Egypt is home to one of the largest vehicle fleets in Africa, with over 6 million cars (80% of which are passenger cars) on its roads. According to this finding, most are used cars; their ratio to new vehicles is 3:1. ButThe used car market is not only huge in Egypt; it is in almost every country with a large global population.
Recently, there has been a rapid digitization of this market, with several startups disrupting incumbents such as classifieds and hoping to define the new era of used car sales platforms. Some include Cazoo in the UK, Cars24 and Spinny in India, InstaCarro in Brazil and Kavak in Mexico.
Cairo-based Sylndr is a new player in a market where unorganized resellers and classified ads dominate sales volume. The auto marketplace, which allows customers to sell and buy used cars, raised a $12.6 million pre-seed round – the largest of its kind in the MENA region and sub-Saharan Africa, surpassing what Rabbit, a 20-minute convenience delivery startup, pulled last November.
Saudi start-up venture capital firm RAED Ventures led the round. Venture capital firms Algebra Ventures, Nuwa Capital, 1984 Ventures and Global Founders Capital participated, along with several regional and global angel investors.
New cars are expensive; this is one of the explanations for the massive demand for used vehicles, particularly in emerging markets. In Egypt, popular brands such as GB Auto, Mansour Automotive and Nissan are generally known to have good resale value. But on the classifieds, the buying experience of these cars is disappointing due to several issues such as lack of trust and affordability.
“The main problem we are trying to solve in Egypt is a complete mistrust between used car buyers and sellers in the markets,” co-founder and CEO Omar El Defrawy told TechCrunch in an interview. “This is the central problem that 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 every year, it’s a substantial amount to shell out. And unlike in developed countries where systems are in place to help people finance their vehicle, it is almost non-existent in developing markets like Egypt, where only around 5% of used cars are financed.
“So imagine if you turn on the funding and make cars much more affordable for people, that’s a core value proposition that we want to ship as well,” added El Defrawy, who founded Sylndr with Amr Mazen in November 2021.
Sylndr has not yet launched to the public. However, he is adapting his model to that of Cars24 in India: getting cars from individuals who want to resell them, buying them back at an agreed price, reconditioning them, and then reselling them to new owners. According to the founders, they will also provide a seven-day guarantee tied to various long-term financing options to users.
The car dealership will first update its car listings by launching them to customers who want to sell their cars. Mazen said 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 refurbishment of cars. From our conversation, a refurbished car on Sylndr would be slightly more expensive than non-refurbished cars found on classifieds such as OLX and Contactcars. But the chief executive argued that Sylndr offers “fair and competitive pricing”, and that consumers would still prefer cars on Sylndr based on quality and speed.
“It’s not about the price being over; it’s a matter of paying for value. If you are a consumer with no automotive experience, you would want to buy something that gives you real value for the amount you have invested,” El Defrawy said. “Customers buy used cars and try to do the refurbishment independently, but nobody has that kind of experience. That’s what we do, and of course, if they can find that car and complete this process in 24 hours, it becomes an even more enjoyable and better experience.
The pre-revenue startup intends to make money from retail sales, auction houses, dealerships, and B2B sales. El Defrawy said Sylndr could also look at ancillary revenue streams such as interest from financing, insurance, roadside assistance fees and other value-added services. “We’re looking to develop that as we go along,” he noted.
Prior to founding Sylndr, El Defrawy worked six years as an investment banker at EFG Hermes and one year as CFO of Elmenus, an Egyptian food delivery startup. Mazen has experience in the food delivery and e-commerce industries with Souq.com, Hello Fresh and Cazoo. They credit their track record, 40+ team composition and the capital intensive nature of the used car market as the reasons for lifting this big pre-seed round despite talk of capital chilling. -risk amid public sales and technology companies. ‘ devaluation.
“The automotive aftermarket is highly fragmented and more often than not consumers do not have a trusted counterpart,” Omar A. Almajdouie, managing partner of RAED Ventures, said in a statement.
“The market is huge, ripe for disruption, and we are thrilled 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 break this business model.
The founders said proceeds from the investment would be spent on scaling the company’s operational capacity, technology infrastructure, growing inventory and building its sales channels at the retail and non-retail for customers. In a statement, Sylndr said he plans 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 recently made inroads in North Africa via an acquisition.