Homzmart, an Egyptian-based marketplace startup, has secured $15 million in its Series A investment round, TechCrunch reports.
In February 2020, the startup’s $1.3 million seed round was reported by Menabytes as one of the largest by an Egyptian startup. It, once again, surpasses previous records as it has now successfully closed the largest financing round in its sector in the Middle East and North Africa (MENA) region.
The company was founded in 2019 by Mahmoud Ibrahim, former COO of Daraz -- an online marketplace and logistics company that operates in South Asia and Southeast Asia -- and Ibrahim Mohamed, former Head of Logistics at Jumia. Still, it didn’t launch until the first quarter of 2020.
This round of financing is co-led by China’s MSA Capital -- one of the investors in Homzmart’s seed round in February 2020, alongside Nuwa Capital. Other participants include Rise Capital, Impact 46, EQ2 Ventures, and Outliers Venture Capital.
Homzmart claims the Egyptian furniture market is historically characterised by poor customer accessibility and high distribution costs for retailers.
The startup’s business model, which involves collecting designs, price ranges, and other details of its retailers’ products, handles high distribution costs for them by providing access to consumers -- homeowners and professionals -- who have flexible financing options.
It creates a one-stop-shop, hassle-free experience for consumers who are easily connected to retailers such as IKEA and Home Centre.
Homzmart’s platform incorporates artificial intelligence to optimise furniture sellers’ content, with intelligent tools helping customers with purchasing decisions.
As Ibrahim said during the company’s seed round, “There are 25 million people in the Middle East and North Africa region searching for home furnishing every month with no serious player serving them online.”
Launched at the start of the COVID-19 pandemic, Ibrahim expressed uncertainty about the company’s survival due to anticipated behavioural changes in consumer spending.
However, the reverse was the case as consumers seemed to like the product, resulting in more sales, as witnessed in most eCommerce and marketplaces during the height of the pandemic.
MSA Capital’s General Partner, Ben Harburg, cites this as one of the reasons the company joined in financing the startup again.
“The COVID-19 pandemic exposed the extreme vulnerabilities and inefficiencies of the Middle East’s archaic offline retail ecosystem, logistics, and supply chain.
“Into the void stepped Homzmart as the next generation, digitally-enabled online marketplace and optimised logistics provider for large-item retail addressing both consumer and enterprise customers.”
Homzmart’s founders' vast experience was another reason behind the firm’s decision.
Having spent its first year in business understanding supply and demand, it now looks to scale its business model, expanding its reach across the region.
“Whatever we did in Egypt, we need to do across the region. Homzmart isn’t looking to be just an Egyptian platform, rather a regional platform,” said Ibrahim.
In keeping with this, Homzmart has strategically established operations close to Damietta City. Known as the region’s largest manufacturing hub, Damietta would allow the company to streamline MENA’s vertical industry supply chain.
Homzmart currently showcases over 55,000 products from thousands of brands and merchants and claims to have 30x growth in sales. The online marketplace is tapping into the rapidly expanding $8 billion industry where 14 million customers in the region search online for furniture monthly.
As TechCrunch reports, Ibrahim says the company hopes to make sure it is building the right institutional infrastructure for its business and to ensure that after two or three years, it is building a very solid, multi-billion dollar business.