Startups that solve the supply chain and operational challenges of players in the fast moving consumer goods (FMCG) industry by helping buyers access products from sellers on a single platform continue to attract venture capital from investors.
Cardboard, one of the key players in the digitization of the traditional retail market including corner shops, FMCG manufacturers, wholesalers and distributors in Egypt, has raised US$12 million in Series A financing. Jordan- and US-based venture capital firm Silicon Badia led the round, which also welcomed the participation of SANAD Fund for MSME, a Middle East and North Africa impact investment fund, Arab Bank Accelerator and Sunny Side Ventures.
Investors like Global Ventures and Kepple Ventures doubled less than a year after participating in the $4.5 million prior to the company’s Series A funding last September. Cartona was then present in three Egyptian cities; it’s eleven now. According to a statement, the investment will allow the startup, founded in 2020, to cover all governorates of Egypt, expand its products, technologies and services and explore new industries beyond FMCG.
“So we think that with that money we would reach profitability. We will use this money for sustainable growth and only for sustainable growth. We’re not going to expand like crazy without having a positive unit economy in every city,” CEO Mahmoud Talaat said TechCrunch in an interview. “We plan to cover all cities in Egypt and have a strong focus on technology and product.”
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 insights.
The company operates an asset-light marketplace where it does not own a single product or vehicle. This model has led to customer complaints on both sides of the platform. As a result, Talaat said, Cartona needs to focus more on its technical integrations with major manufacturers and their warehouses, which has given the company more upside potential. With these integrations, he said, Cartona can simultaneously seek capital efficiency and growth while scaling its embedded financial product.
Providing credit, working capital or BNPL to micro and small businesses is the sweet spot of B2B e-commerce and retail marketplaces in Africa. But how they offer this service differs. CTO Mahmoud Abdel Fattah claims that Egypt is a market with other climbers like asset-heavy MaxAB or hybrid model captainCartona excels at integrating BNPL services into its marketplace processes without the help of a third party. So instead of making small businesses pay their loans with interest every month like other platforms, Cartona allows them to repay those loans with every product delivery.
“In a market like Egypt, retailers are not very happy with the concept of paying BNPL with interest at the end of the month. You don’t want to think that you’re paying more interest when an outside company gives you those working capital loans. They prefer it to be part of product pricing and embedded through the order cycle, which makes us a little bit different.” Talat added.
Cartona initially forgives from his balance sheet. But executives say the company expects to receive some lines of credit and venture capital from local and international partners by January next year.
There are over 400,000 stores and thousands of international and local brands across Egypt, with the sector growing at 8% annually. reports also say the total size of the retail market is $120 billion, with the food and beverage market being worth $70 billion. The tremendous opportunity this presents to platforms like Cartona has attracted investors like Silicon Badia to the B2B retail sector. According to the company’s founding managing partner, “The market is hungry for this species[s] of solutions and we believe that Cartona’s asset-light approach will enable them to serve as many market participants as possible in a highly efficient manner.”
In our interview with Cartona’s executives last year, the company had over 30,000 merchants and processed over 400,000 orders with an annual gross merchandise value of EGP 1 billion (~$64 million). Since then it has doubled some of its numbers. Talaat said the company now serves more than 60,000 merchants and has processed over 1 million transactions with an annual gross merchandise value of EGP 2.3 billion (~$120 million). Cartona has more than 1,500 distributors and wholesalers on its platform and 200 FMCG companies, including big names like Unilever and Henkel. These numbers are higher than the numbers from 1,000 distributors, wholesalers and 100 FMCG companies last September.
The founders say they want to build Cartona to become a better technology partner for these FMCG brands. Abdel-Fattah, the manager responsible for these technical integrations, said: “We started with very large FMCGs, but everyone, including multinationals, is interested because they now see our value. We don’t compete with them or lower their prices. We don’t subsidize their products like the competition sometimes does. We just connect them to the retailer, so it’s all about making the process seamless.”
Egyptian B2B e-commerce platform Cartona raises $12M to scale and explore new verticals – TechCrunch Source link Egyptian B2B e-commerce platform Cartona raises $12M to scale and explore new verticals – TechCrunch