Last September, Egyptian startup Capiter raised $33 million in Series A funding to compete in the country’s burgeoning B2B e-commerce and retail space. Fast forward a year later, the startup laid off many employees and now its CEO and CEO have been fired after being accused of mismanaging the fund.
Here’s what we know so far. Between June and July, several former employees of Egyptian startups, including Capiter, wrote posts about layoffs at their respective companies despite recruiters never mention them publicly. Other companies include OPay Egypt, elmenus, ExpandCart and Brimore.
Several sources told TechCrunch that Capiter laid off at least 100 employees in those two months. Others describe a workplace with poor management and no structure and a company that finds it difficult to reach merchants with its platform while at the same time running out of money. They say the company has only had one runway in a month since August. TechCrunch contacted Capiter at the time but received no response.
As a result, Capiter investors were looking for potential buyers to take over the struggling company in the form of an acquisition or merger. This information is further corroborated in an email obtained by TechCrunch, in which Capiter’s Board of Directors – citing that Mahmoud Nouh and Ahmed Nouh have left Egypt for their current positions – said executives Executives failed to fulfill their obligations and duties by appearing before a representative of the Board of Directors. and investors to complete due diligence this week. The excerpt of that email is as follows:
Today, the Board of Directors of parent company Capiter Egypt LLC, a Cairo-based B2B e-commerce startup, approved a proposal to remove Mahmoud and Ahmed Nouh from their positions of CEO and COO. , effective immediately. Furthermore, the Board of Directors has started an investigation against Mahmoud Nouh and Ahmed Nouh, alleging that both have embezzled funds from the company, breached legal obligations, and potentially commit fraud. Mahmoud and Ahmed Nouh have left Egypt, and their current locations are unknown. This action comes after a week in which representatives of the Board of Directors and shareholders conducting on-site due diligence for a potential merger discovered funds embezzled while conducting investigations. interviews with team members in Cairo.
Prior to Capiter, Mahmoud was the co-founder and COO of the Egypt and Dubai-based ride-hailing company SWVL (the company that public through SPAC transaction last year, laid off 32% of employees this May). Together with his brother Ahmed, he launched Capiter in 2020 as an FMCG platform that allows small and medium-sized retailers to order inventory, arrange for delivery and access financing to pay for goods. Some of its competitors include MaxAB and Cartona in Egypt, and in Africa, Wasoko, TradeDepot and Chari.
Capiter has 50,000 merchants and 1,000 sellers with over 6,000 SKUs on its platform when the founders spoke to TechCrunch last September. In the interview, they said Capiter is on track to hit $1 billion in annual sales this year. And like many startups in Africa and globally, last year, Capiter was hiring aggressively to achieve its goals.
However, 2022 has taken an unexpected turn for many tech startups as they deal with the uncertainty arising from interest rate hikes and other factors that have had a small diminutive effect on capital investment. venture capital. News of layoffs, flat rotations, and cuts from startups in a variety of sectors – especially those that have raised a lot of money in the last 18-24 months, such as 54gene , Kuda and Marketforce – were more popular although the continent boasts better VC totals at the end of Q2 2022 than Q2 2021.
B2B e-commerce platforms operate on a low-asset or high-inventory model. The latter requires more capital and for Capiter, which uses a hybrid model, it is unclear how the company managed to sell after raising millions of dollars from Quona Capital, MSA Capital, Shorooq Partners, Savola and others last year. Capiter investors declined to comment on the matter but issued an emailed statement instead. “The Board of Directors and shareholders have initiated an internal investigation and are therefore not authorized to comment on news or allegations spread on social media at this time. The Board of Directors and shareholders are also working closely with stakeholders, the legal and human resources team as well as law enforcement agencies to conduct an external investigation into the matter. “
Meanwhile, the board’s leaked initial statement said Capiter’s management team – “some of whom have recently resigned in protest of what they feel is poor management by the Nouhs” – trying to stabilize the company’s ship. The company’s chief financial officer, Majid El Ghazouli, will act as interim CEO “as the remaining leadership works to stabilize the situation and continue conversations with potential acquirers.” , who are still interested in Capiter’s fortune.” Mahmoud did not respond to comment.