UAE Startup Melltoo Closes Pre-Series A Round With 500 Startups, Shorooq Investments, And Other Investors
In addition to potentially closing their Series A round in the first quarter of 2019, Melltoo is planning to launch the Impacter initiative in Saudi Arabia.
Melltoo, a secondhand e-commerce platform launched in Dubai in 2014, has closed a bridge to Series A round with the participation of 500 Startups, KISP Ventures, Khwarizmi Ventures and Shorooq Investments. The amount of funding has not been disclosed.
According to Melltoo co-founders, Sharene Lee and Morrad Irsane, one of the lead investors has already committed half of the Series A round.
As a secondhand e-commerce marketplace for used electronics, fashion, home, and kids' items, Melltoo plans to use the investment to expand operational capacity, including onboarding new dedicated couriers, and moving to a larger fulfillment center.
Furthermore, the new funds will help scale up Melltoo's Impacter. Launched last year, Impacter is an initiative that allows socially conscious users to list their used items for sale while donating sale proceeds to the charitable cause of their choosing. Buyers can see that the items they are buying are for charity and the amount that will be donated, while Melltoo handles the complete payment and delivery process.
Melltoo also offers a free electronics collection service to potential donors who prefer not to handle the sale process themselves. Collected electronics are reset, cleaned and sold on the marketplace with half the sale proceeds going to the cause selected by the donor.
Speaking about Impacter, Mahmoud Adi, Partner at Shorooq Investments, said, "Our region as a whole is used to buying more than we need and yet lack creative solutions to properly dispose of the excess goods in our companies and homes. I have used Melltoo to donate my personal belongings ranging from IT to general products, and it has been an extremely efficient and smooth process, which is so important. I encourage everyone and every company to use Melltoo, if they have any items that they want to throw away or donate or sell, like unused laptops and IT equipment. It's just so easy."
Melltoo partners with multiple UAE-based charities that support a variety of causes, from helping orphans to supporting refugees, including Emirates Red Crescent, Friends of Cancer Patients and The Big Heart Foundation.
Beyond the social benefit, the initiative has also become a successful part of the company's business model, says Irsane. "Since we started Impacter, our team has been reignited with passion because we strongly believe that what we are doing helps those who are in need," Irsane said. "The Melltoo community has also embraced the initiative and our user base and sales are growing rapidly. The recent investment allows us to expand Impacter and take it to the next level as we gear up for our series A."In addition to potentially closing the Series A round in the first quarter of 2019, Melltoo is planning to launch the Impacter initiative in Saudi Arabia with the support of Khwarizmi Ventures. "We see a great scope for Melltoo in Saudi Arabia and we see ourselves as strategic partners for their expansion in the country," said Yasser Alkadi, Founding Partner, Khwarizmi Ventures. "We have always been cross border partners for startups looking to expand in the region. We're excited to help them grow."
In terms of advice for other entrepreneurs wanting to raise funds, Irsane noted the following: "It can be tough to raise funding at the moment because many of the funds are themselves fundraising. And those with lots of capital to deploy are looking at later stage companies who need much larger checks than we did. However, investors are still around and looking for good deals so it's still a reasonably healthy environment for fundraising. A case in point, many of the investors that joined our round are early to growth stage investors. Furthermore, there is more and more interest from external investors, especially those coming from the East."
"And startup founders should know that, in the current tough economic times, healthy unit economics and low burn rates should be prioritized," Irsane continued. "Fundraising is not a given and founders should focus on building profitable businesses. The only exception to this is for businesses that are experiencing rapid growth without excessive marketing spend. If you're in this category, then you can take some liberties with profitability."