Egypt’s E-commerce startup MaxAB gets $40 Million pre-Series B Funding while Kenzz gets $3.3 Million.
Last year, MaxAB, the food and grocery B2B e-commerce and distribution platform serving a network of traditional retailers across Egypt and Morocco, raised its $55 million Series A in two tranches; the latter accompanied its acquisition of the Morocco-based and YC-backed WaystoCap. The moves signaled MaxAB’s ambition to dominate Egypt’s and North Africa’s B2B retail and e-commerce market, which includes Cartona and the troubled Capiter, other players that have raised significant capital to compete within the past year.
To continue growth due to the rising demand for food and groceries and fuel its expansion across the MENAP region, MaxAB has raised more money, this time a pre-Series B to the tune of $40 million.
Although smaller than last year’s prized round, CEO Belal El-Megharbel told TechCrunch that the pre-Series B was neither a down round nor a flat round in terms of valuation. He also noted that the company raised new capital, not because it needed the money but because “there are many opportunities that we believe we can tap into quicker the more capitalized we are.” The asset-heavy MaxAB has raised over $100 million in total.
Small traditional retailers serve as the backbone of the FMCG industry across Africa. For most B2B e-commerce platforms across the continent, groceries are one of the many consumer goods they help retailers source from suppliers. For MaxAB, that’s its sweet spot. And since its launch in 2018, MaxAB has connected suppliers with over 150,000 unique traditional retailers in this food and grocery supply chain across Egypt and Casablanca, Morocco, delivering over 2.5 million orders within this timeframe.
MaxAB’s perspective of going deep rather than wide with its product offerings also extends to how it regards geographical expansion. After scaling its B2B grocery delivery across Egypt for over three years, it intends to utilize its network and relationships with local and multinational suppliers and advance full distribution into Morocco, which now accounts for 10% of MaxAB’s business, and entry into Saudi Arabia by the end of 2023.
The company estimates that more than 750,000 mom-and-pop businesses require its services in Egypt and Morocco alone. At the same time, Saudi Arabia is appealing due to the government’s drive to digitize the informal sector and the FMCG’s willingness to explore new business models.
“We’re trying to offer more services to the grocery stores since they are the foundation of the economy we operate in before jumping into these other supply chains. Think about Amazon; they kept selling books for eight years before adding another category. And that’s the school of thought we like to go with,” said the CEO who founded MaxAB with Mohamed Ben Halim. “In Egypt, we focused on launching the grocery supply chain and we’ll use the learnings that have come from that to launch across multiple markets. It’s easier to launch the grocery supply chain in various markets than launch, for example, electronics in our core market because it’s just a completely different business model that we have to relearn from scratch.”
Another growth stream for MaxAB is the fintech business launched last year, which leverages its large pool of merchants and operational capacity to carry out cash collections. And its entry approach to offering financial services differs from the competition; it launched a bill aggregation product — which has grown 5x in transaction value since the start of the year — rather than a BNPL product that many B2B e-commerce platforms introduce to merchants first.
It didn’t take long for MaxAB to delve into the popular B2B fintech category, though; last month, the platform launched a working capital product to its merchant base. However, like Wasoko, another B2B e-commerce platform based in sub-Saharan Africa, MaxAB opted not to raise debt financing to scale that part of its operations. According to El-Megharbel, who was an ex-general manager at Careem, MaxAB currently gets a lot of supplier credit that helps it finance the working capital without raising debt, at least for now. “And because the buy now, pay later product is still early, we can still do some financing with equity without having to pay for debt that we won’t be utilizing in the short term,” the CEO added.
MaxAB’s equity round includes an impressive list of new investors: DisruptAD, ADQ’s venture capital platform; the British International Investment (BII); and the Menlo Park–headquartered private equity firm Silver Lake — its first check of any form in an African startup. Silver Lake invested through its Long-Term Capital strategy with Mubadala Investment Company.
“We’re always proud of our ability to attract top-tier investors to the region. Historically, since our seed round, we’ve always had at least one VC that has invested in Egypt, North Africa or Africa for the first time,” said El-Megharbel on the investment, referencing firms such as 4DX Ventures and Flourish Ventures. They participated in this round alongside other existing investors, Beco Capital and Africa Platform Capital.
Kenzz gets $3.3 Million
Kenzz, an e-commerce platform bringing shopping to the mass market in Egypt and MENA, is announcing that it has raised $3.5 million in seed funding. U.S.-based and MENA-focused venture capital firm Outliers Venture Capital led the round. Some of the participating investors include HOF Capital, Foundation Ventures, and Samurai Incubate.
The company, founded this February by Ahmed Atef, Mahmoud Al Silk and Moataz Sami, said it will use the seed round to grow its product categories, widen the product categories on its platform, hire talent and invest in tech as it launches its app.
You can compare the e-commerce landscape in Egypt to fintech across Africa in that there are more startups in that sector than others; reports say 20% of tech startups in Egypt are in the e-commerce and retail sectors. Several factors drive the creation of such startups in the country, including a young and urban population that has increased in tandem with internet and mobile penetration rates rising over the years. About 40% of Egyptians purchase consumer goods online weekly, according to data.
However, some, like Kenzz’s founders, believe that internet penetration levels and shopping numbers in Egypt mask the reality that e-commerce is yet to be fully realized and optimized in the North African country and, more widely, across the MENA region. Chief executive officer Atef told TechCrunch that they launched Kenzz for this purpose: to deepen e-commerce adoption in Egypt.
Online shoppers in Egypt mainly purchase items on big e-commerce platforms such as Souq, which rebranded as Amazon Egypt in 2021; Jumia; and Noon or social commerce platforms that utilize Facebook pages and groups in a B2B2C manner. Atef argues that while both models have managed to increase e-commerce activities in Egypt, the big e-commerce players neglect the mass market and instead focus more on the three largest cities Cairo, Alexandria and Giza — while smaller social platforms tend to provide unreliable and unorganized service. Thus, Kenzz was built to fill in the lapses from the two models: make products available to the mass market and offer them in an organized manner.
“We’re going after a completely different segment that Amazon and the big platforms are not looking at as they are centralized in big cities and towards the people who are comfortable buying online,” said Atef. “What we’re doing is bringing that experience much closer to the masses and building a reliable, trustworthy e-commerce platform that caters specifically for the mass market, solving for the barriers to buying, whether it’s trust, affordability and relevance while capitalizing on social engagement and social interaction aspects of e-commerce.”
Kenzz’s model is akin to players like Taagerbecause it’s social. However, the mass e-commerce solution is taking a B2C approach as it removes the middleman/resellers, sources products directly from local manufacturers and offers them to consumers. Therefore, consumers know the exact brand selling to them, Atef said. The platform also gives consumers discounts of up to 65% when they make collective purchases with friends and family. According to the CEO, sourcing directly from manufacturers and importers enables it to secure the best deals for consumers — and the group buying feature facilitates more referrals, bringing down its customer acquisition costs. Group orders can also be sent to single locations to reduce consumer delivery fees and logistics costs for Kenzz.
“Most users didn’t see the need to pay for deliveries as they could buy offline and get the product themselves. However, they are finding out that they pay more for transportation. So what was interesting in the pilot is that we’ve seen that people want to share this burden as it became a major pain point when we talked with consumers,” the chief executive said. “So when you’re buying with your friends, we can deliver the order to one place. They get to unlock more savings when they choose this approach.”
Atef also stated that Kenzz’s model helps stakeholders on the other end — local manufacturers and SMEs — by providing data on what consumers want and access to such consumers among additional insights.
Kenzz is yet to launch fully into the market as it is fine-tuning offerings to meet consumers’ demand, which, according to Atef, was grand when the platform soft-launched for two months. He said thousands of customers used the platform within this timeframe, with 50% ordering from outside Egypt’s big cities. “Those numbers help prove this vast potential outside the big cities where people were not comfortable buying online. But when you’re so relevant to them, in terms of brand products, prices and experiences, you unlock this huge potential.”
In a statement, Sarah AlSaleh, a partner at Outliers Venture Capital, said the asset-light Kenzz is solving two key issues that current e-commerce incumbents are not addressing: affordable and reliable last-mile logistics and an uncompromising customer trust philosophy. She references Kenzz’s founding team — with years of experience from Vodafone, Google, Amazon and Jumia — as one of the reasons Outliers invested. “The diversity and depth of Kenzz’s founding team strongly positions them to combine a multitude of experiences and expertise into creating a category-defining company and e-commerce champion for Egypt,” said the partner.