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Founders of well-funded Egyptian B2B startup Capiter fired following fraud allegations

Final September, Egyptian startup Capiter raised $33 million in Series A funding to compete within the nation’s rising B2B e-commerce and retail area. Quick-forward a yr later, the startup has laid off a number of staff and now its CEO and COO have been relieved from their duties after allegedly mismanaging funds.

Right here’s what we all know to date. Between June to July, a number of ex-employees of Egyptian startups, together with Capiter, wrote posts about layoffs at their respective corporations regardless that the employers by no means addressed them publicly. Different corporations embody OPay Egypt, elmenus, ExpandCart and Brimore.

Some sources instructed TechCrunch that Capiter had laid off a minimum of 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 working out of cash concurrently. The corporate had solely a month runway as of August, they stated. TechCrunch reached out to Capiter on the time however obtained no response. 

In consequence, Capiter traders have been looking for potential consumers to soak up the struggling firm within the type of an acquisition or merger. This info was additional corroborated in a local news report the place Capiter’s Board allegedly stated 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 said the executives had shunned showing earlier than the board of administrators after inner disturbances and disagreements over their administration methodology.

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 via a SPAC deal final yr, laid off 32% of its staff this Might). Together with his brother Ahmed, he launched Capiter in 2020 as an FMCG platform that permits small and medium-sized retailers to order stock, organize supply and entry financing to pay for items. A few of its rivals embody 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 stated Capiter was on its option to reaching an annualized income of $1 billion this yr. And like many startups in Africa and globally, Capiter employed aggressively final yr to satisfy its targets. 

Nonetheless, 2022 has taken an sudden flip for a lot of tech startups as they take care of uncertainty arising from rising rates of interest and different elements which have a trickle-down impact on enterprise capital. Information of layoffs, flat rounds and cutbacks from startups in numerous sectors — particularly people who raised some huge cash throughout the previous 18-24 months, corresponding to Wave, 54gene, Kuda, and Marketforce — have been extra widespread regardless of the continent boasting a greater VC complete by the top 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 electronic mail assertion.

“The Board and shareholders have initiated an inner investigation and subsequently usually are not at liberty to touch upon the information or allegations circulating the social media in the interim. The Board and shareholders are additionally working carefully with related stakeholders, authorized and HR groups in addition to the authorized authorities for an exterior investigation on this matter.”

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