Egyptian B2B e-commerce platform Cartona raises $12M to scale and explore new verticals – TechCrunch

Startups that solve the supply chain and operational challenges of players in the fast-moving consumer goods (FMCG) industry – by helping buyers access sellers’ products on a single platform – continue to grow. attract venture capital investors.

Cartona, a leading player in digitizing the traditional commerce market including mom-and-pop stores, FMCG producers, wholesalers and distributors in Egypt, raised $12m in Series A funding Jordanian and US start-up venture capital firm Silicon Badia led the round, which also welcomed participation from the SANAD Fund for MSMEs, an impact investment fund for the Middle East and North Africa. , Arab Bank Accelerator and Sunny Side Ventures.

Investors such as Global Ventures and Kepple Ventures have doubled down less than a year after participating in the company’s $4.5 million pre-Series A funding last September. At the time, Cartona was present in three Egyptian cities; it is now in eleven o’clock. According to a statement, the investment will enable the startup, which launched in 2020, to cover all Egyptian governorates, expand its products, technology and services, and explore new vertical markets beyond FMCG.

“So we believe that with this money we will achieve profitability. We will use this money for sustainable growth and only sustainable growth. We won’t grow like crazy without having a positive unit economy in every city,” CEO Mahmoud Talaat told TechCrunch in an interview. “We plan to cover all cities in Egypt, focusing a lot on technology and products.”

Cartona’s platform allows buyers to order inventory from a network of curated sellers through an app that provides a communication tool for promotions and a dashboard for market information.

The company operates in an asset-light market where it does not own a single product or vehicle. This model has led to customer complaints on both sides of the platform. And therefore, Talaat said that Cartona needed to focus more on its technical integrations with large manufacturers and their warehouses, which created more benefits for the company. With these integrations, he said Cartona could simultaneously seek efficiency and capital growth while scaling its integrated finance product.

The provision of loans, working capital or BNPL to micro and small enterprises is the strong point of the e-commerce and B2B retail markets in Africa. But the way they provide this service differs. CTO Mahmoud Abdel-Fattah says that in Egypt, a market with other new entrants such as asset-rich MaxAB or the hybrid Capiter model, Cartona stands out by integrating BNPL services into its market processes without the help of third parties. a third-party provider. So, instead of forcing small businesses to repay their loans every month with interest like other platforms, Cartona allows them to repay those loans whenever there is a shipment of product.

“In a market like Egypt, retailers are not very supportive of the idea of ​​paying BNPL with interest at the end of the month. You don’t want to think you’re paying more interest with an outside company giving you these working capital loans. They prefer it to be part of product pricing and integrated throughout the order cycle, which makes us a little different. Talaat added.

Cartona lends off its balance sheet for now. But executives say the company expects to receive credit lines and venture capital debt from local and international partners by January next year.

Picture credits: Cardboard

There are over 400,000 stores and thousands of international and local brands across Egypt, with the industry growing at 8% annually. Reports also indicate that the overall retail market size is $120 billion, with the food and beverage market accounting for $70 billion. The huge opportunity this presents for platforms like Cartona has drawn investors like Silicon Badia into the B2B retail space. According to the company’s founding managing partner, “the market is hungry for this type of[s] of solutions, and we believe that Cartona’s asset-light approach will allow them to serve as many market participants as possible in a very efficient manner. »

In our interview with Cartona executives last year, the company had over 30,000 merchants and was processing over 400,000 orders with an annualized gross merchandise value of EGP 1 billion (~$64 million). It has doubled some of its numbers since then. Talaat said the company now serves over 60,000 merchants and has processed over 1 million transactions with an annualized gross merchandise value of EGP 2.3 billion (~$120 million). Cartona has over 1,500 distributors and wholesalers on its platform and 200 FMCG companies, including big names like Unilever and Henkel. These figures are up from last September’s figures of 1,000 distributors, wholesalers and 100 FMCG companies.

The founders say they want to build Cartona to become a better technology partner for these FMCG brands. Abdel-Fattah, the executive in charge of managing these technical integrations, said: “We started with very large FMCGs, but everyone, including multinationals, is interested because now they see our value. We do not compete with them or lower their prices. We don’t subsidize their products like the competition sometimes does. We just connect them with the retailer, so it’s all about making the process seamless.