Founders of effectively-funded Egyptian B2B startup Capiter fired following fraud allegations • TechCrunch
final September, Egyptian startup Capiter raised $33 million in sequence A funding to compete inside the nation’s rising B2B e-commerce and retail house. quick-forward a yr later, the startup has laid off a quantity of workers and now its CEO and COO have been relieved from their duties after allegedly mismanaging funds.
right here’s what all of us know up to now. Between June to July, a quantity of ex-workers of Egyptian startups, collectively with Capiter, wrote posts about layoffs at their respective firms regardless that the employers by no means addressed them publicly. completely different firms embody OPay Egypt, elmenus, ExpandCart and Brimore.
Some sources advised TechCrunch that Capiter had laid off at the very least one hundred workers in these two months. Others described a office with poor administration and no construction and a agency discovering it arduous to onboard retailers to its platform whereas working out of money concurrently. the agency had solely a month runway as of August, they said. TechCrunch reached out to Capiter on the time however obtained no response.
consequently, Capiter buyers have been making an try to get hold of potential patrons to take in the struggling agency inside the variety of an acquisition or merger. This information was further corroborated in an e-mail obtained by TechCrunch, the place Capiter’s Board — citing that Mahmoud Nouh and Ahmed Nouh had left Egypt with their current location unknown — said the executives didn’t fulfill their obligations and duties by exhibiting earlier than representatives of the Board and buyers to full due diligence for a doable merger this week. An excerpt of that e-mail study as follows:
in the present day the Board of directors of the mum or dad holding agency of Capiter Egypt LLC, a Cairo-primarily based B2B e-commerce startup, permitted a movement to take away Mahmoud and Ahmed Nouh from their positions as CEO and COO, efficient immediately. further, the Board has commenced an investigation in opposition to Mahmoud Nouh and Ahmed Nouh, alleging that the two have embezzled funds from the agency, breached fiduiciary duties, and probably dedicated fraud. Mahmoud and Ahmed Nouh have left Egypt, and their current location is unknown. This movement follows every week all by way of which representatives of the Board and shareholders conducting on-website due diligence for a doable merger found misappropriated funds whereas conducting interviews with workforce members in Cairo.
earlier than Capiter, Mahmoud was the co-founder and COO of Egypt-born and Dubai-primarily based experience-hailing agency SWVL (the agency, which went public by way of a SPAC deal final yr, laid off 32% of its workers this might seemingly). collectively with his brother Ahmed, he launched Capiter in 2020 as an FMCG platform that permits small and medium-sized retailers to order inventory, set up supply and entry financing to pay for items. a quantity of of its opponents 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. inside the interview, they said Capiter was on its decision 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.
however, 2022 has taken an sudden flip for masses of tech startups as they deal with uncertainty arising from rising prices of curiosity and completely different elements which have a trickle-down impression on enterprise capital. information of layoffs, flat rounds and cutbacks from startups in different sectors — particularly these who raised some large money all by way of the previous 18-24 months, corresponding to 54gene, Kuda, and Marketforce — have been extra widespread regardless of the continent boasting a greater VC whole by the tip of Q2 2022 than Q2 2021.
B2B e-commerce platforms function both asset-mild or inventory-heavy fashions. The latter requires extra capital and for Capiter, which employs a hybrid mannequin, it’s unclear how the agency is already making an try to promote after elevating hundreds of hundreds from Quona Capital, MSA Capital, Shorooq companions, Savola and others final yr. Capiter’s buyers declined to contact upon the matter however as an alternate issued an e-mail assertion. “The Board and shareholders have initiated an inner investigation and on account of this fact are often not at liberty to contact upon the information or allegations circulating the social media inside the interim. The Board and shareholders are additionally working intently with related stakeholders, authorized and HR teams as effectively as to the authorized authorities for an exterior investigation on this matter.”
in the meantime, the preliminary leaked board’s assertion said Capiter’s administration workforce — “a quantity of of whom had just at present resigned in protest of what they felt was mismanagement by the Nouhs” — are making an try to regular the agency’s ship. the agency’s chief monetary officer Majid El Ghazouli will act as interim CEO “as remaining management works to stabilize the state of affairs and proceed conversations with potential acquirers, who stay interested inside the Capiter asset.” Mahmoud didn’t reply to remark.