Today, Moglix is a business-to-business procurement and supply chain transformation company valued at $2.6 billion. Yet like many startups in emerging markets, it began as a great idea with the need for capital.
Just a year after it was launched in India in 2015, Moglix crossed paths with an IFC-supported seed fund based in Singapore called SeedPlus, which provided young startups with seed funding and access to networking. The initial check from SeedPlus helped Moglix create a digital platform to address the fragmented, inefficient procurement system for buyers and suppliers of raw material, such as steel, cement, and packaging to small and medium sized enterprises. Moglix grew in the next two years and IFC invested directly in the company as it expanded across Asia and into shipping, logistics, SaaS solutions, and supply chain and export finance, becoming a unicorn — a privately held startup valued at more than $1 billion.
Rahul Garg, Founder and CEO of Moglix. Photo courtesy of Moglix.
“IFC is a fantastic partner because they have access to all emerging markets, enabling us to hold conversations across the world and learn about best practices,” says Moglix Founder and CEO Rahul Garg.
The platform that initially supported Moglix, IFC’s Startup Catalyst (ISC), was established to address funding gaps in underdeveloped venture capital ecosystems by investing in incubators, accelerators and seed funds across emerging markets. The program focuses on nascent ecosystems in the world’s poorest countries from the International Development Association (IDA) and countries facing fragility and conflict-affected situations (FCS).
ISC has helped create a pipeline of innovative companies with high-growth potential to receive later-stage investment. In total, it has supported more than 2,800 entrepreneurs, including 700 women, in 24 countries through 19 funds, including Flat6Labs Cairo and Tunis, Sarmayacar in Pakistan, Ibtikar in West Bank and Gaza, and Antler East Africa.
“Backed by IFC’s Disruptive Technologies and Venture Capital team and the expanded ISC Platform, we are eager to work with startups in emerging markets and give them the chance to grow and fund them directly as they become later-stage tech businesses, all while trying to address pressing challenges of our time” Sonneborn said.
The support is timely. Amid a slowdown in global venture capital investment, technology startups in emerging markets face challenges in raising funds. Venture capital investment in emerging markets rose significantly in 2021, but it was concentrated in a handful of countries and regions, including Brazil, China, India and Southeast Asia.
Incubators, accelerators and seed funds play an important role in the venture ecosystem. These early-stage investment vehicles provide startups and seed-stage entrepreneurs with much-needed capital, as well as the technical know-how, support, and mentorship to help young businesses survive and scale operations.
Dina el-Shenoufy, Partner and Chief Investment Officer of Flat6Labs. Photo courtesy of Flat6Labs
“IFC was the first major fund to invest in seed stage funds and support startup ecosystems in the Middle East and North Africa region,” says Dina el-Shenoufy, Partner and Chief Investment Officer of Flat6Labs, an Egypt-based accelerator supported by the program. “When we started in 2011, international venture capitalists wouldn’t even take our calls, because the Middle East at large wasn’t an attractive market for them, irrespective of stage. IFC had the foresight to see what we were trying to achieve, and today we do have international investors interested in Egypt. We could not achieve that without creating a pipeline of startups.”
One of the startups supported by Flat6Labs is Chefaa, a women-led online pharmacy in Egypt that offers medical supplies, medications, and health and hygiene products. The company received seed money and mentorship from Flat6Labs before they launched in 2018. Chefaa has raised more than $3.6 million in funding over five rounds to expand partnerships with 1,000 pharmacies, offering services to 7.5 million regular users who benefit from auto refills of prescriptions, dosage reminders, and the ability to consult an Arabic-speaking pharmacist at any time. The company is now expanding into Saudi Arabia with plans to extend services throughout the region.
“IFC has been with us from the beginning, supporting directly and indirectly,” says co-founder Rasha Rady. “They literally went miles to help us open lines of communications with potential partners we didn’t have access to before.”
Talented and innovative entrepreneurs in developing economies are eager to create the next Moglix, if given the chance.
“If I look at the goals of Moglix and the goals of IFC, there is a
lot of overlap in terms of development,” says Garg, citing the mutual commitment to empowering small- and medium-sized businesses, increasing sustainability, and improving gender equality. “Many tech businesses are
aligned with the goals of IFC, which makes for great partners.”
Published in December 2022