Capiter Raises $33M to Expand B2B E-commerce in MENA

Investment in African B2B E-commerce Continues to Rise

Funding for startups focused on connecting manufacturers and sellers with merchants via a unified platform is experiencing sustained growth throughout Africa.

Cairo-based B2B e-commerce platform, Capiter, is contributing to this trend, having recently secured $33 million in a Series A funding round.

Investment Details

The investment round was jointly led by Quona Capital and MSA Capital. Additional investors participating in the round include Savola, Shorooq Partners, Foundation Ventures, Accion Venture Lab, and Derayah Ventures.

Capiter's Founding and Core Mission

Capiter was established in July 2020 by Mahmoud Nouh and Ahmed Nouh. CEO Mahmoud Nouh explained to TechCrunch that the company addresses critical challenges related to market reach and actionable insights for both suppliers and manufacturers.

Currently, many manufacturers in Egypt lack the necessary supply chain infrastructure to effectively reach merchants. Nouh indicates that manufacturers typically access only 30% of the available merchant base, a figure Capiter aims to increase to between 80% and 100%.

Furthermore, a significant portion of manufacturers’ sales occur through traditional channels, lacking the transparency of data and market intelligence.

Leveraging Machine Learning for Market Insights

Capiter utilizes machine learning to provide manufacturers with essential insights into their target markets, product performance, and competitive positioning.

Addressing Merchant Challenges

For merchants, Capiter tackles three key issues. Firstly, it simplifies the process of sourcing products from multiple suppliers. Secondly, it promotes pricing transparency, reducing negotiation complexities between merchants and manufacturers. The third challenge is providing access to working capital, enabling timely product procurement.

Through Capiter, merchants can conveniently order products from Fast-Moving Consumer Goods (FMCG) companies and wholesalers, with the company handling delivery logistics. The platform also offers competitive pricing and a diverse inventory selection.

Moreover, Capiter facilitates access to working capital, allowing merchants to purchase products even with limited immediate funds. This is achieved through partnerships with Egyptian banks and the Central Bank.

Diverse Merchant Base

Capiter serves a broad spectrum of over 12 merchant types, including small retail stores, hotels, restaurants, cafes, electronics retailers, supermarkets, grocery stores, and catering businesses, each benefiting from tailored solutions.

“We analyze the products they purchase to offer customized recommendations on what to sell, when to sell it, and during peak seasons, including information on ongoing promotions,” stated Mahmoud Nouh.

Revenue Generation Model

The company generates revenue through small margins on products sourced from manufacturers and sold to merchants. Additional income streams include rebates from suppliers and commissions on working capital loans provided to merchants. Capiter also earns revenue by offering market insights and data services to manufacturers and FMCG companies.

Hybrid Business Model

B2B e-commerce platforms typically operate with either asset-light or inventory-heavy models. Nouh explains that Capiter has adopted a hybrid approach – managing deliveries without owning a fleet of trucks to ensure scalability, while maintaining inventory for fast-moving products to guarantee availability and competitive pricing.

“This strategy has allowed us to scale rapidly while maintaining efficiency and reliability. We rent warehouse space and utilize third-party logistics for transportation, which we manage directly,” he added.

Current Scale and Future Ambitions

Currently, Capiter serves over 50,000 merchants and 1,000 sellers, offering a catalog of approximately 6,000 Stock Keeping Units (SKUs). CEO Nouh projects an annualized revenue of $1 billion by next year.

“We are on track to achieve this goal,” he affirmed. “Our team has grown to over 1,000 people, including those involved in warehousing and delivery, demonstrating strong traction across all areas.”

Investor Perspective

Quona Capital, a co-lead investor, has a history of investing in B2B e-commerce ventures, such as Kenya’s Sokowatch. The investment in Capiter expands the firm’s portfolio in this sector and marks its first investment in Egypt.

Monica Brand Engel, co-founder and managing partner at Quona Capital, stated, “Capiter’s integrated finance model, combined with its expertise and strong user engagement, has the potential to significantly improve the financial well-being of SMEs, fostering thriving communities.”

Ben Harburg, partner at MSA Capital, added, “SME supply chain inefficiencies are substantial throughout the Middle East. We believe the primary obstacle is a lack of working capital. Capiter has developed an asset-light solution to connect retailers and suppliers, facilitating credit access through a comprehensive suite of services, including commerce, credit financing, digital payments, bookkeeping, and inventory management, leveraging partnerships with local banks and financial institutions.”

Future Expansion Plans

According to Ahmed Nouh, the company’s COO, Capiter plans to expand into new sectors, including agriculture and pharmaceuticals.

The co-founder brings valuable experience from the shipping and logistics industry. Both he and Mahmoud are experienced entrepreneurs. Mahmoud previously co-founded and served as COO of Egyptian ride-hailing company SWVL, which is currently pursuing a SPAC deal with a valuation of $1.5 billion and is contributing to the emergence of a “tech mafia” in Africa. Ahmed Sabbah, another co-founder, now leads early-stage fintech startup Telda.

Mahmoud stated that Capiter has assembled a global team with expertise from companies like Careem and Flipkart, essential for achieving the company’s objectives.

He further noted that the team, coupled with financial service partnerships and the hybrid business model, differentiates Capiter from competitors such as Fatura, Bosta, and MaxAB.

Following this funding round, the company intends to expand both its service offerings (vertically) and its geographic reach within the next year.

“Our goal is to serve every SME in the MENA region, expanding both within Egypt and internationally,” he said. He also highlighted the pivotal role of Savola Group, a major investor in FMCG products in the MENA region, in supporting this growth. Capiter also intends to broaden its financial service offerings to include payment solutions.