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–keep attracting venture capital from investors.
Cartona, one of the major players digitizing the traditional trade market, including mom-and-pop stores, FMCG producers, wholesalers, and distributors in Egypt, has raised $12 million in Series A funding. Jordan and U.S.-based early-stage venture capital firm Silicon Badia led the round, which also welcomed participation from the SANAD Fund for MSME, 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 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’s now in eleven. Per a statement, the investment will allow the startup, launched in 2020, to cover all of Egypt’s governorates, grow its product, technology, and services, and explore new verticals beyond FMCG.
“So we believe that with this money, we would reach profitability. We will use this money for sustainable growth and only sustainable growth. We won’t expand like crazy without having positive unit economics in every city,” CEO Mahmoud Talaat told TechCrunch in an interview. “We plan to cover all the cities in Egypt, focus a lot on technology and product.”
Cartona’s platform allows buyers to order inventory from a network of curated sellers via 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. And as a result, Talaat said Cartona had to focus more on its technical integrations with big manufacturers and their warehouses, which has created more upside for the business. With these integrations, he said Cartona could simultaneously pursue capital efficiency and growth while scaling its embedded finance product.
Providing loans, 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 provide this service differs. CTO Mahmoud Abdel-Fattah claims that in Egypt, a market with other upstarts such as asset-heavy MaxAB or hybrid model Capiter, Cartona stands out by integrating BNPL services into its marketplace processes without the help of a third-party provider. So instead of getting small businesses to pay their loans each month with interest like other platforms, Cartona allows them to repay these loans every time there’s a product shipment.
