Egyptian delivery startup Bosta Raises $6.7 Million series.
bosta, a rising Egyptian delivery startup serving e-commerce companies, has raised a $6.7 million Series A round, providing funding to drive expansion as it takes on established players including Fetchr and Aramex. The Cairo company is plotting expansion into Dubai and Saudi Arabia by the end of 2021 and targeting a goal of handling a million monthly deliveries, says its CEO Mohamed Ezzat.
The funding round was led by Jordanian venture capital firm Silicon Badia, with other participants including 4DX Ventures, which is an Africa focused investor, alongside undisclosed Saudi investors, and angel investors. This follows a $1.8 million round Bosta secured in 2020 from European parcel delivery giant DPDgroup, and brings its total raised to roughly $9 million.
Currently, Bosta carries out around 300,000 deliveries each month in Egypt and reports that it is working with 3,000 businesses, including Amazon, Noon, and Jumia. The startup provides a variety of services for e-commerce companies, including next day delivery, order tracking, returns and exchange, and cash collection. “They focus on selling, we focus on operations and delivery,” says Ezzat. Bosta has 210 employees and a network of around 500 drivers.
Investor Silicon Badia reports it was impressed by what Bosta has accomplished while operating in a challenging sector and a key regional market. “Numbers speak for themselves,” says Namek Zu'bi, Silicon Badia’s managing partner. “This company is on track to triple across its KPIs this year, all while maintaining a superior customer experience, something that is critical in this space.”
Initially, Bosta pursued on-demand, same day deliveries, but Ezzat eventually found that this approach made it difficult to break even and compete with Aramex or Fetchr. Customers weren’t willing to pay a premium for same day deliveries for many items. The solution was
shifting to next day deliveries, says Ezzat. “The difference between
the same day orders and the next day orders was huge,” he says.
Today, Bosta works with e-commerce companies of all sizes, but a key focus is serving small businesses, which Ezzat says struggle to scale operations due to logistics hassles. That includes making money management easier, a major problem plaguing e-commerce companies in Egypt’s cash-based economy. Here Bosta works with Egyptian payments company Fawry, which also was an early investor in the company. That allows merchants to process online transactions and access the cash through kiosks operated by Fawry in Egypt.
Bosta reports having delivered roughly 4 million parcels to date, including 2.5 million over the last 12 months, a surge Ezzat attributes to COVID-19’s impact on e-commerce. He claims his company is now market leader in Egypt for e-commerce deliveries and profitability is in sight. Alongside expansion, it is also eying fulfillment (meaning handling inventory in warehouses) and B2B services, including working with companies outside e-commerce, like banks.
Although Bosta faces established industry incumbents, there’s still opportunity to elbow into the region’s growing online retail landscape. The GCC’s e-commerce market size alone reached $24 billion in 2020 and is expected to roughly double to $50 billion by 2025, according to consulting firm Kearney.
Meanwhile, Dubai-based competitor Fetchr has recently hit speed bumps despite raising significant funding and making over 28 million deliveries since inception in 2012. That saw a massive company overhaul in 2020, including leadership and strategy changes.
Ultimately, Bosta's investors see a chance for another logistics player to rise. E-commerce in the region has always been held back by something, from payments to market fragmentation, says Silicon Badia’s Chairman Fawaz Zu’bi. “We are excited to finally see companies like Bosta emerge to tackle some of these issues and help e-commerce realize its full promise and potential in a region that has now 'turned on' digitally,” says Zu’bi