Why We Invested: Illa is Powering Middle-Mile Logistics in Egypt Using Technology

When/how did TLcom first meet the founder(s)? What stood out?

Illa is TLcom’s first investment in Egypt - we came in at Series A. We first met the company’s four co-founders at a conference in New Cairo in 2019. Subsequent interactions with CEO Mahmoud El-Zomor, COO Alaa Jarkas, Head of Digital Transformation Ahmed Sakr and CTO Hossam Saraya confirmed that a high-quality team led the Egypt-based trucking platform with deep experience in FMCG. Many of the company’s leaders bring extensive experience from top-tier companies like Coca-Cola and the Clorox Company. 

A couple of elements stood out in our early interactions. First, Mahmoud’s leadership. Illa’s CEO is an energetic and visionary entrepreneur with first-hand knowledge of the logistics and supply chain challenges in Egypt and Africa. It was clear that he combined vision with strategic clarity. His strategy placed a clear emphasis on Illa’s driver network within the company’s value chain. Illa put its drivers at the company's core. Second, despite the company being early on its journey, we liked that Illa had already forged some notable partnerships with blue-chip FMCG clients.  

Why did the founder(s) choose to build this COMPANY? What problem is the COMPANY solving?

Illa has built a middle-mile logistics platform to serve mid- and large-sized players in the FMCG sector, which relies critically on the efficiency of its supply chain and distribution channels and partners. Solid middle-mile logistics is critical to ensuring the availability of FMCG companies’ products to their customers, particularly in markets like many of Africa’s, which often have operationally complex routes to market. 

The continent’s logistics and distribution sector has large and obvious infrastructure gaps, including fragmented, small and traditional truck supply, poor road networks, and low visibility of product/truck movements due to a prevalence of manual tools and ways of working. The result is supply disruptions, stock-outs, sub-optimal capacity and route optimisation, high costs for FMCGs and, consequently, high end prices for consumers.

Illa is positioning itself as the primary tech-backed B2B middle-mile logistics provider in Egypt. The company’s business model is aggregating the supply and demand of trucks and using their technology to optimise routes, increase visibility and availability of trucks, and, in the long term, reduce the cost of logistics.

What is the nature of the market opportunity the COMPANY is addressing?

The market opportunity is massive. Africa’s consumer spending is projected to surpass $2 trillion by 2025(1), and nearly half of household retail spend is on FMCG products. In Egypt alone, consumers spend over $50 billion annually on FMCG products, and companies spend $2.7 billion on logistics. Generally, logistics companies on the continent have mainly focused on first-mile, maritime or last-mile. Middle-mile has been underserved for the most part and is fragmented. Large FMCGs typically operate proprietary middle-mile infrastructure or work with independent contractors that usually lack the technology and operational capacity to handle large and frequent volumes. 

Significant trends, including a growing middle class and increased internet penetration, propel the adoption of tech-enabled logistics solutions, which are more efficient and robust, relative to current market practices. Illa has a clear first-mover opportunity to cater to the fragmented middle-mile market and secure high-margin opportunities using their highly scalable and efficient platform.

What is differentiated or unique about the service THAT ILLA is offering? 

First, Illa has robust technology, offering a proprietary model continuously refined by a data science team. The biggest competition the company faces is the client's in-house logistics. While an in-house solution reduces risk compared to the current alternative by ensuring complete autonomy and control of the supply chain, it is often costly and ineffective from a capacity optimisation standpoint.

Second, Illa adopts a driver-focused strategy to ensure the loyalty and longevity of one of its most important assets – the drivers who chose to join and stay on the platform to move goods from points A to B. The company is hyper-focused on building an ecosystem around its growing drivers that delivers convenience and value in their day-to-day interactions with Illa and minimised churn. Illa provides drivers with a digital portal for timely payments, trip data tracking, and discounts on services like car maintenance and insurance. 

Finally, Illa adopts a customer-centric approach, tailoring user experiences to sector-specific needs and delivering essential customer data for informed decision-making and supply chain optimisation. 

Why is TLcom excited about the investment?

We’re thrilled to have made our first investment in Egypt with Illa and we continue to evaluate investments in Egypt-based startups actively for our second Africa-focused fund. 

Illa is well-positioned to capitalise on the growing middle-mile logistics opportunity in MENA and, selectively, sub-Saharan Africa. The company has a great technology-enabled product and a great team in place. This combination not only attracts large multinational clients but also drives tech adoption and loyalty throughout its ecosystem, including customers and drivers. The absence of direct competitors in the tech-enabled middle-mile sector in Egypt further solidifies its first-mover advantage.

1) Lions (still) on the move: Growth in Africa’s consumer sector, McKinsey Report, 2016

Illa's co-founders: L-R: Ahmed Sakr (COO), Mahmoud El-Zomor (CEO), Hossam Saraya (CTO), Alaa Jarkas (Executive Director)