Last September, Egyptian startup Capiter raised $33 million in Series A funding to compete in the country’s growing B2B e-commerce and retail space. Fast forward a year later, the startup has laid off several employees and now the CEO and COO have been fired for mismanaging funds.
Here’s what we know so far. Between June and July, former employees of several Egyptian startups, including Kapiter, wrote about layoffs at their companies, even though the employers had not officially told them. Other companies include OPay Egypt, elmenus, ExpandCart and Brimore.
Some sources told TechCrunch that Kapiter has laid off at least 100 employees in the past two months. Others described poor management and an unstructured workplace, and simultaneously running out of money when a company struggled to enter the market on merchants. The company only had a runway until August, they said. TechCrunch reached out to Kapiter at the time and did not receive a response.
As a result, Capiter investors have been looking for potential buyers to buy the struggling company through acquisitions or mergers. This information was further corroborated by an email obtained by TechCrunch, which stated that the Capitre board – Mahmoud Nouh and Ahmed Nouh had left Egypt, their current whereabouts unknown – and that the executives did not fulfill their duties and obligations by appearing before the board’s representatives. And for investors to complete due diligence on a potential merger this week. An excerpt of that email reads:
The board of directors of the parent holding company of Cairo-based B2B e-commerce startup Capiter Egypt LLC has approved a request to remove Mahmoud and Ahmed Noh as CEO and CEO respectively. The board has also launched an investigation against Mahmood Nooh and Ahmed Nooh, who have been accused of misappropriating the company’s funds, breach of trust and fraud. Mahmoud and Ahmed Nuh left Egypt and their current whereabouts are unknown. This move follows a week in which the board representatives and shareholders conducted due diligence on the site after interviewing team members in Cairo, where they found tainted funds.
Prior to Kapiter, Mahmoud was the founder and COO of the Egyptian-born and Dubai-based ride-hailing company SWVL (now the company). Public through the SPAC agreement Last year, 32% of workers were laid off this May. Along with his brother Ahmed, he launched Kapiter in 2020 as an FMCG platform that allows small and medium-sized retailers to order goods, get financing for delivery and payment for goods. Competitors include MaxAB and Cartona in Egypt, and Wasoko, Tradedepot and Chari in Africa.
Capter had 50,000 merchants and 1,000 sellers with more than 6,000 SKUs on its platform when the founders spoke with TechCrunch last September. In the interview, he said that Kapiter is on track to reach $1 billion in annual revenue this year. And like many startups in Africa and globally, Kapiter has been recruiting aggressively over the past year to meet its targets.
However, 2022 has brought an unexpected turn of events for many tech startups, with rising interest rates and other dampening effects on venture capital. News of layoffs, turnarounds and layoffs from startups in various sectors – especially those that have raised a lot of money in the past 18-24 months, such as Wave, 54gene, Kuda and Marketforce – has become more widespread even as the continent boasts. Better VC total at end of Q2 2022 compared to Q2 2021.
B2B e-commerce platforms operate either asset-light or inventory-heavy models. The latter will require more capital and it’s not clear how the company used the money for Capiter, which employs a hybrid model and is looking to sell after raising millions from Quona Capital, MSA Capital, Shorooq Partners, Savola and others last year. Capital Investors declined to comment on the matter but issued an emailed statement.
“The board and shareholders are not at liberty to comment on the news or allegations circulating on social media for the time being as an internal investigation has commenced. In this regard, the Board and shareholders are working closely with relevant stakeholders, legal and human resources teams, and legal entities.
Meanwhile, the first leaked board statement said Captair’s management team — “some of whom recently resigned in protest at the perceived mistreatment of Noah’s management” — is trying to right the company’s ship. Majid El Ghazouli, the company’s chief financial officer, will act as interim CEO “as the rest of the management works to stabilize the situation and continue discussions with potential people, they are looking for the capital asset.” Mahmoud did not respond to comments.
This is a developing story…
