“We Acquired Funded!” Cairo-Headquartered FlapKap Raises US$3.6 Million In A Seed Spherical To Notice Its Mission Of Empowering Underfunded SMBs In The MEA Area

Cairo-headquartered revenue-based financing (RBF) platform FlapKap has raised US$3.6 million in a seed funding spherical led by US-based enterprise capital (VC) companies QED and Outliers, in addition to Egypt-based VC companies Nclude and A15. The brand new spherical follows the $1.2 million FlapKap raised as an funding in March 2022- the identical month the fintech startup was launched.

FlapKap’s enterprise mannequin includes providing non-dilutive funding -a type of working capital that does not require a startup founder to surrender fairness or possession when receiving it- to small and medium companies (SMBs) and software-as-a-service (SaaS) companies, which is then repaid as a hard and fast share of the income they generate. “Because of this no matter funding we make into the enterprise is repaid, together with our small mounted payment, as a hard and fast share of the each day gross sales, until the overall excellent quantity is absolutely repaid,” Ahmed Coucha, co-founder and CEO of FlapKap, explains. “In different phrases, our purchasers pay us again solely once they promote. If gross sales enhance, so do our repayments. And, vice versa, compensation slows down if gross sales fall.”

Now, it’s no secret that the e-commerce growth witnessed via the course of the coronavirus pandemic incentivized plenty of companies to begin promoting on-line. Coucha, nonetheless, laments that this shift magnified plenty of funding-related points for the already financially underserved SMB market. “On the one hand, e-commerce SMBs, that are continuously struggling to entry the wanted funds for development, are usually not simply understood by the standard banks,” Coucha says. “To not point out that the banking course of may be very sluggish for his or her rising wants, and that extreme collaterals are normally required, which add additional threat on the founders. However, getting buyers’ cash to finance working capital means giving up fairness. This creates an adversarial incentive for development. The extra these corporations can develop, the extra the founders will lose of their possession. To not point out that this feature is simply obtainable to a choose few. That is why we’ve created what we name a 3F providing: quick, versatile, and founder-friendly funding.”

The chain of occasions that sparked Coucha’s inspiration for FlapKap, nonetheless, got here a lot earlier than the pandemic had even begun. “Greater than 11 years in the past, I co-founded a digital promoting company, which has now grown right into a a lot bigger promoting community referred to as GP&Okay,” Coucha recollects. “At GP&Okay, we’ve principally labored with what we name the ‘top-of-the-pyramid’ purchasers resembling Amazon, Netflix, Coca-Cola, P&G, and plenty of others. However alongside our journey, we realized that apart from providing these purchasers promoting companies, we have been additionally providing them banking companies, and the bigger the consumer’s finances, the extra beneficiant credit score phrases they get. This at all times struck me as counterintuitive and a bit ironic. We thus felt that this was an immense alternative to assist the ‘middle-of-the-pyramid’ SMEs. Through the coronavirus e-commerce growth, I got here throughout the RBF mannequin, and that is once we determined to begin FlapKap to change into the primary RBF participant within the MENA.”

Ahmed Coucha, co-founder and CEO, FlapKap. Supply: FlapKap

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From Coucha’s perspective, whereas FlapKap caters to a really area of interest situation within the funding ecosystem, it does not essentially see itself appearing as a separate entity within the grand scheme of issues. “FlapKap acts as a lacking puzzle piece, supporting our companions as an prolonged division,” he explains. “Our enterprise mannequin can remedy their working capital points with the media or stock funding inside 48 hours.” However flexibility in financing aside, by providing instruments resembling intuitive dashboards that present insights on commercial spending, in addition to a spend-now-pay-later characteristic for stock administration, FlapKap additionally seeks to offer a holistic resolution for SMB founders. “We assist our purchasers in optimizing their digital adverts via a man-made intelligence (AI) mannequin that we’re constructing, in addition to entry to our development consultants, and that is why we see ourselves as a full-fledged development resolution,” Coucha provides. “We assist our clients in optimizing their enterprise and figuring out development areas, then fund them in probably the most versatile solution to notice this development.”

With the funds they’ve now raised, the FlapKap staff hope to have the ability to scale their companies throughout the MEA area. “Whereas the newly raised funds might be used to gas extra development for our clients, nearly all of the funds might be deployed to extra purchasers throughout KSA, UAE, and Egypt,” Coucha says. “One other half might be utilized in scaling our tech platform and additional investing in our AI mannequin to generate extra significant insights for our companions.” FlapKap’s determination to boost a seed spherical, nonetheless, wasn’t at all times on the playing cards, reveals Coucha.”Since our launch, we have been receiving beneficiant curiosity from the funding group, however we needed to respectfully flip down their provides as we had sufficient money to go for an additional yr a minimum of and we needed to concentrate on constructing the product,” Coucha says. “Nevertheless, we determined to open the spherical once we obtained curiosity from QED. Other than being one of many largest fintech buyers on the planet, QED is the main investor within the RBF area globally. They have been additionally amongst the primary buyers in our international friends, Wayflyer and Fairplay, who’ve collectively raised over $900 million of debt and fairness. So, it was a no brainer for us that getting such an esteemed accomplice on board early on can speed up our development massively.” It was this determination to open a strategic ad-hoc spherical for QED that finally led to FlapKap additionally partnering with the aforementioned VC companies Outliers and Nclude.

Now, in mild of how the continued funding winter has led to a stagnation in funding alternatives for a lot of startups, Flapkap’s story many not be significantly reflective of most funding anecdotes within the area proper now. However Coucha nonetheless has a couple of phrases of recommendation for fellow entrepreneurs. “Elevating throughout this time isn’t a straightforward activity in any respect with many VCs following a strategic wait strategy, however regardless of ours not being a typical spherical, there are such a lot of learnings that may be useful,” Coucha says. “An important of those learnings is to boost when you’re not most in want. Elevating whereas brief in money will drive us right into a survival mindset, not a strategic one. We do not wish to be elevating to outlive, we hopefully wish to increase to thrive!”

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