In Africa, chartering vessels and processing ocean freight can be challenging. The sector is largely inefficient and fragmented. Merchants also struggle to access finance to perform cross-border trade in the continent. A couple of digital freight companies are tackling this problem, like Nigerian-based MVX. The company today is announcing its $1.3 million seed 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 a professional capacity building apps and websites for companies), Membere-Otaji was intrigued by how no online marketplace for vessels existed.
“I decided to figure out how to solve that problem of finding vessels because there were too many intermediaries, which made processes difficult,” he told Stock Market Pioneer. However, a few issues relating to not having the right team to build out the product stalled the company’s progress. In 2019, Membere-Otaji finally launched the company with CTO Tobi Amusan after securing a $100,000 pre-seed investment from Oui Capital, a pan-African VC firm.
The company was called MVXchange at first. Its business model revolved around providing a support vessel booking platform that matched vessel chartering requests made by operators with available Offshore Support Vessels (OSVs).
But in March 2020, the company made a sharp pivot and tweaked its model. CEO Membere-Otaji cites uncertainty of oil prices and the pandemic as reasons behind the decision.
“We couldn’t see ourselves doing vessel chartering for the long term because the demand for fossil fuels will definitely reduce over the next few decades. We wanted to do something scalable, something that was impactful, and something that we could be proud of in the next 20 years,” he added.
What followed was the launch of MVXtransit, a digital freight booking platform, helping cargo owners find deals on moving containers across Nigeria. This April, the company launched MVXpay, a finance and payment solution to provide trade finance for freight operators. However, both offerings are now rolled into one: MVX.
According to the CEO, MVX wants to make freight shipping and trade finance easier for African businesses by bringing booking and deployment processes online. The startup has expanded beyond Nigeria and claims that merchants from 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 the services provided, including trucking, warehousing, shipping, and cargo stuffing.
“We make it easy and convenient for businesses. Instead of trying to do everything themselves, which can be chaotic and cause distraction from their core businesses, we handle everything because we have all these service providers in one platform. So as shippers work with us, MVX works with like seven to 10 other service providers,” said Membere-Otaji.
The market for cross-border logistics services is said to hit revenues of $32 billion by 2025. Multiple companies are needed for the market to reach its full potential. That has been the case, and investors are noticing too. For instance, Ghana’s Jetstream offers a similar service and raised $3 million two months ago. SEND is another example; YC backs the startup.
However, what stands out for 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 worlds of fintech and trade. So the way it works is that with merchants looking to move shipments from Africa to the U.S. or China, some lack adequate capital to pay for freight or supply. With MVX, they can proceed to request credit. MVX passes it over to its financial partners, who lend to the consumers if they meet the minimum requirement. Next, MVX takes care of the shipment and delivers it abroad. Once the transaction is done, the merchant pays back, with all partners taking commissions.
“Our job really is to empower trade in Africa, and freight is a means to that. From every step involved in that process, from providing trade and finance to warehousing to payments processing, we want to play in all that space. There aren’t a lot of companies with that trading finance element doing that like us. And also, we see a huge potential in the offline market. Right now, the reason why we have this problem is that transactions are offline. Our strategy in capturing offline markets is also key.”
The pan-African freight company has already recorded more than 300 shipments this year but plans to end with 1,500. Per revenue and traction, the CEO claims the company has surpassed its 2020 numbers.
MVX raised money for its seed round from Africa-focused firms Kepple Africa, The Continent Venture Partners, Founders Factory, Launch Africa, and Capital Oak. Some angel investors in the U.S., Japan, Nigeria, and South Africa also participated. The two-year-old startup will use the investment to scale its operations, hire staff and improve its technology. MVX is also talking to investors to raise more money, most likely debt, for its trade financing product.
In a statement, Satoshi Shinada, general partner at Kepple Africa, said, “The trade sector in Africa is one that we believe is ripe for disruption. MVX is building a game-changing technology and platform to revolutionize how businesses in Africa move shipment and trade around the world.”