Why this Saudi fund chose to invest in Morocco’s ‘Udaan’

In January 2022, business-to-business (B2B) e-commerce startup based in Morocco Chari raised a bridge tower at a $100 million valuation.

Investors including Afrimobility (the venture capital arm of AKWA Group), AirAngels (Airbnb Alumni Investors’ Syndicate) and Khwarizmi Ventures – a Saudi Arabia-based seed venture capital fund – participated in the round.

In fact, this is the Saudi venture capital fund’s first investment in Morocco.

Having seen similar ventures in other geographies, Abdulaziz Al-Turki, Managing Partner of Khwarizmi Ventures, recalls the first meeting with the founders.

“For us, it was about building a team with a super solid background. We are in this business where we look at visionary founders. Our investors give us money to invest in big dreams and businesses that can give big returns,” Abdulaziz said. Gulf YS.

Founded in January 2021 by Ismael Belkhayat and Sophia Alj, Chari digitizes small and medium traders (fragmented B2B distribution sector) in French-speaking African countries – Morocco and Tunisia.

Building the ‘Udaan’ of Morocco

B2B e-commerce unicorn Udaan has a network of over three million registered users and 25,000-30,000 sellers across 900 cities in India and has over 1.7 million retailers, chemists, farmers, etc., performing more than 4.5 million transactions per month.

And Chari aims to become the Udaan of French-speaking African nations.

The Casablanca, Morocco-based startup’s Android and iOS apps help small retailers order products from local manufacturers and global fast moving consumer goods (FMCG) companies within 24 hours.

It has partnered with Nestlé, Kellogg’s, P&G, etc., to supply these FMCG brands’ products through its B2B e-commerce platform to local mom and pop stores.

The startup takes between 5 and 20% margin from suppliers. It also charges manufacturers and FMCG brands for the data it shares, including the number and type of products sold and customer information.

Currently, Chari is building a Buy now, pay later (BNPL) service based on merchant registration date, average order basket, amount of money lent and order frequency. Merchants receive a negative balance between -$100 and -$500 on their digital wallets for 30 days free of charge.

Today the African BNPL and B2B markets are developing with the presence of players such as LipaLater (Kenya), TradeDepot (Nigeria), ThankUCash (Nigeria), Payflex (South Africa), Carbon Zero (Nigeria), etc.

To date, Chari has raised $5 million in funding.

“If you look at the business model, it’s about giving retailers access and managing their supply logistics. After establishing credibility and trust, the next step is to figure out how you can serve these retailers in other ways, lending to them and empowering them with the financial muscle to grow their business. Chari is also extending its end customer with options like BNPL,” says Abdulaziz.

Startup

Serial entrepreneur and co-founder of Chari, Ismael Belkhayat, said, “For me, starting a business, even my previous startups, was about realizing that the segment has a challenge and needs a complete solution.”

Born in Morocco, Ismael studied in Europe and pursued his master’s degree at Cornell University, USA. During his time at BCG in Paris, Ismael was instrumental in the establishment of BCG’s regional office in Morocco.

But that was not enough for Ismael. After working for three years at BCG, he decided to take the plunge.

“That was eight years ago. My first startup was similar to Uber. However, a more rental-based startup has been acquired by Avis Rental Cars. The next company was a real estate portal. When looking for a house in Morocco, it means going door to door at apartment complexes to see if a house is vacant. We had experienced these issues first hand,” says Ismael. His second business was purchased by the Propertyfinder Group.

Build for Africa

Chari’s idea also came from a personal issue. Sophia, a former consultant at McKinsey, was tasked with understanding how small retailers and FMCGs operated in the region.

Ismael and Sophia visited several stores and realized that many small retailers were having significant issues.

Ismael explains: “Sometimes for certain goods, the shopkeeper in these mom and pop shops would ask us to wait because one of the supplier’s trucks stopped. Usually, most of these trucks are manned by one person, and traders let the customer hang to help transport the goods. »

He continues: “When I asked him why he was doing this, the trader replied: if a customer leaves, there will be others, but if the supplier leaves, I will simply not have any goods for a week. for my clients.

Realizing that this problem is quite significant and persists throughout the French-speaking African region, Ismael and Sophia decided to expand Chari’s operations to Tunisia in early 2022.

The following June, the B2B e-commerce startup acquired Ivorian startup Diego which connects neighborhood retail stores with FMCG businesses. The startup was founded in 2021 by Amidou Diarra and Ali Ouattara (former managers of Glovo and PepsiCo).

In October 2021, the startup acquired Karny, a Moroccan accounting startup that provides credit and accounting services.

Last year, Chari won the Disruptor of the Year award at the Africa CEO Forum in Abidjan, Ivory Coast.

“Our goal is to help small stores compete with large supermarkets and online platforms,” says Ismael.