Topship, a Nigerian digital freight forwarding startup announced that it has raised $2.5 million in a seed round led by Flexport. The recent YC-combinator alumnus has other investors in this round including Soma Capital, Starling Ventures, Olive Tree Capital, Capital X and True Capital. Individual investors such as Immad Akhund, Mercury CEO and Arash Ferdowsi, co-founder of Dropbox were also involved in this round.
Founded in 2020 during the pandemic, Topship helps African businesses ship their goods to any destination in the world. CEO and co-founder Moses Enenwali says that it helps about 1,500 merchants move cargo and parcels from Nigeria to more than 150 countries. For now, it only receives cargo deliveries from the U.S., the U.K and China for Nigerian merchants.
Topship earns revenue by selling shipping insurance and taking a margin on transactions. Enewali however said the company is exploring other revenue streams, including trade financing and customs clearance charges. The company claims it has recorded ~50% month-on-month revenue growth since getting into YC.
According to Enewali in a discussion about Topship’s revenue growth after YC with Techcrunch, “I think what YC does more than anything is just push you to dive as deep as possible in understanding your users.”
“Looking into the future, a lot of it’s coming from that ethos of the user being the most important piece of the puzzle, and we have to be obsessive about it. We’re taking all the learnings and insights that we’ve learned from our users over the past five months or six months and building it into the product in a way that is merchants-focus,” he adds.
Topship’s business model focuses rather on air cargo even as others explore a mix of air, ocean and truck haulage pioneered by Flexport. Now Enewali says that he does not think that the Flexport model will work in Africa because it is heavily dependent on ocean cargo movement
“The reason why the Flexport model wouldn’t work here is it’s heavily invested in ocean freight and we don’t have enough ports on the continent. For example, in Nigeria, we have one function port, and for ocean freight to work, we need ports, railways and roads for trucking. But we don’t have the roads, and we don’t have the railways,” said the CEO, giving reasons why Topship doesn’t involve itself with ocean cargo.
“It’s difficult to connect the continent with ocean freight. Flexport’s business model makes a lot of sense even with how they attack problems aggressively, and I love that. But for Africa, we need to tweak it to fit the use case here. So what we’ve seen is the way to connect the continent is via air. Every country and major city on the continent has a functioning airport, and airlines are flying to all those airports daily.”
Topship says that is considering invitations from merchant groups to start operations in Ghana, Kenya and Tanzania. So this new funding will help it analyse the possibility of starting operations in these countries. Some of the funding will also be used to improve its asset-light technology and build out a proprietary global shipping infrastructure to make imports and exports significantly faster and easier.
Other African competitors in this business include as Sote, SEND and OnePort365 who just secured $5 million in a seed Funding round last month.
