Moroccan startup, Chari, has closed a $5 million seed round at $70million valuation.
Investors in the seed round — which is currently the largest of its kind in Morocco — include Y Combinator, Plug and Play, Orange Ventures, Village Capital/MetLife Foundation, SPE Capital, Airbnb executives, Michael Lahyani, Pincus Private Equity, The Chandaria family, and the management company of an American Ivy League university.
The seed round was co-led by P1 Ventures, Rocket Internet, and Global Founders Capital.
Chari will use the funding to expand into Francophone Africa; Ivory Coast, Cameroon, Senegal and Mauritania, to name a few, while also getting licenses to offer other financial services like bill payments, remittances, pay later in Tunisia and Morocco, mobile top-up and buy now.
Unlike private African startups that rarely disclose their valuation, Chari has taken an impressive step.
Investors are excited about its prospects in relation to B2B e-commerce retail in the MENA region, especially as it is a startup from a North African country other than Egypt that is commanding high valuation.
Alj hopes that this will translate to more investments in Morocco and the Maghreb region:
“We are happy to lead the way of the nascent Moroccan startup ecosystem.
We hope that this seed round will be one the first of a long series of noticeable seed funding in Moroccan startups.
Founded in 2020 by Ismael Belkhayat and Sophia Alj, Chari digitizes mom and pop stores, and it operates as a mobile app that enables small retailers to order and get products from partnering local manufacturers and FMCG multinationals in less than 24 hours.
In August, Chari acquired Karny.ma, a platform that provides credit and bookkeeping services to about 40,000 merchants. It now serves as the startup’s strategy to provide payment facilities to users.
According to Belkhayat, the acquisition has allowed the startup to be at par with MaxAB in the country because it provides more merchants for Chari to tap into, adding that the startup’s “great relationship” with the suppliers also gives it an edge in the industry.
He added, “We have exclusivity on some digital trades. For instance, P&G works with Chari exclusively. So in case any other player wants to sell P&G products, either they have to go through Chari or they have to buy the goods from the supermarket.”
The startup takes a 10-30% percentage from each sale it makes from shop owners and it holds distribution contracts with FMCG companies it partners with.
The payment terms that it employs are suitable (It collects instant payments from local shops but is not required to pay suppliers in 40 days).
This system enables Chari to be cash-flow positive with an average of 15 days of stock.
The startup rents assets instead of owning them and it does not intend on adopting an inventory-heavy model later on because, according to the CEO, there are many warehouses available in Morocco to rent which allows the company to scale faster.
This is the case with Tunisia, Chari’s second market after Morocco. Concerning logistics, a total of 100 people work as delivery agents in both regions.
The YC-backed startup transacts about $2.5 million monthly, with a 20% month-on-month growth and 15,000 merchants signed up to it.
The total number of merchants using Chari’s products extends to over 50,000 when you take Karny into account.
Chari had recently taken part in the Y Combinator Summer batch which ended two months ago.
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