartphone shipments to recover, affordability and consumer purchasing power will continue to play a major role in smartphone penetration across the continent.

In addition, Badili taps into the growing refurbished and used mobile phones marketwhich is expected to reach $146 billion by 2030, at a CAGR of 11%, driven in part by the adoption of smartphones in emerging countries.

Badili buys the phones through his platform and a network of stores and agents across the country. It uses its price estimation algorithm, which takes into account several factors, including the phone’s age and model, to calculate the phone’s value. The phones are refurbished, repackaged and resold with a one-year warranty.

Lawania said Badili requests details including ID and mugshot from the sellers and also requires them to sign an affidavit stating that they are the rightful owners of the devices. For added caution, he said, Badili has also set up a system that can flag frequent sellers.

He said Badili is currently establishing and scaling up the technology, systems, partnerships and networks needed to build Africa’s most trusted and largest consumer electronics re-commerce marketplace.