Final September, Egyptian startup Capiter raised $33 million in Collection A funding to compete within the nation’s rising B2B e-commerce and retail house. Quick-forward a yr later, the startup has laid off a number of workers and now its CEO and COO have been relieved from their duties after allegedly mismanaging funds.
Right here’s what we all know thus far. Between June to July, a number of ex-employees of Egyptian startups, together with Capiter, wrote posts about layoffs at their respective corporations although the employers by no means addressed them publicly. Different corporations embrace OPay Egypt, elmenus, ExpandCart and Brimore.
Some sources instructed TechCrunch that Capiter had laid off at the least 100 workers in these two months. Others described a office with poor administration and no construction and an organization discovering it onerous to onboard retailers to its platform whereas operating out of cash concurrently. The corporate had solely a month runway as of August, they mentioned. TechCrunch reached out to Capiter on the time however acquired no response.
Consequently, Capiter traders have been trying to find potential consumers to soak up the struggling firm within the type of an acquisition or merger. This info was additional corroborated in a native information report the place Capiter’s Board allegedly mentioned that the founders had not been reporting to the board, its representatives and shareholders throughout on-site in-person due diligence for a possible merger. One other publication acknowledged the executives had avoided showing earlier than the board of administrators after inner disturbances and disagreements over their administration technique.
Earlier than Capiter, Mahmoud was the co-founder and COO of Egypt-born and Dubai-based ride-hailing firm SWVL (the corporate, which went public by way of a SPAC deal final yr, laid off 32% of its workers this Could). Along with his brother Ahmed, he launched Capiter in 2020 as an FMCG platform that permits small and medium-sized retailers to order stock, prepare supply and entry financing to pay for items. A few of its opponents embrace MaxAB and Cartona in Egypt, and in Africa, Wasoko, TradeDepot and Chari.
Capiter had 50,000 retailers and 1,000 sellers with greater than 6,000 SKUs on its platform when the founders spoke to TechCrunch final September. Within the interview, they mentioned Capiter was on its technique to reaching an annualized income of $1 billion this yr. And like many startups in Africa and globally, Capiter employed aggressively final yr to fulfill its targets.
Nonetheless, 2022 has taken an sudden flip for a lot of tech startups as they cope with uncertainty arising from growing rates of interest and different components which have a trickle-down impact on enterprise capital. Information of layoffs, flat rounds and cutbacks from startups in numerous sectors — particularly those who raised some huge cash inside the previous 18-24 months, resembling Wave, 54gene, Kuda, and Marketforce — have been extra widespread regardless of the continent boasting a greater VC complete by the tip of Q2 2022 in comparison with Q2 2021.
B2B e-commerce platforms function both asset-light or inventory-heavy fashions. The latter requires extra capital and for Capiter, which employs a hybrid mannequin, it’s unclear how the corporate has exhausted its funds and is already trying to promote after elevating tens of millions from Quona Capital, MSA Capital, Shorooq Companions, Savola and others final yr. Capiter’s traders declined to touch upon the matter however issued an e-mail assertion.
“The Board and shareholders have initiated an inner investigation and due to this fact will not be at liberty to touch upon the information or allegations circulating the social media in the meanwhile. The Board and shareholders are additionally working intently with related stakeholders, authorized and HR groups in addition to the authorized authorities for an exterior investigation on this matter.”
In the meantime, in keeping with native stories, the corporate’s chief monetary officer Majid El Ghazouli will act as interim CEO. Mahmoud didn’t reply to remark.
Replace: CEO Mahmoud Nouh, in response to the allegations, mentioned, “I deny the false allegations and that I haven’t acquired any official discover of what’s above [referencing the statement about his and Ahmed’s dismissal].”
This can be a growing story…