One of Egypt’s leading companies, Cartona has raised $12M in Series A funding to digitize the conventional trading industry, which includes mom-and-pop shops, FMCG makers, wholesalers, and distributors. The SANAD Fund for MSME, an impact investing fund for the Middle East and North Africa, the Arab Bank Accelerator, and Sunny Side Ventures also participated in the round, which was led by Jordan and the American early-stage venture capital company Silicon Badia.
Startups that enable consumers to access products from sellers on a single platform continue to draw venture money from investors. These startups address the operational and supply-chain difficulties faced by players in the fast-moving consumer goods (FMCG) market.
Less than a year after taking part in the company’s $4.5 million pre-Series A investment last September, investors like Global Ventures and Kepple Ventures increased their stake. Cartona is presently found in eleven Egyptian cities, up from three at the time. According to a statement, the funding would enable the firm, which was founded in 2020, to expand its product, technology, and services, serve all of Egypt’s governorates, and investigate additional industry verticals outside FMCG.
B2B Ecommerce Cartona has Raised $12M to Expand
“We, therefore, think that we may become profitable with this money. The only purpose for which we will spend this money is sustainable expansion. Without having profitable units in every location, we won’t grow like crazy, CEO Mahmoud Talaat told TechCrunch in an interview. We want to cover every Egyptian city and provide special attention to products and technology.
Through an app that offers a communication tool for promotions and a dashboard for market information, Cartona’s platform enables customers to place inventory orders from a network of carefully selected vendors.
The business runs a market with few assets and doesn’t own any goods or vehicles. Customers have complained about this model on both sides of the platform. Talaat claimed that as a result, Cartona had to concentrate more on its technical integrations with significant manufacturers and their warehouses, which has increased the company’s potential for growth. He said that with these integrations, Cartona could scale its embedded finance offering while pursuing capital efficiency and growth.
The sweet spot of B2B ecommerce and retail marketplaces in Africa is lending money, working capital, or BNPL to micro and small firms. But they differ in the way they offer this service. According to CTO Mahmoud Abdel-Fattah, Cartona stands out in Egypt’s competitive market by incorporating BNPL services directly into its marketplace operations, as opposed to using a third-party supplier like asset-heavy MaxAB or hybrid model Capiter. Therefore, unlike other platforms, Cartona allows small firms to return their debts whenever a shipment of goods is made, as opposed to making them do so each month with interest.
“Retailers are not very comfortable with the idea of paying for BNPL with interest at the end of the month in a market like Egypt. You don’t want to believe that receiving these working capital loans from an outside company will result in you paying higher interest. They prefer it to be incorporated into the costs of the products and experience it throughout the ordering process, which distinguishes us a little. Talaat threw in.
Currently, Cartona makes loans from its balance sheet. However, the company’s leaders claim that by January of the following year, they anticipate receiving some credit lines and venture loans from domestic and foreign partners.
In Egypt, there are more than 400,000 stores, and thousands of foreign and domestic brands, and the industry is expanding by 8% annually. According to reports, the food and beverage sector accounts for $70 billion of the $120 billion global retail market. This huge possibility has drawn investors like Silicon Badia into the B2B retail space, including platforms like Cartona. “The market is clamoring for these type[s] of solutions, and we believe Cartona’s asset-light approach will allow them to serve as many marketplace participants as possible in a highly efficient manner,” the firm’s founding managing partner said.
The company had over 30,000 merchants, handled over 400,000 orders, and had an annualized gross merchandise value of EGP 1 billion (about $64 million) when we spoke with executives from Cartona last year. Since then, some of its numbers have doubled. According to Talaat, the company now provides services to more than 60,000 merchants and has handled more than 1 million transactions with an annual gross merchandise value of EGP 2.3 billion (about $120 million). On its platform, Cartona has more than 1,500 wholesalers and distributors as well as 200 FMCG firms, including well-known brands like Unilever and Henkel. These figures surpass the 1,000 distributors, wholesalers, and 100 FMCG businesses from last September.
According to the founders, the goal of creating Cartona is to make it a better technological partner for major FMCG companies. “We started with very big FMCGs, but everyone, including multinationals, is interested because they now understand our value,” said Abdel-Fattah, the executive in charge of handling these technological integrations. We are not attempting to undercut them or their prices. We are not providing them with subsidies, as the opposition occasionally does. Making the procedure seamless is important because we are simply connecting them with the retailer.