“We Received 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 entails 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 set share of the income they generate. “Which means that no matter funding we make into the enterprise is repaid, together with our small mounted charge, as a set share of the every day gross sales, until the full excellent quantity is absolutely repaid,” Ahmed Coucha, co-founder and CEO of FlapKap, explains. “In different phrases, our shoppers 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 increase witnessed by way of the course of the coronavirus pandemic incentivized plenty of companies to begin promoting on-line. Coucha, nevertheless, 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 consistently struggling to entry the wanted funds for progress, should not simply understood by the normal banks,” Coucha says. “To not point out that the banking course of could be very gradual for his or her rising wants, and that extreme collaterals are often required, which add further threat on the founders. Then again, getting traders’ cash to finance working capital means giving up fairness. This creates an adversarial incentive for progress. The extra these firms can develop, the extra the founders will lose of their possession. To not point out that this selection is barely obtainable to a choose few. That is why now we have created what we name a 3F providing: quick, versatile, and founder-friendly funding.”

The chain of occasions that sparked Coucha’s inspiration for FlapKap, nevertheless, 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&Ok,” Coucha remembers. “At GP&Ok, now we have principally labored with what we name the ‘top-of-the-pyramid’ shoppers reminiscent of Amazon, Netflix, Coca-Cola, P&G, and lots of others. However alongside our journey, we realized that apart from providing these shoppers promoting providers, we had been additionally providing them banking providers, and the bigger the consumer’s funds, the extra beneficiant credit score phrases they get. This all the time 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 increase, I got here throughout the RBF mannequin, and that is after we determined to begin FlapKap to develop 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 concern within the funding ecosystem, it would 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 resolve their working capital points with the media or stock funding inside 48 hours.” However flexibility in financing aside, by providing instruments reminiscent of intuitive dashboards that present insights on commercial spending, in addition to a spend-now-pay-later characteristic for stock administration, FlapKap additionally seeks to supply a holistic answer for SMB founders. “We help our shoppers in optimizing their digital advertisements by way of a synthetic intelligence (AI) mannequin that we’re constructing, in addition to entry to our progress specialists, and that is why we see ourselves as a full-fledged progress answer,” Coucha provides. “We help our prospects in optimizing their enterprise and figuring out progress areas, then fund them in essentially the most versatile method to understand this progress.”

With the funds they’ve now raised, the FlapKap crew hope to have the ability to scale their providers throughout the MEA area. “Whereas the newly raised funds can be used to gas extra progress for our prospects, the vast majority of the funds can be deployed to extra shoppers throughout KSA, UAE, and Egypt,” Coucha says. “One other half can be utilized in scaling our tech platform and additional investing in our AI mannequin to generate extra significant insights for our companions.” FlapKap’s resolution to boost a seed spherical, nevertheless, wasn’t all the time on the playing cards, reveals Coucha.”Since our launch, we have been receiving beneficiant curiosity from the funding neighborhood, however we needed to respectfully flip down their presents as we had sufficient money to go for one more yr not less than and we wished to concentrate on constructing the product,” Coucha says. “Nonetheless, we determined to open the spherical after we obtained curiosity from QED. Other than being one of many largest fintech traders on this planet, QED is the main investor within the RBF house globally. They had been additionally amongst the primary traders in our world 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 progress massively.” It was this resolution 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 gentle 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 notably 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 is just not a straightforward process 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 if you end up not most in want. Elevating whereas brief in money will power 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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