Ghanaian e-logistics startup Jetstream Africa has announced today that it has secured $13 million in equity and debt pre-Series A financing to expand its operations globally.
Cauris, a fintech lender and private equity firm, provided the entirety of debt financing. Octerra, Wuri Ventures, Seed9, The MBA Fund, French development organization Proparco, and ASCVC, a venture fund established by Project44 executives, are some equity investors. Alitheia IDF and Golden Palm, two previous investors, also took part.
The funding round comes about 18 months after the Tema-based cross-border logistics platform announced a $3 million seed round (including $1 million in debt).
According to the company, the fresh investment will enable it to expand into new nations and keep improving its technological platform, which vertically unites disparate logistics and financing providers in the African trade market. Currently, the company operates in 29 (including 12 in Africa) nations.
According to the startup’s chief executive Miishe Addy, although the company operates two products line, the company has successfully achieved product-market fit correspondingly.
Jetstream Africa had two business lines at its seed round: one offered logistical services to cargo owners dealing with import and export, and the other distributed funding to freight forwarders. But during the past few months, Jetstream has combined the two offerings to cater to cargo owners only.
“Running those two lines side by side, we observed that the import or export business controls the supply chain,” she said on the pivot.
“Although the cargo owners and freight forwarders have a lot of information asymmetry, the importer and exporter can put pressure on the freight forwarder to digitize the supply chain. We simplified our business into just the import-export product line by directly them with a combination of trade financing and logistics.”
Tokunboh Ishmael, co-founder and principal partner at Alitheia IDF, one of Jetstream’s investors, says this round of funding, which supports the startup’s expansion to new markets, will see it capitalize on trade policies like AfCFTA, “enabling richer inter-continental trade which is needed to support inclusive economic development and unleash the continent’s full potential.”
More on Jetstream’s latest round and business model
Founded by Miishe Addy and Solomon Torgbor in 2018 to enable African businesses to see and control their cross-border supply chains, Jetstream aggregates private sector logistics providers at African ports and borders and brings them online.
Its new business strategy now resembles a freight forwarder. In addition to charging a fee and providing loans to individuals who need them, the company now participates in the end-to-end movement of shippers’ cargo (both import and export).
Typically, the traditional method for most cargo owners when they want to take out a loan to run their businesses is to go to banks to secure a letter of credit. Whether they get it depends on the bank of their counterparty, but that is time-consuming and inefficient for all involved.
The letter of credit system is ineffective, which forces the cargo owners on both sides of the transaction to look for alternate sources of funding that demand some collateral in exchange for their loans. They essentially receive working capital from Jetstream, backed by actual shipments.
The three-year-old firm, according to Addy, has a security stake in the cargo. Instead of handling the letter of credit itself, Jetstream underwrites loans through its banking partners that must be repaid within 15 to 90 days and distributes the loan proceeds to each supplier in the supply chain.
“If you’re importing 10 containers, in addition to paying for the actual good, importers have to pay the shipping line, customs broker on both sides, truck drivers on both sides, you have to pay a warehouse operator in some cases, or container terminal. There’s a minimum of nine different vendors you have to pay,” noted Addy, who co-founded Jetstream with COO Solomon Torgbor in 2018.
“And when someone applies for a Jetstream loan, they’re not just saying give me $50,000 but enough money to fund this entire shipment and pay these nine vendors. Also, we don’t give the money to the cargo owners but to the nine vendors directly.”
Jetstream has grown its trade finance product from the $1 million debt it secured in mid-2021 to about $9 million in total loans. Its projection is to increase that amount fivefold by the end of this year, Addy said.
The chief executive also noted that Jetstream changed its business model and went from disbursing one loan per month to up to 50 loans, becoming EBITDA positive.
The 44-man team, which competes with Sote, SEND, One35 Port and MVX, among others, has been able to strike several essential partnerships for its next growth phase, including multinational banks like Societe Generale and startups such as Lami and MFS Africa.
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