Egypt is home to one of Africa’s largest fleets, with more than 6 million cars (80% passenger cars) on the roads. According to this finding, most used cars are; their ratio to new vehicles is 3:1.
The used car market is not only huge in Egypt. It’s the same in almost every ‘popular’ country worldwide. Recently, there has been a rapid digitization of this market, with several startups overthrowing incumbents such as advertising and hoping to define the new era of used car sales platforms. Some include Britain’s Cazoo, India’s Cars24 and Spinny, Brazil’s InstaCarro, and Mexican Kavak.
Cairo-based Sylndr is a new player in a market where disorganized dealers and advertising dominate sales volume. The auto market where customers can sell and buy used cars has raised a $12.6 million pre-seed round — the largest of its kind in MENA and sub-Saharan Africa, outperforming what Rabbit, a 20-minute startup has been up to. convenience delivery, last brought in November.
Saudi Arabia-based venture capital firm RAED Ventures led the round. VC firms Algebra Ventures, Nuwa Capital, 1984 Ventures and Global Founders Capital participated, also involving several regional and global angel investors.
New cars are pricey; that explains the huge 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 in advertising, the buying experience of such 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 buyers and sellers of used cars in the markets,” co-founder and CEO Omar El Defrawy told businesstraverse.com in an interview. “That’s the core problem we’re trying to solve. Our vision as a company is to quickly become the most trusted used car dealer in Egypt and the region.”
Popular car models in Egypt cost about $15,000 on average. For many Egyptians, who earn less each year, that is a significant amount to part with. And unlike in developed countries where systems have been set up to help people finance vehicles, this is almost non-existent in emerging markets like Egypt, where only about 5% of used cars are financed.
“Imagine if you enable financing and make the cars much more affordable for people, that’s a core value proposition that we also want to deliver,” added El Defrawy, who co-founded Sylndr with Amr Mazen in November 2021.
Sylndr has yet to be launched to the public. However, it adapts its model to the Indian Cars24: buying cars from private individuals who want to sell them, buying them up for an agreed price, refurbishing them and then selling them on to new owners. According to the founders, they will also offer users a seven-day guarantee tied to various long-term financing options.
The car dealer will first launch the sellers and update its car lists. Mazen said Sylndr plans to open the platform to buyers in the fourth quarter of this year or in the first quarter of 2023.
Between these two events is the refurbishment of the cars. From our conversation, it appears that a refurbished car on Sylndr would be slightly more expensive than non-refurbished cars found on advertisements such as OLX and Contactcars. But the chief executive argued that Sylndr offers “fair and competitive prices”, and that consumers still prefer cars on Sylndr for its edge in quality and speed.
“It’s not about prices being higher; it’s a matter of paying for value. If you’re a consumer with no car experience, you’d want to buy something that gives you real value for the amount you’ve put into it,” claimed El Defrawy. “Customers buy used cars and try to do the renovation themselves, but nobody has that experience. That’s what we’re doing, and of course, if they can find that car and do this process in 24 hours, it’s going to be a much more fun and better experience.”
Image Credits: Sylndr
The pre-revenue startup plans to monetize retail sales, auction houses, dealerships, and B2B sales. El Defrawy said Sylndr could also look at additional revenue streams, such as interest from financing, insurance, roadside assistance and other value-added services. “We’re looking to develop that as we go,” he said.
Before starting Sylndr, El Defrawy spent 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 food delivery and e-commerce sectors with Souq.com, Hello Fresh and Cazoo. They view their background, the composition of their 40+ team and the capital-intensive nature of Sylndr’s market as reasons for increasing this major pre-seed round, despite talks of venture capital cooling amid public sell-offs and devaluation of tech companies.
“The secondary auto market is highly fragmented and consumers often have no trusted counterpart,” Omar A. Almajdouie, the managing partner at RAED Ventures, said in a statement.
“The market is huge, ripe for disruption, and we are excited to be a 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 proceeds of the investment would be spent on scaling the company’s operational capacity, technology infrastructure, growing inventory and building its retail and non-retail channels to customers. In a statement, Sylndr said it aims to more than double the size of his team by the end of the year. The company faces competition from the likes of Autochek, a Nigeria-based automotive platform that has recently entered North Africa through an acquisition.
