Last year, MaxAB, the B2B e-commerce and distribution platform for food and groceries serving a network of traditional retailers in Egypt and Morocco, has raised its $55 million Series A in two tranches; the latter accompanied the acquisition of Morocco-based and YC-backed WaysToCap. The moves indicated MaxAB’s ambition to dominate Egypt and North Africa’s B2B retail and e-commerce market, including Cartona and the troubled Capiter, other players that have raised significant capital over the past year to compete .
To continue the growth driven by rising food and grocery demand and fuel its expansion in the MENAP region, MaxAB has raised more money, this time a pre-Series B at a cost of $40 million.
Although smaller than last year’s award-winning round, CEO Belal El-Megharbel told londonbusinessblog.com that the pre-Series A was neither a down nor a flat round in terms of valuation. He also noted that the company has raised new capital not because it needed the money, but because “there are a lot of opportunities that we think we can capitalize on faster the more capitalized we are.” The asset-heavy MaxAB has raised more than $100 million in total.
Small traditional retailers are the backbone of the FMCG industry across Africa. For most B2B e-commerce platforms across the continent, groceries are one of many consumer goods that help retailers buy from suppliers. That is the right place for MaxAB. And since its launch in 2018, MaxAB has connected suppliers with more than 150,000 unique traditional retailers in this food and grocery chain in Egypt and Casablanca, Morocco, delivering more than 2.5 million orders within this time frame.
MaxAB’s perspective of going deep rather than broad with its product offering also extends to how it views geographic expansion. After more than three years of scaling up its B2B grocery delivery across Egypt, it plans to leverage its network and relationships with local and multinational suppliers and take full distribution to Morocco, which now accounts for 10% of MaxAB’s business for takes its account, and join Saudi Arabia by the end of 2023.
The company estimates that more than 750,000 mom-and-pop businesses need its services in Egypt and Morocco alone. At the same time, Saudi Arabia is attractive because of the government’s drive to digitize the informal sector and the FMCG’s willingness to explore new business models.
“We are trying to offer more services to the supermarkets as they are the foundation of the economy we operate in before jumping into these other supply chains. Think Amazon; they continued to sell books for eight years before adding a new category. And that’s the mindset we like to be in,” said the CEO who founded MaxAB with Mohamed Ben Halim. “In Egypt, we focused on launching the food supply chain and we will use the lessons learned to launch in multiple markets. It’s easier to launch the food supply chain in different markets than, say, launch electronics in our core market, because it’s just a completely different business model that we have to learn from scratch.”
Another growth stream for MaxAB is the fintech business launched last year, which uses its large pool of merchants and operational capacity to conduct fundraisers. And the entry-level approach to providing financial services is different from the competition; it launched an invoice merging product – which has grown 5x in transaction value since the beginning of the year – rather than a BNPL product that many B2B ecommerce platforms are introducing to merchants first.
However, it didn’t take long for MaxAB to delve into the popular B2B fintech category; last month, the platform launched a working capital product on its trading base. However, like Wasoko, another B2B e-commerce platform in sub-Saharan Africa, MaxAB chose not to raise debt financing to scale that portion of its business. According to El-Megharbel, who was a former general manager at Careem, MaxAB is currently getting a lot of supplier credit that allows it to fund working capital without incurring debt, at least for now. “And because the ‘Buy now, pay later’ product is still early, we can still fund some with equity without paying off debt that we won’t use in the short term,” the CEO added.
MaxAB’s equity round includes an impressive roster of new investors: DisruptAD, ADQ’s venture capital platform; British International Investment (BII); and Menlo Park-based private equity firm Silver Lake — the first audit of any form in an African startup. Silver Lake invested through its long-term capital strategy at Mubadala Investment Company.
“We are always proud of our ability to attract top investors to the region. Historically, since our starting round, we have always had at least one VC investing for the first time in Egypt, North Africa or Africa,” said El-Megharbel of the investment, referring to companies such as 4DX Ventures and Flourish Ventures. They participated in this round together with other existing investors, Beco Capital and Africa Platform Capital.