In Africa, chartering vessels and handling ocean freight can be difficult. The sector is largely inefficient and fragmented. Traders are also struggling to access finance to trade across borders on the continent. A few digital freight companies are tackling this problem, like the Nigerian company MVX. The company is today announcing its $ 1.3 million funding round to bolster its efforts.
Tonye Membere-Otaji thought about the idea for MVX in 2016. Having worked in the maritime industry (running his family business and in professional capacity building applications and websites for businesses), Membere-Otaji was intrigued by how there was no online market for ships.
âI decided to find a way to solve this ship finding problem because there were too many middlemen, which made the processes difficult,â he told TechCrunch. yet, a few issues with not having the right team to develop the product blocked the company’s progress. In 2019, Membere-Otaji finally launched the business with CTO Tobi Amusan after obtain a pre-seed investment of $ 100,000 from Oui Capital, a pan-African venture capital firm.
The company has been called MVXchange at the start. Its business model was to provide a support vessel reservation platform that matched vessel charter requests made by operators with Offshore Support Vessels (OSVs).
But in March 2020, the company took a sharp turn and fine-tuned its model. CEO Membere-Otaji Cites Oil Price Uncertainty And Pandemic As Reasons For Decision.
âWe didn’t see ourselves chartering ships in the long term because the demand for fossil fuels will certainly decrease over the next decades. We wanted to do something scalable, something impactful and something we could be proud of over the next 20 years, âhe added..
What followed was the launch of MVXtransit, a digital freight booking platform, helping freight owners find deals on moving containers across Nigeria. Last April, the company launched MVXpay, a finance and payment solution to provide commercial financing to freight operators.. However, the two offers are now rolled in one: MVX.
According to the CEO, MVX wants to make freight transport and trade finance easier for African businesses by bringing booking and deployment processes online. The startup has spread beyond Nigeria and claims that traders in the West African country, as well as Kenya, South Africa, Ghana and Rwanda, can use its platform to move freight in and out of their countries.
MVX charges a commission for services provided, including trucking, warehousing, shipping and stuffing of cargo.
“We make it easy and convenient for business. Instead of trying to do everything themselves which can be chaotic and cause distraction from their core business, we take care of everything because we have all of these service providers on one platform. So because the shippers work with us, MVX works with seven to ten other service providers, âMembere-Otaji said.
The cross-border logistics services market is said to reach revenues of $ 32 billion by 2025. Several companies are necessary for the market to reach its full potential. It has been, and investors are noticing it too. For example, Jetstream from Ghana offers a similar service and raised $ 3 million two months ago. SEND is another example; YC supports the startup.
yetWhat emerges from MVX, according to Membere-Otaji, is that the company also sees itself as a trade finance company.
The concept brings together the best of both fintech and retail worlds. So the way it works is that with traders looking to move shipments from Africa to the United States or China, some lack sufficient capital to pay for freight or supplies. With MVX, they can apply for credit. MVX sells it to its financial partners, who lend to consumers if they meet the minimum conditions. Then MVX takes care of the shipment and delivers it abroad. Once the transaction is made, the merchant reimburses, all partners taking commissions.
“Our work really is to strengthen trade in Africa, and freight is one way. From every step involved in this process, from delivering commerce and finance to warehousing to processing payments, we want to play in this whole space. There aren’t many companies with this element of trade finance that do that like us. And also, we see huge potential in the offline market. Right now the reason we are having this problem is that the transactions are offline. Our strategy to conquer offline markets is also essential.
The pan-African freight company has already recorded more than 300 shipments this year but plans to do away with 1,500. By revenue and traction, the CEO says the company has exceeded its 2020 figures.
MVX has raised funds for its seed cycle from Africa-focused companies Kepple Africa, The Continent Venture Partners, Founders Factory, Launch Africa and Capital Oak. Some angel investors in the United States, Japan, Nigeria and South Africa also participated. The two-year startup will use the investment to evolve its operations, hire staff and improve its technology. MVX is also in talks with investors to raise more money, most likely debt, for its trade finance product..
In a statement, Satoshi Shinada, general partner of Kepple Africa, said: âThe business sector in Africa is one that we believe is ripe for disruption. MVX is building a revolutionary technology and platform to revolutionize the way African businesses move shipping and trade around the world.