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


Startups that solve the supply-chain and operational challenges of players in the fast-moving consumer goods (FMCG) industry–by helping buyers access products from sellers on a single platform–keep attracting venture capital from investors.

Cartona, one of the major players digitizing the traditional trade market, including mom-and-pop stores, FMCG producers, wholesalers, and distributors in Egypt, has raised $12 million in Series A funding. Jordan and U.S.-based early-stage venture capital firm Silicon Badia led the round, which also welcomed participation from the SANAD Fund for MSME, an impact investment fund for the Middle East and North Africa, Arab Bank Accelerator and Sunny Side Ventures.

Investors such as Global Ventures and Kepple Ventures doubled down less than a year after participating in the company’s $4.5 million pre-Series A funding last September. At the time, Cartona was present in three Egyptian cities; it’s now in eleven. Per a statement, the investment will allow the startup, launched in 2020, to cover all of Egypt’s governorates, grow its product, technology, and services, and explore new verticals beyond FMCG.

“So we believe that with this money, we would reach profitability. We will use this money for sustainable growth and only sustainable growth. We won’t expand like crazy without having positive unit economics in every city,” CEO Mahmoud Talaat told TechCrunch in an interview. “We plan to cover all the cities in Egypt, focus a lot on technology and product.”

Cartona’s platform allows buyers to order inventory from a network of curated sellers via an app that provides a communication tool for promotions and a dashboard for market insights.

The company operates an asset-light marketplace where it does not own a single product or vehicle. This model has led to customer complaints on both sides of the platform. And as a result, Talaat said Cartona had to focus more on its technical integrations with big manufacturers and their warehouses, which has created more upside for the business. With these integrations, he said Cartona could simultaneously pursue capital efficiency and growth while scaling its embedded finance product.

Providing loans, working capital, or BNPL to micro and small businesses is the sweet spot of B2B e-commerce and retail marketplaces in Africa. But how they provide this service differs. CTO Mahmoud Abdel-Fattah claims that in Egypt, a market with other upstarts such as asset-heavy MaxAB or hybrid model Capiter, Cartona stands out by integrating BNPL services into its marketplace processes without the help of a third-party provider. So instead of getting small businesses to pay their loans each month with interest like other platforms, Cartona allows them to repay these loans every time there’s a product shipment.

“In a market like Egypt, retailers are not very okay with the concept of paying for BNPL with interest at the end of the month. You do not want to think you’re paying more interest with an external company giving you these working capital loans. They prefer it to be a part of the product prices and to feel it embedded through the order cycle, making us a bit different.” Talaat added.

Cartona lends out of its balance sheet for now. But the executives say the company expects to receive some credit lines and venture debt from local and international partners by January next year.

Image Credits: Cartona

There are over 400,000 shops and thousands of international and local brands across Egypt, with the sector growing annually by 8%. Reports also say the overall retail market size is $120 billion, with the food & beverages market worth $70 billion. The massive opportunity this presents to platforms such as Cartona has attracted investors like Silicon Badia into the B2B retail sector. According to the firm’s founding managing partner, “the market is hungry 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.”

In our interview with Cartona’s executives last year, the company had 30,000+ merchants and processed over 400,000 orders with an annualized gross merchandise value of EGP 1 billion (~$64 million). It has doubled some of its numbers since then. Talaat said the company now serves 60,000+ merchants and processed over 1 million transactions with an annualized gross merchandise value of EGP 2.3 billion (~$120 million). Cartona has more than 1,500 distributors and wholesalers on its platform and 200 FMCG companies, including big names like Unilever and Henkel. These numbers are up from last September’s numbers of 1,000 distributors, wholesalers, and 100 FMCG companies.

The founders say they want to build Cartona to become a better technology partner for these FMCG brands. Abdel-Fattah, the executive in charge of handling these technical integrations, said, “We started with very big FMCGs, but everyone, including multinationals, is interested because now they see our value. We are not competing with them or bringing down their prices. We’re not subsidizing their products as competition sometimes does. We’re just connecting them with the retailer, so it’s about making the process seamless.”



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