Homzmart, a Cairo-based furniture marketplace, closes a $15 million Series A
Homzmart, a Cairo-based furniture marketplace, closes a $15 million Series A
Homzmart, an Egyptian marketplace startup, has raised $15 million in a Series A funding round. Menabytes reported in February 2020 that the startup's $1.3 million seed round was one of the largest ever raised by an Egyptian startup. It has now successfully closed the largest financing round in its sector in the Middle East and North Africa (MENA) region, shattering previous records.
Mahmoud Ibrahim, a former COO of Daraz — an online marketplace and logistics company operating in South Asia and Southeast Asia — and Ibrahim Mohamed, a former Head of Logistics at Jumia, founded the company in 2019. Nonetheless, it did not begin operations until the first quarter of 2020.
MSA Capital — one of the investors in Homzmart's seed round in February 2020, alongside Nuwa Capital — is co-leading this round of financing. Additionally, Rise Capital, Impact 46, EQ2 Ventures, and Outliers Venture Capital are participating.
Homzmart asserts that the Egyptian furniture market has historically been defined by limited customer accessibility and high retailer distribution costs.
The startup's business model, which involves collecting designs, price ranges, and other details about its retailers' products, alleviates their high distribution costs by connecting them with consumers — homeowners and professionals — who have access to flexible financing options.
It enables consumers to have a one-stop-shop, hassle-free experience by connecting them to retailers such as IKEA and Home Centre.
Homzmart's platform uses artificial intelligence to optimize the content of furniture sellers, while intelligent tools assist customers in making purchasing decisions.
As Ibrahim stated during the company's seed round, "there are 25 million people searching for home furnishings in the Middle East and North Africa region each month with no serious player serving them online."
Ibrahim expressed concern about the company's survival following the start of the COVID-19 pandemic.
However, the opposite was true, as consumers appeared to enjoy the product, resulting in increased sales, as observed in the majority of eCommerce and marketplaces during the pandemic's peak.
Ben Harburg, General Partner of MSA Capital, cites this as one of the reasons the company re-invested in the startup.
“The COVID-19 pandemic exposed the Middle East's archaic offline retail ecosystem, logistics, and supply chain's extreme vulnerabilities and inefficiencies.
“Homzmart stepped into the void as the next generation of digitally enabled online marketplaces and optimized logistics providers for large-item retail, serving both consumer and enterprise customers.”
Homzmart's decision was also influenced by the founders' extensive experience
After spending the first year of its existence figuring out supply and demand, it is now looking to scale its business model and expand its reach throughout the region.
“Whatever we did in Egypt, we must replicate in the rest of the region. Homzmart is not aiming to be an Egyptian platform, but rather a regional one,” Ibrahim explained.
Homzmart has strategically located its operations near Damietta City in accordance with this. Damietta, which is the region's largest manufacturing hub, would enable the company to streamline the vertical industry supply chain in MENA.
Homzmart currently features over 55,000 products from thousands of brands and merchants and claims to have tripled its sales in the last year. The online marketplace is targeting the rapidly growing $8 billion furniture industry in the region, where 14 million customers search for furniture online on a monthly basis.
Ibrahim says the company hopes to make sure it is building the right institutional infrastructure for its business and to ensure that after two or three years, it is building a very solid, multi-billion dollar business.
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