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FlapKap Provides Revenue-Based Financing to MENA E-Commerce Brands, Gets $3.6M Startup Funding • londonbusinessblog.com

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recent Research suggests that the e-commerce market in Saudi Arabia, the UAE and Egypt is worth $21.4 billion and is expected to grow by more than 50% to $33.3 billion over the next three years. And as MENA shoppers increase their retail spending, it becomes increasingly important for online stores to position themselves to take full advantage of the growing phenomenon.

FlapCap, using its revenue-based financing platform (RBF), helps these stores solve the growth-destructive challenges emerging online stores face when trying to meet customer demands. The company, which enables e-commerce businesses to scale and grow by targeting businesses with limited access to bank or venture finance, announces it has raised $3.6 million in seed funding to increase its efforts.

Ahmed Coucha and Khaled Nassef founded FlapKap in 2022; Sherif Bichara and Adel Hodroj are on the founding team. It was during Coucha’s time at Kijamii, a digital agency he launched in 2014 and executed projects for Fortune 500 companies, that the CEO noticed late payment and access to working capital issues faced by companies, including his own. For example, most of Kijamii’s customers always paid late, sometimes 30 to 120 days after a sale was closed.

“We’ve always thought to ourselves that this should be the exact opposite. Big clients with huge amounts of cash shouldn’t be the ones getting super flexible payment terms from the agencies; it should be the small and medium-sized enterprises competing for money and growth. These should get the support,” CEO Coucha told londonbusinessblog.com.

In 2021, Coucha spent some time in the US and witnessed the rise of revenue-based financing platforms in the country and the West, including Clearco and Wayflyer. The idea of ​​replicating a similar operation for MENA came up, hence the launch of FlapKap. The company primarily serves SaaS and e-commerce platforms like most revenue-based finance companies, but has more customers with the former than the latter.

E-commerce operations have flexible payment terms that suit FlapKap’s business as they spend heavily on advertising, marketing and inventory, recurring activities that cause these brands to make late payments or take out loans to stay operational. “SaaS is still growing in the Middle East in its early stages, but it’s not big yet. On the other hand, e-commerce is booming in all parts of the world and is underserved by the current financial infrastructure in the Middle East and Africa,” he added about his company’s preference for e-commerce brands in both. regions.

FlapKap’s business model is one in which it funds the expenses of ecommerce platforms and recoups its money when these brands refund a percentage of their revenue until the refund is completed. In other words, FlapKap adds a flat fee – to be paid in percentages of their revenue within a specified time frame – to the amount its customers use on the platform.

The revenue-based e-commerce platform financing company, which claims to grow 300% quarter-over-quarter, also said it has partnered with dozens of customers from Egypt and the UAE in six months. Some include Dresscode, Raw African, Palma, and Tam’s Shoemaker. FlapKap claims to have helped generate more than 85% increase in sales and more than 70% increase in net profit for these customers within a few months.

FlapKap also recently integrated its AI-based insights and financial data analytics with Shopify, WooCommerce, Facebook and Google, and expects to build more partnerships, it said in a statement. “In addition to the financing solutions we provide to our partners, we also provide other value-added services to help them move forward. So we always like to position ourselves as a growth partner; we don’t just fund,” said the CEO. “We want to stimulate growth for them. We built a work-in-progress model to identify customer growth potential; it’s a model we’re building right now and being improved by the data we’re collecting.”

This latest capital injection comes six months after FlapKap’s pre-seed raise and the investors on board are strategic for FlapKap. For example, QED has invested in some of FlapKap’s global counterparts, such as Wayflyer and Fairplay. The fintech-focused venture capital firm used Bolt, its Middle East investment arm, to complete the transaction. There is also the Egyptian government backed Nclude, the renowned MENA early stage investor A15 and Outliers. “I’m excited to build FlapKap with them,” Coucha said. “I think it’s not just investors; they are true partners in what they do for us now and are expected to do in the future,” said Coucha.

With the new financing, FlapKap plans to increase its capacity to help more e-commerce businesses in the MENA region and maximize their growth potential, as well as consolidate its position as the leading revenue-based financing player in the region. The company aims to strengthen its presence in Saudi Arabia, the UAE and Egypt by enabling e-commerce companies to scale their inventory and digital advertising now and pay flexibly later. Gbenga Ajayi, a partner at QED, said of the investment: “Having invested in other regions such as Europe and Latin America and working with similar companies like FlapKap, we are confident that this team can achieve the same success.”

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