Earlier this year, we participated in Sylndr’s $12.6M pre-seed round alongside Raed Ventures (lead), Algebra Ventures, GFC and a number of prominent angel investors.
Sylndr is an automotive-focused e-commerce platform aiming to disrupt the traditional car-buying experience, via displacing the existing car dealership and classifieds industry. Via an intuitive and convenient e-commerce platform, consumers can reliably and transparently: buy or finance used cars, trade in or sell their current vehicle, sign contracts, and schedule as-soon-as-next-day delivery or pickup.
Marketplaces are inherently complex to operate. As opposed to vertical e-commerce platforms, they have to solve for two parties - both demand and supply, who often have misaligned incentives. The marketplace creates a layer in between buyers and sellers (i.e. a middleman) and therefore, needs to offer enough utility/benefits to both sides to justify its existence and adoption. These complexities are compounded when the marketplace facilitates capital intensive items such as cars, like Sylndr does.
While evaluating investment opportunities, the above points are paramount to keep in mind. The following are some high-level qualitative and quantitative points that helped guide our investment decision, and pushed us to invest:
- We developed deep conviction in the founding team, who are comprised of senior talent from global comparables (Cazoo, Carvana), investment banking (EFG Hermes) and have significant experience scaling growth-stage startups (ElMenus, Cluno, HelloFresh, Souq), managing complex operations (Uber), and scaling technology products (Nextdoor, Salesforce, Intel). We believe the breadth of experience the founding team possesses is unique and will guide the business through its ups & downs
- The company had a fully developed C-suite from inception of the business, which greatly mitigates executional risk from our perspective, covering a wide range of areas including commercial, growth, operations, fundraising, strategy, and logistics. In addition, the c-suite’s close proximity to the investment banking sector in Egypt eases the process to acquire debt for capex requirements, a key lever for Sylndr’s success
- The automotive industry and car-buying experience is ripe for disruption with inefficiencies across both sides of the marketplace: 1) the demand side offers a poor customer experience, with a lack of transparency & trust, increasing risk in a transaction and 2) the supply side offers poor availability and is extremely fragmented, with over 18K car dealers in Egypt and no dealer group capturing over 1.0% market share. These issues create a clear gap in the middle for a tech-enabled marketplace, enabling consumers to transact reliably and without information asymmetry
- Automotive e-commerce is a proven and globally transferable business model, with successful global comparables such as Carvana (US), Cazoo (UK), Cars24 (India), Auto24 (Germany), Kavak (Mexico). We believe that the success of this model in other emerging markets is a strong indicator for Sylndr’s potential in Egypt
- Sylndr’s proposed fintech and insurtech solutions offer a large opportunity to cross-sell services that can enable financial inclusion and substantially increase the average revenue and margin per car sold
- A large total addressable market ($14B in Egypt alone with 2K+ used cars sold daily), can allow Sylndr to achieve significant scale by penetrating only a small percentage of the market
- The company has a first-mover advantage, which allows it to become the go-to destination for purchasing used cars in Egypt, gain brand awareness and defensibility (i.e. a moat)
Arnav Danthi is Senior Associate at Nuwa Capital.