In a significant development for Egypt's digital commerce sector, Cartona, a leading B2B e-commerce platform, has successfully raised $8.1 million in a Series A extension round. This funding comes at a crucial time for the FMCG industry in Africa, where many startups are facing challenges. Cartona's ability to secure this investment underscores its strong market position and potential for future growth.

Funding Details

The funding round was spearheaded by Algebra Ventures, a prominent Egyptian venture capital firm. Other participants included existing investors Silicon Badia and the SANAD Fund for MSME. The investment comprises $5.6 million in equity and $2.5 million in debt, with the latter provided by Camel Ventures and GlobalCorp. This extension brings Cartona's total Series A funding to $20.1 million.

Company Overview

Founded in 2019 by Mahmoud Abdelfattah, Mahmoud Talaat, and Rafik Zaher, Cartona has become a key player in digitalizing Egypt's traditional trade market. The platform connects small retailers, FMCG producers, wholesalers, and distributors, creating a more efficient and transparent marketplace.

Business Model and Growth

Cartona operates on an asset-light model, which has proven to be a significant advantage in the current economic climate. This approach has allowed the company to achieve impressive growth while maintaining lean operations. The company's annualized gross merchandise volume (GMV) has reached approximately EGP 10 billion ($210 million). Cartona now serves over 180,000 retailers across 17 Egyptian cities, managing more than 40,000 SKUs on its platform.

Expansion into HORECA

In addition to its core FMCG business, Cartona has successfully expanded into the HORECA (Hotel, Restaurant, and Cafe) sector. This vertical, launched over a year ago, already contributes 7% of the company's GMV and is expected to reach 15% by year-end. The expansion demonstrates Cartona's ability to leverage its existing infrastructure and apply its business model to new market segments.

Financial Inclusion and Embedded Finance

Cartona has made significant strides in promoting financial inclusion among retailers. The platform's embedded finance offerings now constitute more than 20% of its GMV, up from 2-3% in 2022. This growth has been facilitated by partnerships with local currency financing providers, enabling Cartona to offer credit options to retailers who might otherwise struggle to access capital.

Future Plans

With the new funding, Cartona aims to accelerate growth in its FMCG and HORECA verticals, increase market share in Egypt, explore expansion into other MENA markets (potentially including Saudi Arabia), and investigate B2B2C opportunities. The company's strategy focuses on replicating its successful execution in new regional markets while continuing to make trading as accessible as possible for retailers and suppliers.

Market Opportunity

Despite the progress made by B2B e-commerce platforms in Egypt, the market remains largely untapped. With over 400,000 shops and thousands of brands, the retail market size is estimated at $120 billion, with the food and beverage sector accounting for $70 billion. Cartona and its competitors currently serve only 2-4% of this vast market, indicating significant room for growth and digitalization in the traditional trade sector.

Cartona's successful funding round in a challenging economic environment demonstrates the strength of its business model and the continued potential of B2B e-commerce in Egypt. As the company expands its operations and explores new markets, it is well-positioned to play a pivotal role in the digital transformation of the MENA region's retail sector. With a focus on financial inclusion and operational efficiency, Cartona is poised to capitalize on the immense opportunities presented by the largely untapped traditional trade market, driving innovation and growth in the years to come.