maxab Raises $40M to Expand Egyptian B2B Food Delivery

Growth in Food and Grocery Delivery Startups

Across the globe, companies specializing in food and grocery delivery have recently secured substantial funding, particularly within Europe. This surge in investment coincides with a notable increase in online ordering, a trend accelerated by the pandemic and its impact on consumer behavior.

MENA Region Attracts Investment

While investment activity in Africa has been comparatively limited, startups operating in the Middle East and North Africa (MENA) continue to attract significant interest, especially those focused on Business-to-Business (B2B) e-commerce solutions.

MaxAB Secures $40 Million in Series A Funding

MaxAB, a Cairo-based startup serving traditional food and grocery retailers throughout Egypt, has successfully raised $40 million in Series A financing. This capital injection will fuel the company’s expansion plans.

The company intends to broaden its physical presence across the Middle East and North Africa. Furthermore, MaxAB will prioritize talent acquisition and the scaling of its newly established business areas, including innovative supply chains and integrated financial services.

Company Background and Founding

Established in November 2018 by Belal El-Megharbel and Mohamed Ben Halim, MaxAB’s platform streamlines the procurement and delivery of groceries to stores in Egypt. Retailers can utilize the platform to purchase products, arrange delivery and logistics, and access dedicated customer support.

According to CEO El-Megharbel, small merchants in Egypt, a significant contributor to the nation’s GDP, often encounter difficulties in sourcing their inventory. Simultaneously, manufacturers face considerable challenges and expenses when serving the Egyptian market, which comprises over 400,000 small, independent grocery stores responsible for 90% of grocery sales.

Optimizing the Supply Chain with Technology

“We recognized a substantial opportunity to optimize this supply chain through the application of technology, ensuring the right products are available in the right place at the right time,” explained El-Megharbel, who transitioned from Careem to found MaxAB in 2018.

El-Megharbel positions MaxAB as an Amazon-like platform for retail within the Middle East. He highlights the challenges of finding reliable third-party e-commerce delivery services in emerging markets, often characterized by high costs or inefficiencies. This is why MaxAB has developed its own infrastructure.

Rather than constructing warehouses from the ground up, MaxAB acquires existing facilities and modifies them to meet its specific operational requirements. The company then employs internal technology to enhance inventory management throughout the warehousing process.

Expansion and Growth

Prior to last year, MaxAB concentrated on providing a single type of supply chain solution within a single city. This was before and after securing $6.2 million in seed funding and onboarding 9,000 merchants onto its platform. This new funding round allows MaxAB to solidify both its infrastructure and technology, enabling a multi-supply chain and multi-city business model.

This development coincides with a period of substantial growth, with MaxAB now serving over 55,000 merchants and offering a catalog of more than 2,000 unique products. The company’s workforce has expanded more than fivefold to 1,600 employees, with further recruitment planned.

Embedded Finance Solutions

MaxAB intends to extend financial services to its merchant base. Leveraging its extensive merchant database, the company can assess their financial standing. Collaborating with both banking and non-banking institutions, MaxAB will offer credit facilities and capital financing options to these merchants.

Investment Details

MaxAB’s Series A investment represents one of the largest funding rounds in the MENA region. RMBV, an impact investor, led the round, with participation from the IFC, Flourish Ventures, Crystal Stream Capital, Rise Capital, and Endeavour Catalyst. Existing investors, Beco Capital and 4DX Ventures, also contributed. This brings the company’s total funding to $46.2 million.

“The COVID-19 pandemic underscored the critical role of Egypt’s economy, with countless shopkeepers and small businesses serving as a vital lifeline during the crisis,” stated Ahmed Badreldin, managing partner at RMBV. “We are proud to support visionary entrepreneurs who have created a transformative business with impressive growth, fostering financial inclusion and job creation. We anticipate supporting MaxAB as it continues to innovate and expand.”

Pandemic Impact and Competitive Advantage

The pandemic has notably accelerated technology adoption and improved the company’s unit economics. As a leading player in the market, MaxAB has capitalized on this opportunity to strengthen its position and achieve sustainable growth amidst competition.

“Competition exists within the Middle East, but many competitors operate as marketplace models without directly managing their supply chains. Our end-to-end control distinguishes our model, although it presents challenges. We believe this comprehensive approach is essential for the B2B e-commerce sector in food and groceries,” the CEO explained.

Future Expansion Plans

Regarding potential expansion into sub-Saharan Africa, where competition from companies like Sokowatch may exist, El-Megharbel responded, “Not in the near future.” He emphasized the substantial market opportunity within the Middle East and North Africa, estimated at $200 billion annually, indicating a long runway for growth before considering expansion into other regions.