When Egyptian B2B e-commerce platform Cartona last raised funds in 2022, global and local investors were eager to invest in African startups addressing supply chain and operational challenges for retailers and suppliers in the fast-moving consumer goods (FMCG) industry.
Two years later, investor enthusiasm has waned as the business models of these startups, whether asset-light or asset-heavy, have faced significant pressure, leading to retreats, closures, downsizing, and mergers.
Despite this trend, Cartona, which is “very close to reaching full EBITDA profitability,” according to founder and CEO Mahmoud Talaat, has successfully raised an additional $8.1 million in a Series A extension. This funding comprises $5.6 million in equity and $2.5 million in debt from new and existing investors.
The round was led by Egyptian VC firm Algebra Ventures, bringing Cartona’s total Series A to $20.1 million. Other participants included Silicon Badia, the lead investor from the first Series A tranche, and SANAD Fund for MSME. Camel Ventures and GlobalCorp provided the debt component.
Talaat mentioned that the 4-year-old e-commerce platform raised funds from a strong cash position. “We have double what we raised now in equity,” he said. The capital will be used to increase Cartona’s market share in Egypt by expanding its operations in FMCG and HORECA (hotel, restaurant, and cafe/catering), a vertical it launched over a year ago. Additionally, Cartona may explore expanding into other regional markets, including Saudi Arabia, and introducing new product lines within Egypt.
Cartona initially launched as an asset-light B2B platform connecting FMCG suppliers and wholesalers with retailers. A common criticism was that asset-light models would struggle to retain customers and compete with asset-heavy B2B e-commerce platforms, which had greater control over their tech and supply chains.
However, asset-light marketplaces like Cartona and Nigeria’s Omnibiz have dispelled such concerns. Talaat explained that Cartona spent its first two years enhancing its technology, user experience, and fulfillment rates to a level comparable to asset-heavy models, which enabled it to secure funding in 2022. Subsequently, the company focused on improving its unit economics in a high-volume industry where profitability per order is challenging. Making significant progress in this area over the past two years, and nearly achieving full profitability, especially amid the devaluation of the Egyptian pound against the dollar, has made Cartona attractive to investors, according to Talaat.
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