Egypt’s Pylon gets $19M to scale software for water and electricity distribution companies

Pylon, an Egyptian infrastructure management platform for water and electricity companies in emerging markets, has raised a $19 million seed round.

The round, a combination of debt and equity, was led by U.S.-based Endure Capital, which is backed by British International Investment (formerly CDC Group), the development finance institution of the U.K. government. Participating investors include Cathexis Ventures, Loftyinc Ventures, Khawarizmi Ventures and several unnamed angel investors.

Pylon currently operates in Egypt and the Philippines. Part of the seed investment will allow Pylon to expand to other countries in emerging markets, including Southeast Asia, Latin America and Africa. This funding is the company’s first venture round. CEO Ahmed Ashour said he and his co-founder, CTO Omar Radi, had bootstrapped Pylon since 2017.

Ashour worked in the metering and utility business for more than a decade and led the implementation of smart metering technologies — particularly hardware– across Africa, Europe, Asia and the Middle East for various companies.

In 2016, he found a gap in the market for solutions tailored to the needs of water and electricity distributors in Egypt and other emerging markets. He said these entities used software designed for developed economies with different needs and challenges from the likes of Siemens, Oracle and SAP that couldn’t meet distributors’ demands in emerging markets.

“We have seen them [foreign software] used in other projects but eventually experienced great failures. We started [Pylon] to replace them because their solution failed on the ground,” Ashour told TechCrunch on a call.

The chief executive said Pylon solves several challenges for water and distribution companies. First, they incur a very high rate of uncollected bills and thus miss out on huge revenues. Second, they experience high electricity costs and water theft. Thirdly, technical losses happen on the grid and the network — whether for lack of maintenance or law enforcement. These three issues contribute to these entities losing 40% of their revenues and give rise to the last issue — these entities being unable to upgrade their solution or have a smart infrastructure in place due to high costs.

Pylon builds solutions for these water and electricity distribution companies to make them efficient and stanch the bleeding — the company calculates hundreds of billions of losses (in dollars) across emerging markets per year. It’s a massive opportunity to increase the aggregate revenues and top line of those utilities by 50%.

Here’s how it works. Pylon’s software gathers data from the grids, analyzes it, and detects where theft and losses occur along the supply process. It then automates billing processes for the companies, similar to how telecom providers in these markets have done over the years.

With no upfront investment, Pylon says it can help utility companies reduce their losses to 8%, in addition to improving their top line. The company said it doesn’t charge its customers an upfront cost for its hardware. However, its smart metering-as-a-service (SMaaS) model makes it easy for cash-conscious utility companies to deploy its solution at scale.

We believe that the electricity sector is following the footsteps of the telecom industry and the curve is starting to show. So we just mirrored the billing solution, and with the data detection, we can detect who exactly is stealing electricity and where the losses are happening,” said the CEO.

“Also, since those utilities are cash-strapped and cannot upgrade, we offer them this solution as a subscription model. So it’s a low-capex model where they subscribe with us, pay around 10-12% of the initial cost of their previous solution, and can recuperate the revenues. So just by signing with us, they start making more money and increasing their top line and bottom line.”

Over 12 different utilities (seven in the private sector and five in public) use Pylon. They serve more than 1 million metering endpoints across 26 separate meter models in Egypt and the Philippines.

Pylon grew its revenues by 3.5x in 2021 and claims to be profitable. But aside from building a thriving business, the founders are particular about how Pylon’s smart electricity grids foster sustainability of the environment.

We believe big time in our role in helping the environment and helping with the challenges that we are currently facing,” the CEO said. “Emissions coming from the electricity sector is one of the biggest sources of CO2 emissions on the planet. We are able to make electricity efficient and reduce [emissions] by 25% when utilities subscribe with us.” 

One of its goals is to achieve 1 gigaton of total CO2 emissions reduction by 2035. On the other hand, water losses in emerging markets also reach over 45 million cubic meters per day. “Pylon can reduce this by up to 22%, potentially providing enough water to serve over 40 million people,” the company said.

The Y Combinator-backed startup believes the market opportunity in the water and electricity distribution space is worth over $20 billion across 10 emerging markets. However, it is currently focusing on one-fourth of that figure which covers Egypt, the Phillippines, Brazil and Africa. Ultimately, the plan is for the Egyptian startup to capture more market share over time, Ashour said, and an expansion to Southeast Asia, another fragmented market, is in the cards.

But these are all long-term projections. In the near future, next year to be exact, Ashour said Pylon plans to reach 3 million meters across its markets, representing a 4x year-on-year growth. The startup is already working with multiple companies across two continents that have deployed more than 2 million endpoints of Pylon’s smart grid technology across 15 distribution companies.

Getting its technology right will be essential in this next phase of growth. Therefore, securing this seed financing — one of the largest in the MENA region — presents Pylon with the chance to advance its engineering and product development.

Egyptian social commerce startup Brimore raises $25M led by IFC and Endure Capital

The Egyptian social e-commerce market will be worth over $14.8 billion by 2024. The opportunity in the market can be attributed to the growth in online social sellers in the country, over 1.25 million them, helping little-known brands sell and distribute their goods via different networks.

Brimore–a market leader in the country and, to an extent, Africa–off the back of witnessing impressive growth in the last three years, has raised $25 million in a Series A round. The company was founded by Mohamed Abdulaziz and Ahmed Sheikha in 2017.

While working in the FMCG business, both founders witnessed how difficult it was for emerging brands to get their products to the mass market due to the dominance of established brands, who, for the most part, had built distribution infrastructure for themselves over the years.

On the other end, thousands of individuals, particularly women and stay-at-home moms, wanted to start their e-commerce shops but had no clue how to go about it, nor did they have products to sell.

“We started working on Brimore with the mindset of actually manufacturing products ourselves. However, producing our products wasn’t the wisest decision at that time as it was a very asset-heavy model,” said CEO Abdulaziz to TechCrunch in an interview.

“So we started scaling with listing different products. And at the same time, it was very insightful to see how the network formed on the other side. From a seller perspective, we started onboarding more and more sellers. Most of them happen to be women.”

Brimore connects both worlds via an app as an omnichannel social commerce platform. So, small and medium-sized suppliers could give these individuals–who double as sellers and word-of-mouth marketers–access to these emerging products. This way, these manufacturers have advertising and marketing on lock while these sellers start their e-commerce businesses and earn extra cash.

Image Credits: Brimore

Over the past three years, Brimore claims to have grown around 400x in revenue. More than 300 suppliers with approximately 8,000 different SKUs from packaged foods, personal care, and household goods are on the platform. The social commerce platform has also built a network of 75,000 sellers (74% of them are women) covering 27 cities, primarily rural and remote areas, in Egypt.

Brimore, in a statement, said it uses “its unique infrastructure–which is an ecosystem of supply, demand, logistics and finance– and proprietary technology to avail market penetration opportunities to emerging brands owners.”

“We are building a smart and reliable infrastructure and a full ecosystem that enable masses to do commerce. So anyone– with a shop or a stay at home mom–can do commerce business with Brimore either online or offline,” said Ahmed Sheikha, the company’s chief business and investment officer.

When sellers register on the platform, they see various product images from different manufacturers. They share these pictures on their socials: Facebook, Instagram, WhatsApp, Telegram, generate orders and place them on the app. Once Brimore confirms, its delivery process depends on where the sellers want their products delivered: to them or their end consumers. The founders say that while sellers often want the products at their doorsteps, the availability and flexibility of both options differentiate Brimore from similar social commerce platforms such as Taager.

Brimore gets a margin from the difference between the suppliers and sellers’ prices. The company runs its warehousing and last-mile and fulfilment infrastructure through a spin-off called Milezmore; before last year, third-party logistics handled those operations.

Abdulaziz, highlighting how beneficial Brimore has been to its sellers, said that 24% of them report signal ‘significant improvement’ in their lifestyle and 88% report an increase in income since they began using the platform.

The next phase for Brimore would be to “grow in Egypt by 50x within the next couple of years,” the chief executive said in a statement. Other use of funds entails expanding its logistics and operational infrastructure, doubling its staff size, triple product catalogues and quadrupling its sellers and suppliers network.

Abdulaziz, on the call, also mentioned Brimore’s plans to introduce financial products, particularly credit and replicate its Egyptian efforts across other African markets.

“We want to crack the concept of go to market in Africa. We know that Africa is like 54 different markets with distinct dynamics of every market,” he said. “Our vision is if we crack the concept of go-to-market through people and reaching the online and offline and the component of trust all together, towards the new age of commerce, the cross border trade will be our next thing. Anyone can produce anything can sell anywhere because we enable the hard part about market access.”

The International Finance Corporation (IFC) and Endure Capital led the new financing round. Walid Labadi, IFC’s country manager for Egypt, said this is the corporation’s largest direct investment in the social commerce space globally.

Other investors include fintech giant Fawry, Flourish, Endeavor Catalyst Fund. Existing investors who participated in its $800,000 seed round and $3.5 million Series A, such as Algebra Ventures (led both rounds), Disruptech and Vision Ventures, participated.

Egypt’s Breadfast wants to build ‘Gopuff for Africa and Middle East’, gets $26M backing

The market for grocery delivery across Africa and the Middle East is worth over $50 billion. And Egypt, buoyed by a young and growing population, is a big market across both regions.

Investors are beginning to back their picks to capture a large chunk of the nascent but fast-growing sector, mirroring how things have played out in Europe and the U.S. this past year.

To that end, Breadfast, an online grocery delivery company that wants to become a regional leader in the sector has raised $26 million in Series A financing from an impressive group of investors. They include lead investors Vostok New Ventures and Endure Capital and participating investors JAM Fund (led by Tinder co-founder Justin Mateen), YC Continuity Fund, a large unnamed Saudi-based fund, Shorooq Partners, 4DX Ventures and logistics giant Flexport.

The investment is coming two years after Breadfast raised a $2 million pre-Series A round. In total, the Egyptian on-demand delivery company has secured more than $30 million.

The story of Breadfast started in 2017 with bread and bakery when Mostafa Amin, Muhammad Habib and Abdallah Nofal conceived the idea for an on-demand bakery service that delivers freshly made bread and pastries to customers. Now, the company has evolved into a full-on online grocery store with more than 2,500 SKUs.

In a call with TechCrunch, CEO Amin said the founders started with bread because it was the “most basic food unit in an Egyptian household.” They called it Breadfast Tomorrow and it was the company’s first model, delivering bread the next morning after customers made their orders.

Breadfast employed a mix of improved customer experience (from what customers expected from traditional players) and a native supply chain process to gain entry into the market, said Amin. He noted that the company was one of the early adopters of operating a native supply chain globally before the arrival of rapid online grocery delivery companies such as Gorillas, Jiffy and Flink. In 2017 when Breadfast launched, the more prominent companies either used marketplace or aggregator models: think Instacart and Postmates.

“When we started pitching to investors in 2017, they thought we were crazy and were like ‘We’re not going to invest in your company because you guys are doing an asset-heavy model. Why not do a marketplace model and go and aggregate from the bakery shops all over Cairo?” the CEO recounted.


Breadfast supplies

Fast-forward four years and rapid on-demand delivery is one of the hottest startup sectors in the world. It has changed how people consume their daily essentials with companies using micro-fulfilment points and asset-heavy models to make quick deliveries under 10-30 minutes.

For Breadfast, the journey to reach the point where it could facilitate fast deliveries took some meticulous planning. After providing next-day delivery for bread, the company began to add more products (supermarket items such as coffee, dairy, meat, fruits, vegetables, personal hygiene products and some electronics, turning into an online supermarket).

Then upon graduating from Y Combinator’s summer batch in 2019, Breadfast finally built its micro-fulfilment points and switched its delivery time to 60 minutes.

Now, Breadfast oversees every part of its supply chain. The company owns some of the products it distributes (like bread and coffee), sources other goods from FMCGs such as Unilever, Pepsi and Coca-Cola while distributing them across its web of dark stores and operates last-mile delivery to customers. 

With all it needs in place, Amin said the company is looking to accelerate its delivery time to 20 minutes in a couple of months after the company upgrades its infrastructure.

“We’re trying to build Gopuff for Africa and the Middle East in a nutshell,” he remarked.

Breadfast currently serves 170,000 households in Egypt with more than 2,500 supermarket items. It claims to have more than a 65% customer retention rate month-on-month; revenue has also grown 4x from 2019 to 2020.

Amin said the company is targeting to deliver 6 million orders in Egypt in the next 12 months. Part of what will drive that is using the investment to expand across eight cities in Egypt, scale its technology and grow the team

“In a couple of months, the total number of dark stores Breadfast is going to operate will be between 40 and 50 in Egypt,” the chief executive continued.

According to Amin, the more than 1,500-strong company (including riders) is also looking southward on the continent into sub-Saharan Africa. The CEO said Breadfast might enter one of the region’s markets in the next two months; however, he didn’t mention which country.

Next year, though, the Egyptian company plans to go all out across Africa and the Middle East and is expecting to close a Series B round to that effect. In two years, Amin projects that Breadfast will have almost 500 dark stores across both regions.

In reference to the company’s plan to expand its on-demand grocery delivery across Africa and the Middle East, the investment manager at VNV Global, Björn von Sivers said, “Over the past few years, Breadfast fueled its growth by offering something that’s highly scarce in emerging markets; an exceptionally good customer experience and solid operational excellence. We see Breadfast becoming one of the most successful companies to come out of Africa and the Middle East.”

Though Breadfast is the most-funded local company in the sector, both in Egypt and sub-Saharan Africa, Amin knows competition similar to what markets such as the U.S. and Europe have will take place on the continent. Already, local newcomers such as Appetito, GoodsMart, Rabbit are pulling their weight despite the presence of more established regional players like InstaShop.

“Egypt now is one of the hotspots for Africa and the Middle East, so everyone is taking a deep look into the market,” said the CEO. “But we’re very excited about the competition because, at the end of the day, it’s something good for the customers and also keeps all the companies trying to be innovative, competitive, and better every day.”