Egypt hosts one of the largest vehicle fleets in Africa, with more than 6 million cars (80% passenger cars) on its roads. According to this finding, most are used cars; their ratio to new vehicles is 3:1. But the used car market is not only huge in Egypt; it is in almost every country with a large population globally.
Recently, there has been a rapid digitization of this market, with a number of startups outperforming headlines, such as classified ads, hoping to define the new era of used car sales platforms. Some include Cazoo from the UK, Cars24 and Spinny from India, InstaCarro from Brazil and Kavak from Mexico.
Cairo-based Sylndr is a new player in a market where unorganized dealers and classified ads dominate sales volume. The auto marketplace, which allows customers to sell and buy used cars, has raised a $12.6 million seed round, the largest of its kind in MENA and sub-Saharan Africa, outpacing what Rabbit, a convenience delivery startup 20 minutes, shot last November.
Saudi Arabia-based early-stage venture capital firm RAED Ventures led the round. Venture capital firms Algebra Ventures, Nuwa Capital, 1984 Ventures and Global Founders Capital participated, as well as several regional and global angel investors.
New cars are expensive; that’s one explanation for the massive demand for used vehicles, especially in emerging markets. In Egypt, popular brands such as GB Auto, Mansour Automotive and Nissan are known to have a good resale value. But the experience of buying such cars in classified ads can be disappointing due to several issues, such as lack of trust and affordability.
“The main problem we are trying to fix in Egypt is a complete mistrust between buyers and sellers of used cars in the markets,” co-founder and CEO Omar El Defrawy told TechCrunch in an interview. “That is the core problem we are trying to solve. Our vision as a company is that we want to quickly become the most trusted used car retailer in Egypt and the region.”
Popular car models in Egypt cost around $15,000 on average. For many Egyptians, who earn less than that a year, that’s a substantial amount to part with. And unlike in developed countries where systems are set up to help people with vehicle financing, it is almost non-existent in developing markets like Egypt, where only about 5% of used cars are financed.
“Imagine if you enable financing and make cars much more affordable for people, that’s a core value proposition that we want to send as well,” added El Defrawy, who founded Sylndr with Amr Mazen in November 2021.
Sylndr has not yet been released to the public. However, it is adapting its model to India’s Cars24: it gets cars from people who want to sell them, buys them for an agreed price, refurbishes them, and then resells them to new owners. According to the founders, Sylndr also plans to offer a seven-day money-back guarantee, warranty, and flexible financing options to users.
The car retailer will first update their car listings by pitching them to customers who want to sell their cars. Mazen said that Sylndr plans to open to buyers in the fourth quarter of this year or the first quarter of 2023.
Between these two events is the renewal of the cars. Based on our conversation, a refurbished car on Sylndr would be slightly more expensive than non-refurbished cars found in classifieds like OLX and Contactcars. But the chief executive argued that Sylndr offers “fair and competitive prices” and that consumers would still prefer cars on Sylndr based on quality and speed of delivery.
“It is not a matter of prices being higher; it is a matter of paying for value. If you’re a consumer with no automotive experience, you’ll want to buy something that gives you real value for the amount you’ve invested,” El Defrawy said. “Customers buy used cars and try to do the refurbishment independently, but no one has that kind of experience. That’s what we do, and of course if they can find that car and run this process within 24 hours, it becomes a much nicer and better experience.”
The pre-revenue startup intends to make money from retail sales, auction houses, dealerships, and B2B sales. The Defrawy said Sylndr could also look at ancillary revenue sources, such as financing interest, insurance, roadside assistance fees and other value-added services. “We’re looking to build on that as we go,” he noted.
Before starting Sylndr, El Defrawy worked as an investment banker at EFG Hermes and CFO of Elmenus, an Egyptian food delivery company. Mazen has experience in the food delivery and eCommerce industries with Souq.com, Hello Fresh, and Cazoo. They credit their background, the makeup of their 40+ team members, and the capital-intensive nature of the used car market as the reasons behind this huge pre-seed round despite talk of chilling equity capital. risk amid public sell-offs and devaluation of tech companies. .
“The auto aftermarket is highly fragmented, and in most cases, consumers do not have a trusted counterparty,” Omar A. Almajdouie, managing partner of RAED Ventures, said in a statement.
“The market is massive, ready for disruption and we are excited to be part of Sylndr’s journey as they transform and set a whole new standard for the used car market. Given the unique background and experience of this team, we believe in their ability to crack this business model.”
The founders said the investment proceeds would go towards scaling the company’s operational capacity, technology infrastructure, increasing inventory and building its retail and non-retail channels for customers. In a statement, Sylndr said he is looking to more than double the size of his team by the end of the year. The company will face competition from Autochek, a Nigeria-based automotive platform that has recently made a foray into North Africa through an acquisition.
Algebra Ventures General Partner Laila Hassan said in a statement: “The team’s competence, coupled with massive business potential within Egypt and beyond, forges a strong path to success. Supporting these exceptional entrepreneurs at such an early stage represents Algebra Ventures’ ‘Founder First’ strategy.”