Nigerian last-mile logistics startup, Fez Delivery, has announced that it has raised $1 million seed investment in a round led by pan-African investor Ventures Platform. Other investors that participated in the seed round include Voltron Capital, Acasia Ventures, and other angel investors.
Founded in 2020 by CEO Seun Alley, CTO Femi Jose, Fez Delivery is a spin-off from a B2B janitorial service and a side hustle that Alley started two years before. The startup intends to use the seed investment to expand within Nigeria and then consider moving into other African markets including Ghana, Kenya, and South Africa as of Q4 2023. The startup says part of the investment will go into improving its technology and operation efficiency, hiring more people, and increasing its marketing spend.
Fez Delivery says it completed 200,000 trips last year and grew revenue by 20% month-on-month. It also claims to have over 17,000 customers using its platform (70% are individuals, while 30% are a combination of SMEs and startups). Some of its clients include Flutterwave, Kuda Bank, Moniepoint, OPay, Red Bull, and Famasi Africa.
The startup believes that its winning formula is its operating model which is a hybrid of on-demand and the hub and spoke model. It says that its competitors like Gokada and Kwik Delivery use the on-demand model.
According to Seun Alley, “So I like to refer to Fez as running 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.”
Last year, the startup introduced a new service called FEZ for fintech, which is aimed at assisting fintech companies in distributing debit cards and POS terminals to their customers and agents throughout Nigeria. In order to meet the high demand for this service, Fez Delivery has recently created a SaaS platform for enrolling and verifying third-party logistics providers who use two-wheeler vehicles, and have fleets with sizes ranging from five to ten, to help complete orders that they are unable to fulfill. These external partners earn a percentage of the revenue that Fez Delivery generates by charging customers on a per-delivery basis (based on distance and item size) and charging businesses a monthly flat-rate subscription fee (based on a specified number of deliveries).
Dotun Olowoporoku, general partner at Ventures Platform said his company decided to back Fez Delivery because its technology, which enables other market players to thrive, is well-aligned with the firm’s investment thesis to support market-creating innovation in underserved industries such as logistics.
Fez Delivery was one of the African startups selected for the Techstars Toronto 2022 Winter cohort.