Fez Delivery, a Lagos-based last-mile logistics startup with hubs across Nigeria, has raised $1 million led by pan-African investor Ventures Platform with participation from Voltron Capital, Acasia Ventures and other angel investors.
Founder and CEO Seun Alley, in a statement, said the company plans to use the seed investment to deepen its work in Nigeria (which has a $10 billion transport and logistics market) while it considers expansion — from Q4 2023 — into other African markets, including Ghana, Kenya and South Africa. The startup also intends to improve its technology and operation efficiency, hire more talent and increase its marketing spend.
Alley, who worked for over a decade in Nigeria’s banking sector and later in startups such as OPay and Bloc, founded Fez Delivery in 2020. It was a spin-off from a B2B janitorial service and side hustle she opened two years prior. While running the business, Alley received several complaints from her customers regarding the janitors: Although they did thorough cleaning in the mornings, they were primarily absent to carry out the necessary touch-ups throughout the rest of the day. “We realized that this happened because the janitors went on lots of errands for our clients’ employees,” the chief executive told over a call. “And the reason for this, we learned, was because most of the places they were buying stuff from did not have a dispatch or logistics service.”
The situation is peculiar to many businesses across Nigeria, as evident in a simple market research Alley undertook before launching Fez Delivery. Alley said she spoke with entrepreneurs and small business owners, including those outside and within her circle, to ask about their major issues: talent and logistics topped the list.
While logistics is one of Nigeria’s fastest-growing industries, it is also one of its most fragmented. The sector is still pretty nascent in many parts of Africa and has barely scratched the surface even though the millions poured into startups — operating in various facets from haulage to last mile — are yet to build sustainable businesses. Meanwhile, in the last-mile category, pricing, reach and delivery times are common headaches that startups and small businesses encounter; these features are what Fez Delivery’s solutions optimize for, according to Alley. Individual customers can access its services via mobile and web apps to place and track orders, manage spend, collate data on specific business points and make payments. On the other hand, the startup offers APIs and dashboards to its business clients. Fez Delivery claims to have over 17,000 customers using its platform (70% are individuals, while 30% are a combination of SMEs and startups).
Last year, the two-year-old startup launched a vertical: FEZ for fintechs, where it helped fintechs deliver debit cards and POS terminals to all their customers and agents across Nigeria. To meet up with the demand, Fez Delivery recently developed a SaaS platform to onboard and verify trained third-party two-wheeler logistics platforms, with fleet sizes of about five-10, to help complete orders that it can’t fulfill. These third-party partners share in the revenue Fez Delivery makes by charging individuals per delivery (based on the distance covered and size of items) and businesses a monthly flat-fee subscription (based on a set range of deliveries).
Fez Delivery said it completed 200,000 trips last year and grew revenue by 20% month-on-month. According to its statement, some of its clients include Flutterwave, Kuda Bank, Moniepoint, OPay, Red Bull, and Famasi Africa.
The Techstars Toronto-backed platform faces competition in Nigeria, including Uber, via its Uber Connect product, Kwik Delivery and Gokada, among other upstarts. According to Alley, the hub and spoke model combined with on-demand operations makes Fez Delivery unique among similar businesses. “We pick items from customers in bulk and take them to a central location where they’re zoned before assigning them to riders to complete,” the CEO commented. Consequently, I like to describe Fez as operating a hybrid model. We have the technology and still own 30% of the assets on our platform. What that does is that if third-party partners don’t show up for any reason, we have backup and can complete our deliveries by ourselves. So for us, we think that gives us an edge because we also own a significant number of assets while also providing technology.”
Dotun Olowoporoku, general partner at Ventures Platform, explained in a statement why his company decided to invest in Fez Delivery, claiming that its technology, which promotes the success of other market players, is well-aligned with the firm’s investment thesis to support market-creating innovation in underserved sectors like logistics.
“I’ve come to the realization that we can develop and produce solutions around payment and core fintech. But there are other problems within the ecosystem that no one is looking at, one of which is logistics,” noted Alley, who also had a brief stint at mobility fintech Moove, when asked why she was building in the logistics and delivery space instead of fintech, where she has several years of experience.