MaxAB-Wasoko acquired EFG Finance’s B2B e-marketplace Fatura after EFG Finance approved the acquisition, according to a statement (pdf). Following the acquisition EFG Finance will become a significant shareholder in MaxAB-Wasoko and part of its board. (Tap or click the headline above to read this story with all of the links to our background as well as external sources.)ICYMI- Egyptian B2B e-commerce platform MaxAB and Kenya-based Wasoko merged in August 2024 to create Africa’s largest network of B2B informal retailers, with more than 450k merchants connected to over 65 mn consumers across Egypt, Morocco, Kenya, Tanzania, and Rwanda.The details: The acquisition strengthens MaxAB-Wasoko’s position in Egypt by adding new cities and wholesalers to its network. The move “marks a pivotal step in MaxAB’s broader strategy to consolidate the B2B ecommerce and fintech space across Africa,” the statement read. Fatura is expected to contribute around 25% of MaxAB’s revenues in Egypt by the end of the year.What they said: “The acquisition of Fatura is more than a growth play; it’s the realization of our ambition to become the go-to, one-stop-shop for retailers throughout Africa … By bringing together operational strength, product depth, and innovative fintech offerings, we’re setting a new standard for retail across the region,” MaxAB-Wasoko CEO Belal El Megharbel said. REMEMBER- EFG Holding’s microfinance arm Tanmeyah acquired Fatura back in 2022 to grow its network of merchants and fill the B2B credit market gap.

Wasoko and MaxAB have a new technical advisor: The newly-merged Wasoko and MaxAB have appointed Mohamed (Mo) El Shenawy (LinkedIn) as an independent board director and technical advisor, the company announced in a press release (pdf). El Shenawy currently serves as president and CTO of driverless car maker Cruise following a long career in the tech industry, which has seen El Shenawy found three tech startups and hold leadership positions at global tech giants like Amazon. Elshenawy also serves on Mercedes-Benz’s software advisory council.(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)“El Shenawy will be instrumental in accelerating Wasoko and MaxAB’s technology development, scaling the company’s systems and pushing the boundaries of its artificial intelligence tools and capabilities,” the release read.Sitting on the company’s board: Alongside El Shanawy, the company’s board now includes Youssef Salem, Quona Capital’s Monica Engel, 4DX Venture’s Peter Orth, and co-CEOs Belal El Megharbel and Daniel Yu.ICYMI: Last August, Egyptian B2B e-commerce platform MaxAB and Kenya-based Wasoko completed their merger and established a Pan-African platform serving Africa's retail sector. The new entity connects more than 450k merchants to over 65 mn consumers across Egypt, Morocco, Kenya, Tanzania, and Rwanda.

It was a busy day for M&A news, with a lot of M&A activity taking place here in Egypt. MAXAB AND WASOKO ARE NOW ONE- That’s a wrap on Africa’s largest tech merger: Egyptian B2B e-commerce platform MaxAB and Kenya-based Wasoko have completed the largest tech merger the continent has ever seen, according to a statement (pdf). Remember: The two companies inked a preliminary merger agreement in December 2023 and unconfirmed reports said that the merger will create a new entity named Maxoko and will see its annual operations hit USD 500 mn. Leading the merged entity: MaxAB CEO Belal El Megharbel (LinkedIn) and Wasoko CEO Daniel Yu (LinkedIn) will serve as co-CEOs of the new entity as well as board directors alongside existing investors. Creating a mega platform: The all-stock transaction establishes a Pan-African platform serving Africa's USD 600 bn informal retail sector. The new entity will be Africa’s large network of B2B informal retailers, with more than 450k merchants connected to over 65 mn consumers across Egypt, Morocco, Kenya, Tanzania, and Rwanda. Future plans: The company's long term plans include going public on a stock exchange, according to unconfirmed reports out in July. The international business press also picked up the story: Bloomberg.DICE WANTS STAKE IN TWIN TOP- Dice wants a big piece of Twin Top: EGX-listed Dice Sports and Casual Wear is looking to snap up a controlling stake in Twin Top Real Estate Investment Company, according to an EGX disclosure (pdf). The company has appointed Osoul Arabia for Investment and Financial Consultancy as independent financial advisor to conduct the fair value study of Twin Top, which the disclosure points out owns a textiles mall catering to manufacturers and merchants.Dice has been doing a lot of acquiring: Earlier this month, Dice increased its stake in United Dyers, acquiring an additional 16.7% stake in the company and pushing its ownership in it to 99.3%. Late last year, the founders of Dice upped their stake in the company to 58.6% in an EGP 436 mn transaction. ORASCOM DEVELOPMENT EXITS TOURISM SUBSIDIARY- Orascom Development offloads stake in UAE tourism arm: Orascom Development Holding (ODH) has sold its Emirati subsidiary RAK Tourism Investment to SPV Cove Holdings in a USD 40 mn transaction, two unnamed sources told Asharq Business. ODH and other RAK shareholders are getting some USD 23 mn in cash for their stake in the company and the buyer will assume around USD 18 mn of RAK’s debt. The two sides entered into the binding share purchase agreement earlier this summer. The transaction is expected to close this quarter. FAISAL ISLAMIC BANK IS ALSO LOOKING TO EXIT STAKES-Faisal Islamic Bank to exit Giza Paints: Faisal Islamic Bank of Egypt will sell its entire 48.57% stake — representing 145.7k shares — in Giza Paints and Chemical Industries in an EGP 32.3 mn transaction, it said in an EGX disclosure (pdf).

MaxAB and Wasoko’s merger is fast approaching: Egyptian B2B e-commerce platform MaxAB and Kenya-based Wasoko are set to complete their merger within the next few weeks, Al Mal reports, citing sources it says have knowledge of the matter. The merger will create a new entity named Maxoko, whose annual operations are projected to hit USD 500 mn.Remember: The two e-commerce platforms inked a preliminary merger agreement back in December with the aim of advancing Africa’s informal retail sector. The transaction — hailed by the two companies as “the largest tech merger in Africa” — is set to create a combined customer base of over 450k merchants serving over 65 mn consumers in eight African countries.The ownership breakdown: Wasoko shareholders will reportedly hold a controlling 55% stake in the merged entity, with the remaining share going to MaxAB shareholders, according to Al Mal.The where: Maxoko intends to expand its operations in Egypt, Morocco, Rwanda, and Kenya, according to Al Mal — MaxAB already operates in Egypt and Morocco, while Wasoko is present in Kenya, Tanzania, Rwanda, Uganda, Zambia, and Congo. Maxoko wants to go public: The company’s long-term plans include listing on a stock exchange. About the companies: Founded in 2018 by Belal El Megharbel (LinkedIn) and Mohamed Ben Halim (LinkedIn), MaxAB offers a range of e-commerce and fintech services targeting smaller retailers and suppliers. Wasoko was founded in 2013 by Daniel Yu (LinkedIn). The company enables smaller retailers to restock products for their businesses via mobile app.

A pan-African e-commerce giant in the works: Egyptian B2B e-commerce platform MaxAB has inked a preliminary merger agreement with Kenya-based Wasoko, according to a joint statement (pdf). The merger aims to “drive the transformation of Africa’s informal retail sector … and establish the most successful digital retail platform on the continent.” Short on details: We reached out to ask about who would own what post transaction, the valuation of the merged entity, and when the two companies expect to see the transaction go through. Company executives did not reply to request for comment. A PR contractor for Wosoko was unable to comment. The merger will give the companies a combined customer base of over 450k merchants serving over 65 mn consumers in eight African countries. MaxAB already operates in Egypt and Morocco, while Wasoko is present in Kenya, Tanzania, Rwanda, Uganda, Zambia, and Congo.They see a massive market: The two want to capture what they say is Africa’s USD 850 mn informal retail sector, offering fintech, logistics, and e-commerce services. Top execs staying on: It’s not clear who will run the combined business, though the statement notes that MaxAB CEO Belal El Megharbel and Wosoko chief executive Daniel Yu are “committed to shaping the long-term future of the company together, and will both continue as full-time executive leaders” when the transaction wraps. The release refers to this as a “merger of equals,” but doesn’t make clear whether they intend to operate as a single brand or who will own what stake in the merged entity.What we know of their capital: MaxAB last year closed a USD 40 mn pre-series B round to fund its expansion across the MENAP region. The capital injection followed a USD 15-mn extension to a USD 40 mn series A round in 2021 and a record USD 6.2 mn seed round in 2019. Wasoko in 2022 raised USD 125 mn in a series B round that valued the company at USD 625 mn.Even more funding: “The combined business has received additional investment and has substantial runway to reach profitability,” the release says, without saying who invested. This isn’t MaxAB’s first M&A: The company in August 2021 acquired Moroccan e-commerce and logistics platform WaystoCap for an undisclosed sum.About the companies: Founded in 2018 by Belal El Megharbel (LinkedIn) and Mohamed Ben Halim (LinkedIn), MaxAB offers a range of e-commerce and fintech services targeting smaller retailers and suppliers. Wasoko was founded in 2013 by Daniel Yu (LinkedIn). The company enables smaller retailers to restock products for their businesses via mobile app.The international press also had the story:Bloomberg | TechCrunch

EDUCATION - New British school in Alexandria: Egypt Education Platform (EEP) and Modon Developments will open the doors of a new British school in Alexandria at the start of the 2024-2025 academic year, under an agreement (pdf) the two companies signed last month. Construction of the Alexandria British Academy will start early next year in the Al Seyouf district. The school will accommodate more than 1.8k students, and will be the first in Alexandria to offer both the international primary curriculum and the British curriculum. EEP: Is an education management firm that counts EFG Hermes and the Sovereign Fund of Egypt among its anchor investors. Formerly known as GEMS Education Egypt, it has a network of 18 schools and nurseries.NON-BANK FINANCIAL SERVICES-#1- Banque Misr, MaxAB partnering in MSME push: State-owned Banque Misr and e-commerce startup MaxAB inked an agreement to provide financing and digital banking solutions to small and micro enterprises in MaxAB’s retail network, according to a statement (pdf). #2- Qardy to provide financial services to NOSCO clients: Online SME lending marketplace Qardy will offer its services to clients of the National Company for Transportation and Overseas Service Company (NOSCO) under an agreement signed with the trucking firm, according to a press release (pdf). The partnership will unlock an initial EGP 100 mn of funding for the firm’s clients, according to the statement. The companies didn’t disclose the specifics of the funding arrangements, saying only that Qardy will offer a “diversified set of financial products” allowing NOSCO’s customers to “optimize their cashflow cycles.”#3- Mastercard has partnered with local fintech firm Egabi FSIto help companies across the Middle East, Africa, and Eastern Europe offer digital buy-now-pay-later, microfinance, and SME finance products, it said in a press release last week.DEBT- #1- ODE shareholders okay loan for Gouna expansion: Orascom Development Egypt (ODE) shareholders have approved a USD 30 mn loan from parent company, Orascom Development, according to an EGX disclosure (pdf). The company said earlier this year that it was looking to borrow USD 30 mn to help finance the planned expansion of El Gouna. The loan carries a tenor of 10 years and an interest rate of 3.75%.#2- Kandil Steel could secure USD 25 mn from the IFC: The International Finance Corporation (IFC) could lend USD 25 mn to flat steel manufacturer Kandil Steel, according to the lender’s website. The facility would allow the company to preserve employment and maintain its capacity utilization rates, “preventing reduction in output and preserving direct value-addition to the Egyptian economy.” The IFC will announce its final decision on the loan on 19 June. BANKING-Housing and Development Bank has launched new three-year high-yield CDs,with an annual interest rate of 20% or a monthly interest rate of 18.5%, according to its website. The minimum deposit is EGP 100k. REMEMBER- A handful of state-owned and private-sector banks have introduced new high-yield certificates of deposit in the wake of the central bank’s decision in March to raise interest rates by another 200 basis points.TRANSPORT- Skoda will take over the maintenance of some of our train locomotives: Czech car manufacturer Skoda will renovate and maintain our Henschel and Adtranz locomotives for a 15-year period as well as help localize the production of spare parts under an agreement it is set to sign with the Madbouly government early next month, the Transport Ministry said in a statement.

It was a mixed bag on the talk shows over the weekend: Commodities was something of a theme as the pundits took a look at what went down at one of ecommerce startup MaxAB’s warehouses over the weekend, as well as getting into the nitty gritty of newly implemented shop licensing laws and an expected bump to the state’s local wheat purchase price. Goods seized at the MaxAB warehouse in Qalyubia: The governor of Qalyubia and other “relevant authorities” ordered the seizure of tons of commodities at the warehouse of ecommerce outfit MaxAB because of a mistaken belief that the company was hoarding both subsidized and unsubsidized products, MaxAB CEO and co-founder Belal El Megharbel told El Hekaya (watch, runtime: 9:05). MaxAB will be providing receipts to the government to get back its goods, El Megharbel said. MaxAB raised a USD 40 mn round to fund its expansion in 2022.Shop owners aren’t jumping to get licensed: Only 2.7k of the 4 mn unlicensed shops in the country have so far applied for licenses under the newly-introduced Public Shops Law, Rep. Mohamed Al Fayoumi told Al Hekaya’s Amr Adeeb in a phone call (watch, runtime: 5:32.) Licenses cost between EGP 1k and EGP 100k depending on the location and size of the shop, Al Fayoumi told Al Hadath Al Youm in a phone call (watch, runtime: 6:36.) Only shops operating in 34 specific activities — rather than all shops — need to obtain security clearances to get a license, Al Fayoumi told Sada El Balad (watch, runtime: 3:02). Owners of unlicensed shops have one year from the law’s implementation last December to apply to obtain licenses, which should be issued within 90 days.A 25-35% increase in the state’s wheat purchase price? Ala Mas’ouleety’s Ahmed Moussa speculated that the price per ardeb of wheat that the state offers to local farmers could rise to EGP 1.25k-1.35k from last year’s EGP 1k (watch, runtime: 3:25). The cabinet will announce its final price for the 2023 season following its weekly meeting on Wednesday, according to Saad (watch, runtime: 10:26.)AND- Prime Minister Moustafa Madbouly’s trip to North Sinai with several government ministers to follow up on development projects got airtime on Masaa DMC (watch, runtime: 1:39), Al Hayah Al Youm (watch, runtime: 5:36), and Kelma Akheera (watch, runtime: 4:32).

Happy almost-THURSDAY, wonderful people. The weekend is (just) within reach, but the news cycle isn’t dying down just yet.THE BIG STORIES TODAY- #1- Qatar to invest USD 2.5 bn in state-held firms: Qatar’s sovereign wealth fund is in advanced talks to buy up 20% of Telecom Egypt’s stake in Vodafone Egypt, as well as other state-held stakes in unlisted companies, in transactions worth up to USD 2.5 bn, sources close to the matter told Bloomberg. A source close to the matter confirmed to Enterprise that talks are still ongoing with three different Arab sovereign funds — the Qatar Investment Authority, Saudi Arabia’s Public Investment Fund and Abu Dhabi’s ADQ — as we’ve reported earlier, and that the two parties could come to an agreement by the end of the year. Telecom Egypt has yet to receive an official bid from any of the funds, the source confirmed.#2- MaxAB closes USD 40 mn pre-series B: B2B e-commerce platform MaxAB closed a USD 40 mn pre-series B round to fund its expansion across the MENAP region, according to a statement (pdf). The round saw follow-on investments from early backers Beco Capital, 4DX Ventures, Flourish Ventures and Africa Platform Capital, as well as commitments from new investors Silver Lake, British International Investment (the UK government’s development finance institution) and DisruptAD (Abu Dhabi sovereign wealth fund ADQ’s venture platform).THE BIG STORY ABROADRussia and the UK are competing for the top slot on the front pages of the international business press this afternoon. Russian President Vladimir Putin imposed martial law in the regions of Ukraine that Russia has annexed, indicating that military administrations will be installed in these regions, CNBC and Reuters report. Meanwhile, UK Prime Minister Liz Truss is facing increasing political pressure as inflation figures jumped to the double digits again in September (Financial Times | Wall Street Journal). ** CATCH UP QUICK on the top stories from today’s EnterpriseAM: Auto assembly legislation + expat car import scheme get parliament sign-off: The House of Representatives’ general assembly approved legislation that will see the establishment of a new council to set policy for local vehicle industry (including EV assembly) and another bill that will allow Egyptians living abroad to import cars and get customs and fee rebates.The bidding war for Pachin is cooling off: Saybad Industrial Investment has abandoned its bid to take over EGX-listed paint company Paint and Chemical Industries (Pachin) after not being able to do due diligence on the firm.Swvl could get booted off the Nasdaq: Cairo-born Swvl is reportedly considering combining (through a reverse stock split) or canceling some of its shares as it looks to avoid delisting due to low trading price. Get Enterprise daily The roundup of news and trends that move your markets and shape corporate agendas delivered straight to your inbox. Subscribe here ***Take our EV survey: Are you an ex-petrolhead shopping around for your first electric vehicle? EV-curious and wondering what all the fuss is about? Or are you not ready to say goodbye to that sweet smell of benzene as you wait at the gas station?We want to hear from you: We’re taking the pulse on how the nation feels about Egypt’s nascent EV transition. Take a few minutes to fill out our short survey. We’ll be back soon with the results.***🗓 CIRCLE YOUR CALENDAR-The Madbouly government’s economic conference takes place Sunday-Tuesday next week. You can find the agenda for the conference here.Egypt and the UAE will host a two-day conference marking 50 years of bilateral ties. The gathering will take place next Wednesday-Friday, 26-28 October and is being produced in association with the two governments. Day one is an economic forum featuring ministers, senior officials and business leaders, while the following day will feature a cultural forum, according to a statement.The Suez Canal Economic Zone (SCZone) will launch a promotional campaign next week to drum up interest in investing there, SCZone head Walid Gamal El Din said, according to a statement. The pre-COP campaign will launch domestically next Sunday, 23 October, before the international campaign kicks off on Monday, 24 October.Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.☀️ TOMORROW’S WEATHER- Temperatures in Cairo will hit 30°C tomorrow during the day before falling to 19°C at night, our favorite weather app tells us.

How B2B e-commerce players are handling working capital pressures + the VC funding squeeze: Part II. Last week, we took a look at how B2B e-commerce players are handling margin pressures like inflation and the global VC funding squeeze through reallocating investments and revisiting their approach to growth. For part two, we look at how they can amend their financial models to make up for the lack of VC appetite, and about potential financing options they can resort to amid the global funding squeeze.REFRESHER- Several startups in the sector have been struggling to pay their dues and implementing cost-cutting measures amid market headwinds, which have pushed investors to put a renewed emphasis on achieving positive unit economics. After Capiter’s high-profile meltdown, social commerce startup Brimore issued a statement (pdf) saying that it would restructure and cut costs in a bid to reach profitability. Brimore says it will tweak its business model, but stopped short of getting into what that means.The problem: So-called “asset-heavy” startups require heavy investments while also needing a lot of working capital to expand, CEO of the Cairo Angels Syndicate Fund (CASF), Aly El Shalakany, told us.That’s why other verticals like embedded finance are taking on new importance, El Shalakany said. MaxAB, one of the biggest players in the sector, just launched its BNPL product last month, and will target most of its investments on this segment and fintech at large in the coming period, CEO and co-founder Belal El Megharbel told Enterprise.Especially when the market is now being hit by rising prices and inflation: “Disruptions to prices are difficult for small retailers — like kiosk owners — to manage,” Fatura CEO Hossam Ali said. “Their working capital is pressured, which is why we’re trying to fill that gap and help finance their products,” he explained. BNPL is critical for the market because it allows wholesalers to gain direct access to much-needed liquidity, while giving retailers their needed credit to buy inventory without pressuring their working capital, Ali explained.BNPL offerings also help boost these startups’ transaction cost economics: “We want to capitalize on the opportunity in the market, but it also helps contribute to more positive economics on the transaction as a whole,” Ali said.Transaction margins are rising to the top of these startups’ priorities: Talabeyah is also prioritizing “positive margins at the scale of each order,” as it continues to “scale up the business model while continuing to minimize costs.” This will allow it to absorb the overheads as it grows and reaches a larger scale, CEO Karim Nassef said. MaxAB also uses promotional bundles that aim to raise the margins of every order by bundling high-margin products with lower-margined ones, El Megharbel said, adding that this has proven to be a much more effective strategy than just selling products below their margin cost.Realistic credit terms are also key: “We were lucky because our cofounder has been in the industry for 20 years, so he had a lot of connections with suppliers, which allowed us to negotiate good credit terms,” Nassef explained. Credit terms on stock ranged between 15 and 20 days, which proved appropriate based on how long it took them to sell their existing stock levels.Efficiency > growth during times of crisis — but aggressive growth can also help give some startups an edge when others are being more cautious. “The growth vs. efficiency ratio is very difficult for startups to perfect, but while historically we’ve tilted towards growth, we’re now tilting more towards efficiency,” El Megharbel told us. “Still, we believe these tough times are massive opportunities, so if you’re well capitalized and you’ve taken into account the possibility of things like this happening, you can reap the gains by expanding aggressively when everyone else is not, just to gain that market share and ground,” he added, which is why MaxAB is still looking at expansions in the near term.When it comes to funding, startups that had a healthy funding mix of VCs, private equity and DFIs are not worried: MaxAB counts PE firms RMBV, Hayaat Group and Axian among its investors, as well as DFIs like the International Finance Corporation (IFC) and the British sovereign wealth fund. El Megharbel is also not worried about potential down rounds or flat rounds. “If you were valued at 4x our sales, now, you’re valued at 3x your sales, so the multiples are getting squeezed,” he explains. “But for startups that are growing fast, this will be higher than the previous rounds, and they will still be able to raise at a decent valuation.”Funding alternatives do exist, but aren’t likely, says El Shalakany: “Banking facilities are usually great options for these startups because they help cover working capital, but I don’t see these being likely in the near future,” El Shalakany said, adding that “if banks were conservative before with startups, they’ll grow even more conservative now.” Another option available to startups is venture debt, El Shalakany noted. Venture debt is a flexible form of debt financing offered by banks and nonbank lenders that typically combines the traditional features of a loan with some aspects of VC financing. “But the more likely option for startups in the sector is to downsize operations,” El Shalakany said. Your top stories on future trends for the week: Venture capital firm Algebra Ventures’ second fund has reached a USD 100 mn first close, surpassing the USD 90 mn initially targeted. The VC outfit plans to invest USD 15 mn in startups by the end of this year.Homegrown smart device startup CardoO landed USD 660k in a seed funding round led by Alexandria Angels with investment from Sofico, the European Bank for Reconstruction and Development (EBRD) and Saudi angel investors.

How are B2B e-commerce players handling working capital pressures + the VC funding squeeze? For a large number of startups that rely mostly on VC funding for growth, the global VC funding squeeze (which has also landed locally) has been a harsh wake-up call. Tougher economic conditions further added to the pressures on startups’ working capital, with some B2B e-commerce startups — particularly those with hefty infrastructure investments — having to revisit their business models and plan for more sustainable growth amid market disruptions.IN CONTEXT- News over the past weeks of startups struggling to pay their dues and implementing cost-cutting measures amid market headwinds have put the B2B commerce sector — and the startup scene at large — in the limelight. After Capiter’s high-profile meltdown, social commerce startup Brimore issued a statement (pdf) saying that it would restructure and cut costs in a bid to reach profitability. Brimore says it will tweak its business model, but stopped short of getting into what that means.Some are just reallocating investments: In a different vein, MaxAB — which has just launched its embedded finance product — is doubling down on international expansion to leverage more resilient markets like Morocco, where it already operates, and Saudi Arabia, which it plans to enter at the beginning of next year, CEO and co-founder Belal El Megharbel told Enterprise. Its expansions in Egypt are also focused outside of the Greater Cairo area, where the startup sees underserved areas as more attractive and less competitive than central cities, and most of its investments are going towards fintech products and tech. Fatura is similarly looking at expanding its BNPL product, but will focus on scaling up existing verticals rather than tapping new ones, CEO Hossam Ali told us.Behind the shift? The market has been dominated by two different models: One that is asset-heavy — in that the startup owns fleets, warehousing and other infrastructure — and one that is asset-light, with the role of the digital marketplace and its services acting as the core of the business. Asset-heavy companies include Capiter, MaxAB and Brimore, while Fatura, Cartona and MNT-Halan’s Talabeyah are some of the big names in the asset-light end of the pool.The problem: Asset-heavy startups need (a lot of) capital to expand: These startups “have to pay a lot of CAPEX in building infrastructure, while also needing a lot of working capital to buy inventory,” CEO of the Cairo Angels Syndicate Fund (CASF), Aly El Shalakany, tells us. The fact that there are a lot of players in the market also drives them to expand at a faster rate, burning more liquidity in the process. “They require a huge amount of cash until they are able to become dominant in the market” and then hit the black, he explains.…which explains why funding rounds in the sector have varied widely in size. Asset-heavy startups like Capiter, which raised USD 33 mn from regional and global investors, and Brimore, which raised USD 25 mn in series A funding, have raised mega rounds in recent years. MaxAB has raised USD 40 mn in its series A round, following a record USD 6.2 mn seed round in 2019. On the other hand, startups with lighter CAPEX costs raised a fraction of those amounts, with Fatura getting a total of USD 4 mn before it was acquired by EFG Hermes’ Tanmeyah, and Cartona raising a larger USD 12 mn in its series A round.FOMO? Talabeyah, a platform launched in 2020 and promising next-day delivery and inventory management solutions for merchants, struggled to raise funds at its initial stages. “We were driven to have positive economics and a clear path towards breaking even, but investors were saying we weren’t moving as fast as the competition,” Talabeyah CEO Karim Nassef told us. Over at MaxAB: “We were very focused from the beginning on achieving the right metrics, which to us are not revenues and sales, but profitability and operational efficiency, and building scalable technologies and strong foundations with suppliers,” El Megharbel said, adding that investors did “push” for more growth.But some investors were looking for the outliers… Talabeyah was acquired by MNT-Halan in June — part of what made Talabeyah attractive was steady and sustained growth. “Talabeyah’s business model was fundamentally strong,” MNT-Halan Vice President of Investments Andre Valavanis tells us, explaining that the reason they acquired them was that “the founders have a growth mindset while focusing on positive unit economics.”…and the asset-light models, which some found carried less risk: Fatura was also acquired in June by EFG Hermes’ Tanmeyah. “For us, the benefits of being asset-light outweighed the risks and the additional margins of the asset-heavy model,” El Shalakany, who was an early investor in Fatura, said.These challenges are not sector-specific, and could impact others on Planet Startup: “The mindset of heavily subsidizing and burning cash is flawed, and this was exposed with the global correction,” Valavanis said. Adds El Shalakany: “If you keep heavily subsidizing the customer below margin cost, your goal is to eventually dominate the market before doing what you want with the customer,” saying that there’s a lot of “unhealthy competition” in markets like FMCG and food delivery. “The reality is that this is not going to happen, especially in these sectors, where the loyalty of the customer lies with the price, not necessarily with the company.”NEXT WEEK: Let's talk financials. We will look at how B2B commerce startups can amend their financial models to make up for the lack of VC appetite, and about potential financing options they can resort to at this time and age. Your top stories on future trends for the week: Is Saudi fintech Sanad Cash moving in on Capiter? Saudi fintech platform Sanad Cash reportedly wants to acquire 60% of crisis-stricken B2B e-commerce startup Capiter.Proptech startup Partment secured USD 1.5 mn in a pre-seed round led by Nclude Fintech Innovation Fund and Plus Venture Capital and with the participation of a group of angel investors.B2B e-commerce marketplace Mazaya closed a USD 5 mn pre-seed round led by Raya Trade and Distribution.Kashat, the region’s first provider of nano-loans, has landed funding from both Plug & Play and Launch Africa as part of its ongoing fundraising drive.

Egypt’s infrastructure isn’t where it needs to be for e-commerce players to run the show in an orderly fashion: E-commerce players are having a hard time accessing the infrastructure needed to run their businesses seeing that the demand for e-commerce-suitable infrastructure outweighs what the country has to offer, industry players tell us. E-commerce businesses typically require physical infrastructure such as warehouses and distribution facilities, tech infrastructure for their platforms to be online, and delivery services to get their products into their customers’ hands. All three areas raise different problems for businesses, with smaller players often having a harder time than others, our sources suggest.These difficulties come at a time when e-commerce is booming: The covid-induced e-commerce boom in the country saw the rise of new e-commerce businesses and the expansion of existing ones, which spurred demand for suitable infrastructure and logistics.When it comes to physical infrastructure, the demand simply outweighs supply: “From an infrastructure perspective, I think the demand for warehousing capacity is way more than the supply and the prices are too expensive,” B2B food and grocery platform MaxAB CEO and co-founder Belal El Megharbel tells us. “There is definitely a big lack in sustainable warehousing spaces — in terms of size, location, layout and design — that allow us to operate efficiently,” El Megharbel. MaxAB had to make do with suboptimal warehouses in terms of layout, location and capacity, because it is all that is available.This dearth of warehousing options makes building (and maintaining) the required infrastructure quite expensive: “An end-to-end distribution infrastructure is expensive to build and more expensive to run, and it requires a strong, disciplined strategic approach to run it in a sustainable way that delivers a great customer experience,” said Ismail Hafez, chief operating officer of grocery delivery startup Rabbit. Local sportswear Magma — which was recently acquired by Mohamed El Sewedy — initially rented out a warehouse with its own in-house team, but eventually their overhead costs became too high, Marketing Director Reem Adel said. At that point, the company decided to use digital warehousing and fulfillment management platform Khazenly’s services.And that’s to say nothing of the geographical and licensing issues: Finding “the right spot” for fulfillment centers is also a process of its own, with factors to consider such as “location, space, surroundings, and many other factors that solve for maximum city coverage,” Rabbit’s Hafez told us. And businesses that want to expand out of Cairo face difficulties finding suitable warehousing spaces in remote areas, and even within the city, it’s “very hard to get a license for a warehouse except in extremely designated areas,” El Megharbel said.Tech is crucial for all e-commerce players, but the complexity of the infrastructure (and its cost) varies significantly: Half of Rabbit’s investments went towards building out the company’s “tech backbone,” which Hafez tells us was crucial to allow the business to minimize its “reliance on external factors.” On the other side of the spectrum, founder of dried fruits and vegetables brand Foya Khadiga El Mawardy tells us that building a website was not an initial priority for her, and started out by selling her products through her business’ Instagram account. After growing her customer base, El Mawardy turned to Zammit to build a website for Foya. “It’s very cheap and suitable for Foya right now because we’re still a small business that doesn’t need a ton of tech maintenance — just an online shop for customers to buy my products with minimal human interaction,” El Mawardy says. Magma took a similar route, but opted for Canada’s Shopify, which Adel says was an ideal choice for Magma instead of building out its own website from scratch.Once e-commerce players figure out warehousing and tech infrastructure, it’s time to stare down one of the biggest issues: Delivery. Businesses that don’t have an in-house delivery team tell us that it’s unideal to rely on third parties for delivery. “I’ve tested out a few delivery companies, but due to poor handling from the delivery companies’ end the products would see a decline in quality, so I decided that it’s better for me to handle delivery myself,” says El Mawardy. Magma also continues to rely on third-party delivery services, but faces “some level of hassle,” because they require constant monitoring and follow-up to ensure that deliveries are fulfilled, Adel says.So it’s unsurprising that businesses integrate delivery into their own operations: Rabbit, whose motto is “groceries and more in under 20 minutes,” relies on a fully vertically-integrated business model, where they control the process end-to-end and with minimal dependencies on third parties. “There are no fleet providers that can offload or take a last minute piece of B2B e-commerce and that’s why we resorted to operating our own warehouses and operating our own fleet of last mile delivery,” El Megharbel said.What do businesses want to see for an easier infrastructure landscape for startups? Ideally, startups would like to benefit from a one-stop-shop from the government for local licensing, utilities management and logistical needs, Hafez tells us. “The significant development in roads and transportation infrastructure, payments and financial infrastructure, especially over the past year has had a massive positive impact on e-commerce as well, and will set the sector up for further growth and success over the coming years.” El Megharbel, meanwhile, suggests that it would be massively helpful for e-commerce players if authorities were to provide cheaper infrastructure — particularly warehousing options. Your top infrastructure stories for the week: EGAS is joining forces with Norway-based Kanfer Shipping and Leth Suez Transit to establish an LNG bunkering service at the Suez Canal.The Dabaa nuclear plant is finally getting off the ground: Russian state nuclear company Rosatom has started building the 4.8 GW Dabaa nuclear power plantThe Suez Canal Container Terminal wants to invest USD 500 mn to expand the capacity of East Port Said port by building a 1k-meter container berth.The EU is providing Egypt with a EUR 117.9 mn grant for water and energy efficiency.

Selling to an established giant is an option for most young companies (hello, exit), but they’re rare in Egypt compared with the rest of the world. Among the handful here that spring to mind: Tinder parent company Match Group’s acquisition of Egyptian matchmaking app Hawaya (formerly known as Harmonica) and Delivery Hero’s buyout of food-ordering platform Otlob, which it later rebranded as Talabat.Until very recently, it has been almost unheard of for a local startup to acquire another early-stage company. That’s changing. Look no further than B2B commerce platform MaxAB acquiring Moroccan startup WaystoCap last summer, Egyptian edtech startup Tyro buying Nafham just a few days ago, and RiseUp’s buyout of Facebook community Starterhub and startup journal MENAbytes a few years back. Mass transport startup SWVL, which originated in Egypt and is looking to go public via merger with a SPAC, acquired two startups in recent months: Spain’s Shotl and Latin America’s ViaPool.WHAT’S NEXT? We talked to local players to take their pulse on whether startup-to-startup acquisitions are likely to become more common here, what form they usually take, and what to watch out for when you’re planning one of your own. The long and the short of it: We’re looking at a wave of acquisitions in a handful of sectors — and founders need to take on board both caution and clarity before heading down that path.We’re not alone: Some 268 venture-backed US companies acquired peers in the first seven months of this year, according to business-finding platform Crunchbase — the most in the past decade.What’s driving consolidation in the startup space? Record levels of venture financing, crowding in a handful of sectors, and newfound IPO prospects.The size of funding rounds in Egypt is skyrocketing — look no further than grocery delivery outfit Rabbit’s record-breaking USD 11 mn pre-seed round or Halan’s recent USD 120 mn round, which set a record for the largest round raised by a regional fintech startup.The median round in Egypt is now 12x larger than it was in 2014. Data from Wamda suggests that back then it was USD 200k — our internal tracker had it at USD 2.38 mn in 2020.And just as angel and VC interest is rising, so too are IPO prospects for more advanced startups. A SPACs law is in the works, Swvl made headlines with intention to list on the Nasdaq through US blank check firm Queen’s Gambit, and e-Finance’s successful IPO has underscored that the EGX is hungry for new issuances from the tech space.More incoming money means more dry powder and more bandwidth to look for alternative, inorganic growth prospects — to say nothing of higher valuations, which mean your share becomes a more powerful acquisition currency, says Karim Bichara, a general partner at A15.The key: Acquisitions by startups aren’t always all-cash arrangements — they often involve a share swap. A company is more likely to use cash in an acquisition after raising a large round, while startups with higher valuations may prefer an all-share transaction, founding director of the American University in Cairo’s Venture Lab Ayman Ismail tells us. But it also largely depends on the seller: If the entrepreneurs on the selling side plan to stay on to grow the business, they will probably prefer shares. If they’re exiting entirely, expect them to go for the money, he says: “There is no standard — it is more of a case-by-case basis.”Why buy a peer? Geographical expansion is often at the top of the list. “A lot of companies from Egypt, UAE and Saudi Arabia will start acquiring companies in Africa, Latin America and Europe, because the money coming in is much more than the capacity of talent in the Egyptian market to handle,” CEO of Klivvr (and former cofounder of Halan) Mohamed “Nagaty” Aboulnaga says.Swvl and MaxAB are cases in point: “If you expand organically, there’s only that much speed you can expand by,” Swvl CFO Youssef Salem says. Buying a player who is already growing in their market can help startups jump several hurdles at once — including penetration, brand equity and operations in a foreign country. “We were looking to enter Morocco, and when we found a culturally aligned team over there, acquiring it gave us a faster leap into the market,” MaxAB CFO Omar Ghazaly tells us.Other times, licenses, revenue growth, the imperative to grow your user base, and talent acquisition are driving factors. If a startup needs to pursue a license for a certain activity, it may opt for buying a similar company that already has it, Bichara explains. Acquiring a company for its user base or revenues is also high on the list, but this can easily become tricky: customer retention under a new setup and brand name is far from assured. Startups may also go down the acquisition route to take on new talent at a significantly smaller competitor or complimentary company (and “acquihire” in the trade).Remember to factor in time for due diligence — lawyer-speak for “kicking the tires and making sure you’re getting what you think you’re getting — without any hidden surprises.” For many startups, there’s a balancing act between the months and months it can take to pull off an IPO — and the weeks it could take to just move in yourself. Tyro CEO Mokhtar Osman says his company spent 5-6 months on the due diligence process for its acquisition of Nafham. Higher metabolism outfits like Swvl try to move faster: “When we decide to grow organically [in another country], it takes us 30-45 days [to set up]. So if we decide to do it through an acquisition, it needs to happen in [a very similar time-span] to keep up with the overall pace of the company,” Salem says.So what have Tyro, MaxAB and Swvl learned from their acquisitions? Internal playbooks for the acquirer’s operations and acquisition strategy are crucial for future transactions and seller onboarding, they say. Also, ensuring adequate valuations and keeping steady, friendly relationships with competitors can assist in being in the right place at the right time when the time for consolidations comes. And you’ll definitely want to bring on third parties to go over your target’s financials, tech compatibility and to evaluate the cultural fit between the two entities. “We decided to get an external finance expert to analyze the two companies, their balance sheets and their employees for two months. That helped a lot,” Tyro’s Osman said.Clarity on purpose and leaving one’s ego at the door are essential for acquisitions to go well: What do you get from your acquisition target — and how does it benefit from you? “If you end up turning the company you bought into a copy of yourself, you haven’t learned anything,” Bichara says. “The playing field needs to be even and you need to leave your pride at the door.” This will also ensure that founders from the sell side stay in it for the long-run — if that’s part of the arrangement.And remember: Inorganic growth isn’t the only path to growth and expansion. “If you only expand by acquiring other players in other countries, you lose your ability to compete and find yourself at the mercy of finding a target market,” Swvl’s Salem tells us. This could cause a startup to lose its in-house dynamic and market launch squads. “Keeping that inorganic and organic-market-launch DNA in the firm helps you get the best of both worlds,” he adds.So which Egyptian sectors are most ripe for consolidation? Follow the funding rounds. “Any sector that has seen over-investment is likely to start a consolidation phase a few years later,” AUC’s Ismail explains. Every few years, trends see entrepreneurs and capital piling into a small handful of sectors. “It started with telcos in the early 2000s, followed by ride-hailing and logistics, and currently fintech,” Klivvr’s Aboulnaga says. We’re seeing price wars now in logistics and last-mile delivery, with value propositions becoming very similar to each other. That makes the sector ripe for acquisitions in the near future, he says, adding that he expects the edtech and healthtech industries to be next. “Once the SPAC law gets released, we will also see 3-4 SPACs, each acquiring one or more companies within two years,” he adds. Your top stories on future trends for the week: Edtech startup Educatly closed a USD 1 mn pre-seed round from Irish state development lender Enterprise Ireland, Falak Startups and a group of angel investors.Fintech startup HollyDesk raised USD 325k in pre-seed funding in a round led by angel investor Faisal Abdel Salam.Three Egyptian startups were chosen to join Techstars Riyadh accelerator: Tegarti, a cloud-based point of sale and retail management platform, Glamera, an app for booking beauty and health services, and Untap, an all-in-one software for planning, launching managing, and assessing online innovation and talent acquisition programs.

Cairo-based B2B food and grocery startup MaxAB has acquired Moroccan ecommerce and logistics platform WaystoCap for an undisclosed amount, following a fresh USD 15 mn capital injection from its investors, TechCrunch reports. The new investment takes the company’s total series A funding to USD 55 mn, enabling it to expand outside of Egypt for the first time.Who are the investors? This round of funding was raised from RMBV, International Finance Corporation (IFC), Flourish Ventures, Crystal Stream Capital, Rise Capital, Endeavour Catalyst, Beco Capital and 4DX Ventures. These are the same investors who took part in the company’s funding round earlier this year, which at USD 40 mn is one of the largest series A’s in Africa this year. The platform said back then it would use the proceeds to set up a branch in every key city in Egypt, with an eye to setting up shop in other MENA countries.WaystoCap is an up-and-coming B2B marketplace + logistics firm: Founded in 2014 and backed by Y Combinator, WaystoCap operates an online B2B marketplace and provides customs and logistics services to businesses trading in Africa. The company has a physical presence in four African countries, as well as the US, the UK and Spain. The company last raised venture capital in 2017, when it landed a USD 3 mn in a seed round from investors including YC.MaxAB’s acquisition will see over 70k retailers “benefit from its technology, expanded end-to-end supply chain solutions and business intelligence tools as well as WaystoCap’s knowledge and expertise,” the company said. The Egyptian company’s expansion plans coincided with WaystoCap's ambitions to grow its business locally, so both companies agreed to work together through the acquisition, MaxAB co-founder and CEO Belal El Megharbel told TechCrunch.MaxAB: A refresher. The retail-tech startup, founded by Belal El Megharbel and Mohamed Ben Halim in 2018, connects informal food and grocery retailers with suppliers through an Android app. It provides retailers in underserved areas access to a variety of products, the ability to order stock online, a rapid delivery service, and access to credit. Brands using the platform have access to various tools including real-time demand monitoring, helping them make informed decisions about their purchasing.

MaxAB has raised USD 40 mn in a series A round led by impact investor RMBV, bringing the amount invested in the company since its record USD 6.2 mn seed round in 2019 to just north of USD 46 mn, according to a MaxAB statement (pdf). The round saw participation from the IFC, Flourish Ventures, Crystal Stream Capital, Rise Capital, Endeavor Catalyst, as well as MaxAB’s original early backers Beco Capital and 4DX Ventures. Investors in the round also included Hayaat Group, a Dubai-based regional family office, Canada-based Sarona, Africa-focused impact investor Axian Telecom, and individual Egyptian investors, a source close to the transaction told us, without naming the local investors.The Cairo-based B2B food and grocery platform will use the proceeds to set up a branch in every key city in Egypt, with an eye to eventually set up shop in other MENA countries. It will also be able to grow its recently-launched business verticals through new supply chains and financing solutions for businesses, while also ramping up hiring and recruitment, “further positioning Egypt as one of the primary technology hubs in the region,” the statement reads“Being backed by a diverse group of renowned and experienced investors will enable us to rapidly scale our operations across the MENA region and developing markets,” MaxAB co-founder and CEO Belal El Megharbel said. The company has already grown more than five times y-o-y in a short period of time, since launching back in 2018, he adds. “We are delighted to be backing visionary entrepreneurs that have created a transformative business with impressive growth that is a catalyst for financial inclusion and job creation,” RMBV Managing Partner Ahmed Badreldin, meanwhile said.What does MaxAB do, exactly? It’s a platform that connects informal food and grocery retailers with suppliers through an Android app. It aims to automate and simplify the USD 45 bn consumer goods industry in Egypt by providing retailers in underserved areas access to a variety of products, the ability to order stock online, a rapid delivery service, and access to credit. Brands that use the platform can make use of tools including real-time demand monitoring, helping them make informed decisions about their purchasing.You can catch up on how the company’s B2B bulk ordering is solving an issue of supply chain fragmentation that had long persisted in Egypt, in a recent feature of Hardhat.

A tale of two startups: How nascent companies are helping solve supply chain fragmentation and pandemic-level customer demand — Part 2: We continue our series today on how startups in Egypt are helping solve some of the problems of our fragmented supply chain management system, particularly as e-commerce continues to rise. Last week, we looked at how Egyptian B2B bulk ordering startup MaxAB is using data from orders and its own delivery infrastructure to minimize the time wasted on trucks full of supply goods roaming the streets waiting for a retailer to buy products.In Part 2, we look at a novel and non-traditional approach to supply chain issues such as customer acquisition and effective distribution, courtesy of social commerce platform Brimore.Refresher: What’s wrong with our current supply chain management system? Typically, a product traveling from the manufacturer to the consumer will change hands multiple times as it goes from the factory to a distributor, then a sub-distributor, a big wholesaler, a smaller wholesaler, and then a retailer. For FMCG products to reach the consumer, it gets even more inefficient, as a wholesaler vehicle stocked with one product from one company drives around, trying to sell the stock to a few of the 400k grocery shops all over Egypt, which oftentimes results in wasted time and expenses.We weren’t ready for the e-commerce boom: Before 2020, e-commerce used to be a marketplace living off single-product, single-item orders, which were often fulfilled by the supplier itself. The e-commerce boom saw customers ordering multiple products in large quantities, which need fleets and warehouses to be fulfilled, , CEO and cofounder of Brimore Mohamed Abdelaziz tells Enterprise. Egypt and the wider MENA region were not ready in terms of fulfillment infrastructure to cope with bulk orders of home-use goods and commodities, he added.Furthermore, smaller manufacturers struggle with new customer acquisition and ensuring their products are available or in stock at every point of sale, Abdelaziz says. Firstly, acquiring new customers for their products entails convincing new people to actually try a new product. Secondly, making sure that 100% of their products are available at 100% of the locations, 24/7 in order to avoid customer frustration and retain customers, is a pain. This requires money to effectively distribute goods and continuously track sales across all retail outlets. The first is a marketing problem; the other is a distribution and supply chain issue — and both are extremely costly.One possible (homemade) solution: Brimore promises manufacturers to make their products consistently available and get new customers to try them. Brimore connects suppliers with independent sellers across 27 of Egypt’s governorates. To do that, the company targets women living in remote areas who act as informal retailers, selling goods out of their homes in their local communities. These women can order the products directly from the supplier in bulk and use their local network (typically other women who manage household purchases) to make sales. This fuels a word-of-mouth type of direct selling, which unshackles the manufacturer from marketing costs.What does this have to do with supply chain management? Instead of the product meandering through a five-stop process until it reaches the retailer, it is directly moved from manufacturer to those women through Brimore.This model is gaining popularity, particularly outside Cairo and Alex: The total number of active women selling through Brimore is at 50k today, growing almost 9x y-o-y. Over 200 manufacturers are distributing their products through the company, while 70% of the business is located outside of Cairo and Alexandria. About 36% of Brimore’s business comes from Upper Egypt and 10% from border governorate, such as Sinai and the New Valley. The company raised USD 4.3 mn of announced investment rounds to date.That demand now requires Brimore to get it on fulfillment centers: During the pandemic, Brimore launched its own end-to-end fulfillment business. Up until last year, the company was still outsourcing its operations. Recently, it decided to take on its own supply chain infrastructure, including a warehouse to store all products it dispatches, and a last-mile delivery service to the women who would directly sell these products to consumers. The new line acts as a revenue center to its core business by fulfilling its own operations, as well as those of other businesses.The model is proving attractive to VCs: Brimore raised USD 3.5 mn in a pre-series A funding round led by Algebra Ventures in 2020. Flat6Labs, Disruptech, Vision Ventures and 500 Startups also participated in the round. The investment came one year after the company secured USD 800k in seed funding in a round led by Algebra and Endure Capital.Altogether, the 2020 experience was a boon for logistics startups’ investment story. The sector was previously extremely underdeveloped, but the pandemic helped convince investors of the value in funding asset-heavy startups, Abdelaziz says. As these startups grow, so will asset-light businesses and marketplaces. Asset-heavy companies usually own a lot of fixed assets, such as machines, that are needed to generate income, while asset-light entities usually do not need a lot of tangible, expensive equipment to operate their business model.Your top infrastructure stories for the week: Rail upgrades: A tender for modernizing the signaling system and track upgrade works along the Cairo-Beni Suef segment of Egypt’s rail network will be issued next month, after it was previously postponed until foreign financing was secured for the project.Land reclamation: 1 mn feddans of desert land near Egypt’s northwestern coastline are slated for reclamation as part of a new national mega-project to create an agricultural production zone dubbed the “New Delta.”Urban infrastructure: A multi-storey residential building collapsed in Gesr El Suez on Saturday, leaving at least 23 people dead and injuring 25 others.Dry ports: Egypt is looking for European Bank for Reconstruction and Development (EBRD) funding to conduct feasibility studies on the Damietta Dry Port.Trade: Steven Yoogalingam was named managing director of the Suez Canal Container Terminal (SCCT).

A tale of two startups: How nascent companies are helping solve supply chain fragmentation and pandemic-level customer demand — Part 1: Back in April 2020, we suggested that a crucial factor for infrastructure companies to survive through the pandemic would be reducing physical interaction.In fact, social distancing created a golden window for growth for one segment: Supply chain-focused startups. Big companies, including fast moving consumer goods (FMCG) players and manufacturers, struggled to keep up with soaring demand from customers who stayed at home and relied instead on e-commerce and apps to order and purchase their needs online.Today, we look at how, in a big industry, B2B bulk ordering app MaxAB found success by solving lingering gaps in supply chain management.Pre-covid, big players were reliant on a flawed, multi-fragmented supply chain: Before 2020, e-commerce used to be a marketplace living off single-product, single-item orders, which were often fulfilled by the supplier itself. Egypt and the wider MENA region were not ready in terms of fulfillment infrastructure to cope with bulk orders of home-use goods and commodities, CEO and cofounder of social commerce platform Brimore Mohamed Abdelaziz tells Enterprise. However, online grocery delivery boomed last year, with customers ordering multiple products in large quantities, which need fleets and warehouses to be fulfilled, he added.How does the supply chain typically work? Typically, a product traveling from the manufacturer to the consumer will change hands almost six times until it reaches the consumer, AbdelAziz explains. It travels from the factory to a distributor, then a sub-distributor, a big wholesaler, a smaller wholesaler, and then a retailer, where it is finally within arm’s reach for the consumer. For FMCG products to reach the consumer, a wholesaler vehicle stocked with one product from one company drives around, trying to sell the stock to a few of the 400k grocery shops all over Egypt, which oftentimes results in wasted time and expenses, cofounder and CEO of MaxAB Belal ElMegharbel says.This setup causes massive fragmentation and makes efficient data collection extremely difficult. Data points like how the product price changes over time, the company’s market share, general market trends, and price elasticity in different areas are very difficult to attain, ElMegharbel explains. Add covid to the mix, and it becomes all the more problematic for manufacturers to handle on-ground fleets, and keep up with the demand in general.In steps B2B bulk ordering: MaxAB uses ordering bulk deliveries as a way to mitigate this fragmented supply chain. On one hand, the ordering helps provide the tech platform with real time data that can be more efficiently utilized by its delivery infrastructure. Based on the data points it collects — including product price changes while traveling through the market and the quantity of each product that is sold — MaxAB can predict the demand and product needs of retailers in different districts, filling the data gap for manufacturers and allowing them to better anticipate output requirements.And just like a good e-commerce platform, it has its own entire fulfillment operation, including warehouses and fleets. Basically, the same model Amazon uses to ensure single-day delivery of its goods. Its warehouse area grew in 2020 from 10k sqm to 45k sqm, as it now owns 11 warehouses in Greater Cairo, as well as Tanta, Mahalla and Mansoura.Data from ordering helps MaxAB optimize its fulfillment service, by stocking its warehouses in advance. For retailers, MaxAB’s app offers a way to order the exact products and quantities needed for the store. As retailers order their needed products through the app or website, MaxAB has an overview of who needs what when. Accordingly, it can fill its warehouses ahead of time and efficiently deliver the exact amount and variety of products needed directly to the retailer.MaxAB benefited from the pandemic, in terms of revenue growth and customer base expansion. During 2020, MaxAB’s top line grew 4.5x, and its active retailer base multiplied to 22k from 8k. Today, 92% of MaxAB’s orders come through the app, as opposed to the 40% of orders placed through its website before covid, Elmegharbel tells Enterprise. And the company sees high engagement levels: More than 40% of the company’s retailer base opens the app on a daily basis.What happens to smaller retailers when cashflow cannot keep up with demand? To continue fulfilling orders, retailers started to stock much more. While this put a strain on supply availability, it also put the retailers in a difficult cashflow position. Since they have to pay upfront for the products they are purchasing, more stock meant more capital was needed.This is why MaxAB introduced its microfinancing product for retailers, to allow them to buy on credit, in partnership with microfinancing company Cassbana, Elmegharbel tells us. Cassbana focuses on individuals and businesses that do not use conventional banking services and uses AI to run a behavior-based credit scoring system, determining access to credit. The ultimate aim is to build financial identities for those who are unbanked — in short: financial inclusion. Cassbana aims to reach 1 mn users by end-2021 and has recently raised a seed round of USD 1 mn, led by Egyptian fintech-focused VC Disruptech.MaxAB raised a USD 6.2 mn seed round in 2019, as well as an undisclosed bridge round.NEXT WEEK: We look at social commerce platform Brimore, which is providing a smaller-scale solution to the fragmented supply chain by turning average, regular households into points-of-sales themselves.Your top infrastructure stories for the week: Water management: A EGP 1.9 bn project to deliver potable water to 192 villages in Minya is being considered by the government.Metro: Italian contractor Saipem is interested in taking part in the planned construction of Cairo Metro’s sixth line, which is expected to be led by US infrastructure giant Bechtel.Desalination: Tenders for four water desalination plant projects in El Hammam, El Quseir, Marsa Alam, and Safaga with a combined daily output capacity of 240k cbm will be launched shortly for private sector participation.Telecom: Telecom Egypt will establish a new fiber optic connection between the Red Sea and the Mediterranean under an agreement with the Suez Canal Authority and the Armed Forces’ Signal CorpsTransport: Public transport company Mowasalat Misr is planning to grow its fleet of buses to 1k from 300 within the next two years.

STARTUP WATCH- Cairo-based e-commerce startup MaxAB has raised USD 6.2 mn in one of the MENA region’s largest-ever seed rounds, it said in a statement (pdf). The round was co-led by Beco Capital, 4DX Ventures, and Endure Capital, while 500 Startups, Outlierz Ventures, and other local investors participated. The company expects the investment to enable it to reach 50% of the Egyptian population in the next two years, before expanding into other markets.MaxAB connects micro-retailers with suppliers, aiming to streamline a USD 45 bn industry: MaxAB is a platform that connects informal food and grocery retailers with suppliers through an Android app. It aims to automate and simplify the USD 45 bn consumer goods industry in Egypt by providing retailers in underserved areas access to a variety of products, the ability to order stock online, a rapid delivery service, and access to credit. Brands that use the platform can make use of tools including real-time demand monitoring, helping them make informed decisions about their purchasing. MaxAB has a stock list of over 600 products and 9k retailers active on the platform, and has recorded 50% month-on-month growth. Investors anticipate rapid growth: Co-founders Belal El Megharbel and Mohamed Ben Halim, who lead a team of 270 people, have been praised by investors for the effectiveness of their business model. “The metrics they have recorded in such a short period are impressive, and we expect to continue to see double-digit growth as they scale,” said Yousef Hammad, managing partner at Beco Capital.