Capiter, a Cairo-based B2B e-commerce solution startup, has raised a $33 million Series A round to power its expansion across the Middle-East North Africa (MENA) region and also its full foray into digital financial service.
The round was led by Quona Capital and MSA Capital with Savola, Shorooq Partners, Foundation Ventures, Accion Venture Lab, and Derayah Ventures also participating.
Launched in July 2020 by Mahmoud Nouh, co-founder and a former COO of Egyptian ride-hailing unicorn Swvl and Ahmed Nouh, a shipping and logistics industry expert, as a marketplace to bring together FMCGs, wholesalers, and merchants on one platform, enabling merchants to order their products through an e-commerce checkout and receive credit on their purchases.
Throughout the four cardinals of the Africa continent, there is an increase in digital products enabling the digitization of the informal retail sector. There are some that bundle the whole fragmented pieces of the sector and there are some products that only unifies a select part of it. For instance, some digitize the logistics and financing fragments while some handle the whole value chain.
Capiter’s product on the other hand is solving three problems: lack of direct and seamless access between manufacturer and merchants, unstable pricing system and lack of credits. It is democratizing access to manufacturing goods by providing merchants with options to seamlessly order on the go. According to Nouh, Capiter is taking manufacturer-merchant access from 30% to between 80% – 100% with his solution.
The unstable pricing structure is one of the problems facing the retail sector across Africa and other emerging markets. In Egypt, it’s the same and for Capiter’s accessibility numbers to be squarely sticky, there must be a transparent pricing system that protects both manufacturers and merchants. On Capiter, there are fair pricing and matching techniques for merchants to explore.
Thirdly, through its partnership with local banks and the Central Bank of Egypt, the startup also provides credits/loans for merchants who don’t have enough capital to stock.
There are currently 12 merchant types on Capiter; mom-and-pop stores, hotels, restaurants, cafes, electronic shops, supermarkets, grocery shops, and catering companies, each with its own customized solutions. The company provides a bespoke solution to solve the unique problem each business has.
How is it doing that? The company says it uses data gathered from the products they order from time to time to create products suggestions. For instance, the company tells them what to sell, peak seasons for each product, and when they will be available.
According to Ahmed Nouh, the company’s COO, the company is well-positioned to scale geographically to enable more retailers across the MENA region to use Capiter’s services while also expanding into new verticals like agriculture and pharmaceutical offerings.
The company’ makes money from little margins on the products ordered from its platform. Then on rebates for the suppliers and commission from the capital provided to merchants. Capiter also makes money from providing market insights and data services to manufacturers and FMCGs.
Over 50,000 merchants and 1,000 sellers currently use Capiter. The company said that it has provided up to 6,000 SKUs and now targeting an annualized revenue of $1 billion by next year. He also indicated that in their books, they are on the right path to achieving their projections.
Capiter plays in a highly competitive market with the likes of MaxB and Fatoura who are both industry leaders and have the backing of some strong investors in the ecosystem. But the vast range of merchant lines it currently has and the ongoing plan to add more and enter into digital payment, Capital is market-ready. “Our competitors only connect with FMCG, we have a wider range of electronic market and we are going to expand across more industries such as pharmaceutical and agriculture.” Alaa Elshafei, Capiter’s CMO told TechCabal.
“Capiter’s embedded finance model, combined with its expertise and strong user engagement, can have a dramatic impact on the financial lives of SMEs, helping them optimize their income which helps communities to thrive.” Quona co-founder and managing partner Monica Brand Engel said in a statement
While speaking on their investment, Ben Harburg, partner at MSA Capital, said “SME supply chain inefficiencies are massive throughout the Middle East. We believe the key blocker is the lack of working capital in the system. Capiter has built an asset-light way to aggregate retailers and suppliers and facilitate credit into the system through a comprehensive multi-product offering such as commerce, credit financing, digital payments, bookkeeping and inventory management for SMEs, leveraging on the ecosystem built by the local banks and financial institutions.”
