How entrepreneur set logistics startup on firm growth pathThursday December 22 2022
To establish and see a start-up through the pre-seed, seed, and early growth and expansion phases in Kenya is impressive.
To do it in the middle of a pandemic and in a sector that lacks proper regulation is even more remarkable.
This is what Mark Mwangi has done in the last three years with Amitruck, a trucking logistics marketplace that is now gearing up to drive its expansion into the East African region.
To avoid being part of the statistics that shows that 70 per cent of Kenyans over 7.4 million start-ups fail, Mark knew from the start that he had to do his homework well.
Any sustainable business is built on the foundation of solving real problems. Amitruck is trying to solve the inefficiency in the logistics sector that leads to high costs.
And like most entrepreneurs, the idea to start Amitruck came to him after getting first-hand experience when he was contracting a transporter.
“It was interesting to find that up to 70 per cent of the final cost of goods is transport. When we first had a look at the space, we realised that there are middlemen or brokers and some deliveries have up to three brokers between a cargo owner and the trucker and they can consume up to 60 per cent of the delivery fee,” points out the CEO.
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Amitruck connects clients with transporters. Instead of meeting physically to haggle over prices and terms of delivery, the platform allows truckers to bid for work and set their prices.
For clients, it offers the convenience of accessing several service providers, saving them time that would otherwise have been spent visiting each.
By allowing clients to participate in the auction, Mark points out that transporters have had to get competitive in the pricing and services which he says has seen customers save up to 40 per cent of their costs.
With 14,000 vehicles currently signed up on its platform and working with over 300 business clients, the sector appears to have bought into Amitruck's business model.
But getting the problem right is only half of Amitruck's success story.
Mark, unlike many other start-up founders, was careful not to use loans as his primary source of funding for growth "because, with loans, one must have a repayment plan" which denies the young companies much-needed cash flow.
He eyed venture capital firms and angel investors mostly from the US, Europe, and Asia.
“For our first round, we approached 300 different investors, got into a discussion with 70, and got into a final with five and of the three that invested in us, two approached us. We had a success rate of below 1 per cent,” he says.
Apart from seeking investors, he also sought new partnerships that will fuel its growth into the future.
Amitruck was one of the five start-ups selected to join the first cohort of the “NINJA Accelerator” in Kenya, which offers a blend of local, Japanese, and international mentoring, expertise, coaching, and investor relations- customised to meet the needs of each venture over the course of three months which took place in July 2021.
Mark points out that one of the challenges they have had to contend with is the ‘unfriendly’ business environment and urges regulators to come up with more incentives that encourage innovation such as favourable tax regimes.
That the Covid-19 pandemic hit business hard is not in doubt.
While some companies and businesses benefited from the e-commerce boom that rose as a result of the containment measures, for Amitruck the pandemic has offered new growth opportunities.
“For us, it has been a mixed bag. On one end we saw a lot of business clients, especially in 2020. The supply chains were disrupted, issues at Mombasa port, lockdown, confusion on regulatory documents one needed to move, and queues at the border. Transporters asked for higher transport fees because of delays, border crossings, and lack of return loads. It was costing them more. We also saw customers asking for lower prices because demand was down,” says Mwangi.
On the positive side, customers saw Amitruck as a tool to manage the uncertainties and the chaos during the lockdown.
“Transport as a cost centre has changed during this pandemic, customers are now looking at the advantages of digitising to the last mile, and the kind of cost advantage they can get adding that Amitruck is also looking at the transporter’s ability to deliver to his/her customer well and the ability to have a flexible supply chain as well.”
The entrepreneur adds that over the past three years he has seen some big companies buying into their model.
Business success is reflected in the competency of its staff and one of the ways Amitruck has succeeded is by ensuring it has a good recruitment process which starts with identifying and documenting the roles and getting the people with the skills required for each job.
This, Mark says, ensures they have the right strengths and skill sets the business requires.
Relevance and growth
To stay relevant in an ecosystem which lacks systems and transparency, Mark says that Amitruck is focusing on one core issue, which is solving the high cost of transportation in a fair and transparent manner.
“We are in a market where trust is generally low, doesn’t matter how you look at it, whether B2B or B2C. Even in e-commerce, there has been a struggle to get trust through the system and by having transparency and giving a repeated good experience you can begin to build that trust. We want to continue to do that,” he emphasises.
Having settled well in Kenya, he says that they are eyeing more expansion.
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“We closed our seed round in February 2022 and our team is now almost 80 people and yes, we continue to sign more people, more cargo owners and more transporters. This is part of our strategy to start our expansion into East Africa even though operations are still quite nascent in terms of the people we want on board on the platform.”
Mark believes that the future is bright for his company, especially as the Covid-19 pandemic has changed the way business is transacted not only in Africa but globally and as e-commerce takes root quickly in the continent.
“There is a lot of space for companies to increase efficiency within the supply chain by going digital. Companies are beginning to realize that you have to change and innovate and the benefits of digitizing to the last mile will cause a reduction in human error, increase flexibility, free up capital to focus more on your core activity and the simplification of all the paperwork,” advises Mwangi.
“We continue to aggressively pursue the perfect delivery, that's our goal and that's where we are staying; continue to ensure we are enabling companies to access markets and that won't change. The only change you might see is geographical diversification as we grow into new markets,” he concludes.