Egyptian B2B e-commerce platform Cartona raises $12 million to scale and explore new verticals

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Startups that solve the supply chain and operational challenges of FMCG players by helping buyers access sellers’ products on a single platform continue to attract venture capital investors.

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Cardboardone of the major players digitizing the traditional commerce market, including family stores, FMCG manufacturers, wholesalers and distributors in Egypt, has raised $12 million in Series A funding. Jordan and U.S. venture capital firm Silicon Badia led the round, which also welcomed participation of SANAD Fund for MSMEs, investment fund for the Middle East and North Africa, Arab Bank Accelerator and Sunny Side Ventures.

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Investors such as Global Ventures and Kepple Ventures have doubled their capital in less than a year after participating in $4.5M Company Financing to Series A in September last year. At that time, Cartona was present in three Egyptian cities; now at eleven. Launched in 2020, the investment will allow the startup to reach all of Egypt’s provinces, develop its product, technology and services, and explore new verticals outside of FMCG, according to the statement.

“Therefore, we believe that with this money we will achieve profitability. We will use this money for sustainable growth and only sustainable growth. We won’t expand like crazy unless every city has a positive unit economy.” – CEO Mahmoud Talaat told TechCrunch in an interview. “We plan to cover all cities in Egypt, with a strong focus on technology and products.”

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The Cartona platform allows buyers to order inventory from a network of curated merchants through an app that provides a communication tool for promotions and a dashboard for market analysis.

The company operates a market with a small amount of assets, where it does not own any product or vehicle. This model has generated complaints from customers on both sides of the platform. And as a result, Talaat said that Cartona had to focus more on technical integration with large manufacturers and their warehouses, which created additional business opportunities. With these integrations, Cartona will be able to simultaneously achieve capital efficiency and growth while scaling its embedded financial product, he said.

Providing loans, working capital or BNPL to micro and small businesses is the golden spot of B2B e-commerce and retail marketplaces in Africa. But the way they provide this service is different. Technical Director Mahmoud Abdel-Fattah claims to have a market in Egypt with other upstarts such as MaxAB or hybrid model captainCartona excels in integrating BNPL services into its marketplace processes without the help of a third party vendor. So instead of forcing small businesses to repay their loans with interest every month like on other platforms, Cartona allows them to repay those loans every time a product is shipped.

“In a market like Egypt, retailers are not very comfortable with the concept of paying BNPL with interest at the end of the month. You don’t want to think that you are paying more interest with an outside company giving you these working capital loans. They prefer it to be part of the price of the product and feel like it’s built into the order cycle, which makes us a bit different.” Talat added.

At the moment, Cartona provides loans from its balance sheet. But executives say the company expects to receive some credit lines and venture debt from local and international partners by January next year.


Image credits: Cardboard

Egypt has over 400,000 stores and thousands of international and local brands, with the sector growing at 8% annually. Reports it is also said that the total size of the retail market is $120 billion and the food and beverage market is $70 billion. The huge opportunity this opens up for platforms like Cartona has attracted investors like Silicon Badia to the B2B retail sector. According to the firm’s founding managing partner, “The market is hungry for these types of[s] solutions, and we believe that Cartona’s approach to asset management will allow them to serve as many market participants as possible with high efficiency.”

In our interview with Cartona executives last year, the company had over 30,000 merchants and handled over 400,000 orders with an annual gross merchandise value of 1 billion Egyptian pounds (~$64 million). He has since doubled some of his numbers. Talaat said the company currently serves over 60,000 merchants and has processed over 1 million transactions with an annual gross value of LE 2.3 billion (~$120 million) in goods. More than 1,500 distributors and wholesalers, as well as 200 FMCG companies, operate on the Cartona platform, including well-known companies such as Unilever and Henkel. These figures are higher than last September, when there were 1000 distributors, wholesalers and 100 FMCG companies.

The founders say they want to create Cartona to be the best technology partner for these FMCG brands. Abdel-Fattah, the chief executive responsible for this technical integration, said: “We started with very large FMCGs, but everyone, including multinationals, is interested because now they see our value. We do not compete with them and do not reduce their prices. We do not subsidize their products, as competitors sometimes do. We just connect them with the retailer, so it’s about making the process seamless.”

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