Egyptian business-to-business platform Cartona has raised $12 million to expand across the country, explore new verticals and further integrate financial services, the company said on Monday.
The series A funding, typically a start-up’s first significant round of venture capital financing, follows a $4.5m raise in September led by Dubai venture capital firm Global Ventures.
Founded in 2020, Cartona aims to digitise Egypt’s traditional trade market by connecting small businesses, producers, wholesalers and distributors in the fast-moving consumer goods (FMCG) industry.
The company operates an asset-light model without ownership of warehouses or vehicles.
“The model itself helped us in order to be, compared to our competitors, much more capital-efficient and reach a market share that’s very strong,” Mahmoud Talaat, Cartona’s chief executive and co-founder, told The National.
“We are confident that with this round, we should reach positive cash flow by 2024."
Start-ups in the Middle East and North Africa have continued to raise record amounts of funding in 2022, despite a global economic slowdown. They raised $1.8 billion in 300 deals in the first half of this year, an increase of 46 per cent year-on-year, according to data platform Magnitt.
The jump was driven by a record-breaking first quarter, while the second quarter showed the first signs of a slowdown in market activity, Magnitt said.
Cartona’s latest round was led by Silicon Badia, a venture capital companyt with offices in Jordan and the US that invests in technology start-ups. Its portfolio includes Nasdaq-listed bus transport app Swvl and healthcare platform Vezeeta.
“We are thrilled to partner with the Cartona team to help them continue to disrupt the $120bn Egyptian retail market through its B2B technology platform and embedded financial service offerings,” said Namek Zu’bi, founding managing partner at Silicon Badia.
“The market is hungry for these types 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,” he said.
The Sanad fund for MSME, which finances micro, small and medium enterprises in the Middle East and Africa to spur economic development and job creation, also participated in the round.
Other new investors included FinTech-focused Arab Bank Accelerator and Sunny Side Venture Partners, and existing investors included Global Ventures and Kepple Africa Ventures, the company said.
Cartona currently has 60,000 users and works with 200 FMCG companies, including multinationals such as Henkel and Unilever, as well as 1,500 distributors and wholesalers. The platform processes around 1 million transactions a year.
Part of the funding will be “dedicated for exploring other verticals beyond FMCG”, such as electronics, construction materials and finishing materials, Mr Talaat said.
The company plans to invest further in “improving integration and the algorithm for whom to give credit to for the embedded finance”, Mr Talaat said.
Cartona also hopes to expand to all governorates across Egypt. The platform started in the three core cities of Cairo, Giza and Alexandria, and has added eight more since September.
“In the near future, we will open three more cities”, possibly Fayoum, Ismalia and Aswan, Mr Talaat said. “By next year, we should cover all cities in Egypt.”