Opontia raises $ 20 million to deploy e-commerce brands in Africa and the Middle East – TechCrunch
Razor Group. Mark. Thrasio. These are big names in the new wave of e-commerce businesses taking the world by storm. Their business of acquiring small e-commerce brands that look promising and consolidating them is very popular in the United States and Europe..
The concept has spread across these shores to Latin America and Asia, where companies like Una Brands and Valoreo have raised significant investments to to acquire and build these brands. Today, the concept has caught on in the Middle East and Africa as Opontics closed $ 20 million in funding to to acquire and expand e-commerce brands across regions.
This round table, one of the largest in the Middle East and Africa, is a mix of debt and equity financing. Although Opontia does not disclose the ratio of equity to debt, it has confirmed that the majority is debt that will be used to make acquisitions.
Investors include Global Founders Capital, Presight Capital, Raed Ventures and Kingsway Capital. The angel investors who participated are also notable names in e-commerce in EMEA; they include Tushar Ahluwalia, CEO of Razor Group; Jonathan doerr, the former CEO of Daraz and co-founder of Jumia; and Arab Hosam, the CEO of Tabby and the former CEO of Namshi.
Opontics was founded by co-CEO Philippe johnston and Manfred meyer in March 2021. Opontia has teams in Dubai and Riyadh, with professionals from Amazon, Zomato, Noon.com, Namshi, McKinsey and Uber Eats. In the coming months, the company plans to open in Cairo, Istanbul and Lagos.
Often times when small ecommerce brands take off, the owner usually starts with being passionate about their product and their customers.. However, through no fault of their own, most are starting to reach a point of stagnation caused by constraints on working capital, operations, logistics and e-commerce business management.
Johnston and Meyer started Opontia to offload these burdens by convincing them to sell their brands and for Opontia to handle all parts of their operations.. But the interesting thing, like most companies that deploy e-commerce brands, these owners continuously to be involved with the daily brand building activities.
âWe launched Opontia to enable e-commerce entrepreneurs to realize the full potential of their brands.. We want to do both in terms of get out now and enjoy future growth, âJohnston told TechCrunch. âWe also want to help develop and develop the entrepreneurial ecosystem of e-commerce in the Middle East and Africa..
When Opontia acquires these brands, owners will be able to participate in the increase in profits over the next two years, Johnston added.. “We are doing this so that they continue to see the benefits of their hard work.”
The two-month-old company is particularly interested in brands with at least $ 10,000 in monthly revenue and at least $ 5,000 in net profit per month. By product categories, Opontia has a weakness for less seasonal “all-weather” products, including kitchen, bathroom, sports, home and life products, cosmetics and toys.
Besides Razor Group, Branded and Thrasio, there are a number of startups deploying e-commerce brands around the world.. But none of them yet target the Middle East and Africa, with their larger and more mature target markets.
For example, China is the world’s largest e-commerce market, with an annual growth rate of over 30% and annual online sales exceeding $ 850 billion. The second largest market, the United States, is over $ 350 billion. Brazil has annual sales reaching $ 36 billion, which represents 32% of the e-commerce market in Latin America. For the Middle East and Africa, these figures are $ 30 billion and $ 25 billion, respectively.
Both regions offer Opontia a huge opportunity. Yet if past events in other regions repeat themselves, it won’t be long before the company begins to face new competition.. Each business should adopt the model that works best in an area, but the founders believe that the model used by companies in other markets can also serve the Middle East and Africa, despite the differences in size and operation.
“The Middle East and Africa market is currently less mature than in the West, but it is growing faster than any other market in the world, with the number of sellers in the market increasing by more than 50% per year.” , Meyer noted. “The business model will work here because there have been so many amazing entrepreneurs in the Middle East over the past few years.. This is a great opportunity for salespeople to be able to do some of the hard work of building their brand so they can take a break or work on their next big thing.
Two years ago, it would have been a concern if Opontia or a similar company launched in both regions, as there simply wasn’t enough sellers. But with the recent and continued growth of sellers in the market, there are now more than enough brands for Opontia to to acquire. Currently, there are around 5 million third-party sellers on Amazon, of which 1 million are joining fair Last year. Opontia says its opportunity lies with the 30,000 sellers from Africa and the Middle East on the Amazon and Noon marketplaces.
Opontia adds that it will expand the acquired brands in their regions and in other parts of the world. The company is in talks with more than 100 small e-commerce brands and claims to have signed “multiple termsheets” with some of them..
Johnston and Meyer come from two distinct backgrounds in e-commerce. A former McKinsey consultant, Johnston worked on e-commerce strategy, private equity and post-merger integration at Big 3. Prior to that, he spent years doing venture capital, investing and banking in Southern Africa, London, New York and Singapore.. At the other hand, Meyer worked as Market Director for Lazada and CEO of Next Commerce, an e-commerce facilitator in the Middle East. In addition to acquiring brands, the founders will look to hire talent with industry experience, who will be responsible for managing and growing these post-acquisition brands.