Last year, MaxAB, the food and grocery B2B distribution and e-commerce platform serving a network of traditional retailers across Egypt and Morocco, raised its Series A round of $55 million. in two installments; the latter accompanied its acquisition of WaysToCap, based in Morocco and supported by YC. The moves marked MaxAB’s ambition to dominate the retail and B2B e-commerce market in Egypt and North Africa, which includes Cartona and the struggling Capiter, other players who have raised significant capital. to be competitive over the past year.
To continue its growth due to growing demand for food and groceries and fuel its MENAP region expansion, MaxAB raised more money, this time a pre-Series B to the tune of $40 million.
Although smaller than last year’s prized round, CEO Belal El-Megharbel told TechCrunch that the pre-Series A was neither a bearish round nor a flat round in terms of valuation. He also noted that the company raised new capital not because it needed the money, but because “there are many opportunities that we think we can tap into more quickly the more capitalized we are.” The asset-rich MaxAB has raised over $100 million in total.
Small traditional retailers form the backbone of the FMCG industry across Africa. For most B2B e-commerce platforms across the continent, groceries are one of the many consumer goods they help retailers source from vendors. For MaxAB, this is its sweet spot. And since its launch in 2018, MaxAB has connected suppliers with over 150,000 unique traditional retailers in this food and grocery supply chain across Egypt and Casablanca, Morocco, delivering over 2.5 million orders within that time.
MaxAB’s perspective of going deep rather than broad with its product offerings also extends to how it views geographic expansion. After expanding its B2B grocery delivery across Egypt for more than three years, it intends to use its network and relationships with local and multinational suppliers and advance full distribution in Morocco, which now accounts for 10% of MaxAB’s business, and entering Saudi Arabia by the end of 2023.
The company estimates that more than 750,000 family businesses need its services in Egypt and Morocco alone. At the same time, Saudi Arabia is attractive due to the government’s drive to digitize the informal sector and FMCG’s willingness to explore new business models.
âWe are trying to offer more services to grocery stores since they are the foundation of the economy in which we operate before jumping into these other supply chains. Think Amazon; they continued to sell books for eight years before adding another category. And that’s the school of thought we like to go with,â said the CEO who founded MaxAB with Mohamed Ben Halim. âIn Egypt, we have been focused on launching the grocery supply chain and will use the learnings from that to launch into multiple markets. It’s easier to launch the grocery supply chain in various markets than it is to launch, say, electronics in our main market, because it’s just a completely different business model that we have to relearn from zero. Â»
Another stream of growth for MaxAB is the fintech business launched last year, which leverages its large pool of merchants and operational capacity to perform cashouts. And its entry-level approach to offering financial services differs from the competition; it launched an invoice aggregation product â whose transaction value has increased 5x since the start of the year â rather than a BNPL product that many B2B e-commerce platforms introduce to merchants first.
However, it didn’t take long for MaxAB to dive into the popular B2B fintech category; last month, the platform launched a working capital product to its merchant base. However, like Wasoko, another B2B e-commerce platform based in sub-Saharan Africa, MaxAB opted not to raise debt financing to scale this part of its operations. According to El-Megharbel, who was a former managing director of Careem, MaxAB currently gets a lot of supplier credit which helps it fund working capital without going into debt, at least for now. “And because the buy now, pay later product is still early, we can still do equity financing without having to pay debt that we won’t be using in the short term,” the CEO added.
MaxAB’s funding round includes an impressive list of new investors: DisruptAD, the ADQ’s venture capital platform; British International Investment (BII); and private equity firm Silver Lake, headquartered in Menlo Park, its first check in any form at an African startup. Silver Lake invested as part of its long-term capital strategy with Mubadala Investment Company.
âWe are always proud of our ability to attract leading investors to the region. Historically, since our funding round, we have always had at least one VC who invested in Egypt, North Africa or Africa for the first time,â El-Megharbel said of the investment, referring to companies such as 4DX Ventures and Flourish Ventures. They participated in this round alongside other existing investors, Beco Capital and Africa Platform Capital.