It is not usual for startups in Egypt to raise up to $3m in pre-seed funding round, but a Cairo-based ecommerce logistics startup, Flextock, has done that. The startup has secured $3.25 million, making the round not just the biggest of its kind in Egypt but also in the whole of North Africa and the Middle East.
Flextock will use the investment to strengthen its position in the Egyptian market, improve its technology and goods, and increase its staff, in addition to expanding.
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Foundation Ventures, MSA Capital, CRE Venture Capital, Alter Global, Jameel Investment Management Company, B&Y Venture Partners, Access Bridge Ventures, and Y Combinator were among the foreign and regional investors who contributed to the round.
Flexport, a multibillion-dollar logistics scaleup based in the United States, and other angel investors from the area also participated in the pre-seed round.
“Flextock is a purpose-driven company. We are on a mission to enable all merchants, regardless of their size, to efficiently scale their brands. This new funding will help us achieve that. With it, we can turbo-charge our growth by further building our products and hiring a solid team,” Mohamed Mossaad, the co-founder and CEO of Flextock said.
Why The Investors Invested
Despite the rise of ecommerce in North Africa, logistics remains a major source of frustration for both companies and consumers, who are often disappointed by the weak last-mile delivery experience provided by the majority of merchants.
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Many startups have attempted to address these problems, but it is fair to say that no significant breakthroughs have yet been recorded.
Fetchr was one of the logistics companies in the region (in this space) on which many were banking, but it, too, failed to deliver, and it has since been attempting to resurrect itself with new management.
Investment in Felxtock is one way the investors are showing that they trust Flextock can do the undoable.
“Our mission is to find and back the world’s top tech founders. Mohamed and Enas are clearly that. Through Flextock, they are igniting growth in the Middle East, which will inspire a rising cohort of entrepreneurs in that ecosystem. They are just the kind of high-character, role model founders we are looking for,” Alter Global’s CEO and Founder, Jesse Sullivan, said.
“We recognize the massive opportunity in logistics presented by the rise of e-commerce in the region. Flextock is building the underlying infrastructure so that any e-commerce player can scale their operations on-demand! We are proud to have been Mossaad and Enas’s first backers and thrilled for the journey ahead,” Mazen Nadim, the Managing Partner of Foundation Ventures, said.
Another important reason the investment came was because both founders have been tried and tested.
Mohamed Mossaad was the Chief Strategy Officer at Egyptian food ordering and distribution startup Elmenus before creating Flextock. Enas Siam, Flextock’s co-founder and COO, previously worked for Careem, where she most recently led the (now defunct) Careem Bus. Both of the founders therefore have prior experience in the FMCG industry.
And yet, even though North Africa has not recorded major successes in the ecommerce logistics sector, the same cannot be said of other parts of Africa. ParcelNinja, a South African startup doing exactly what Flextock is doing was recently acquired by Imperial Logistics, a Johannesburg Stock Exchange-listed logistics company, for an undisclosed amount.
However, although the exact value of the deal was not disclosed, ParcelNinja was acquired by Imperial at the same time as the Johannesburg-based pharmaceutical manufacturing and healthcare services company Pharmafrique, which trades as Kiara Health. Both deals were put at 120 million rand ($8.2 million). The total amount of funding raised by Parcelninja during the course of its startup journey stands at $1.7m and that the last time it raised funding was in 2015.
The startup also took part in Y Combinator’s Winter 2021 batch, a very notable point for the startup in a continent where herd mentality over YC-backed startups persists among investors.
With the exception of Flexport, Y Combinator, and Alter Global which are based in the United States and the Chinese investor MSA Capital, all other investors are based in the Middle East and Africa.
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Foundation Ventures, Jameel Investment Management Company, B&Y Venture Partners, Access Bridge Ventures, and others specifically focus on early stage startups in the Middle and North Africa region.
A Look At What The Startup Does
Flextock was established in 2020 by Mohamed Mossaad and Enas Siam with the aim of providing fulfillment services to online businesses in Egypt.
Its on-demand warehousing and distribution network collects inventory from companies, stores it at Flextock fulfillment centers, processes orders (pick, pack, and prepare), and then ships them to customers on the business’s behalf.
They essentially allow online retailers of all sizes to outsource all of their logistics needs, including first-mile delivery, warehousing, last-mile delivery, cash collection, and returns. All of the services are accessible via a dashboard, which also helps merchants to track their inventory in real time, control their KPIs, and manage returns and cashback.
The Egyptian startup works with a wide range of companies, including those who need to sell orders to other businesses (B2B) or even their own branches.
Flexstock said in a statement that it has now signed over 100 merchants of over 5,000 SKUs. More information was not included in the release, but it did state that the company is expanding at a rapid pace.
According to the startup’s website, the company’s facilities are available for more than 15 sectors, and it covers 28 Egyptian cities. The startup’s website also claims that it can store and fulfill over 300,000 orders every month with a 99 percent accuracy rate.
Flextock expects to expand to several new markets in the area before the end of the year, so it will be important to see if it can solve the pressure points faced by online retailers in multiple markets — at competitive rates.
Flextock logistics Flextock logistics
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer