The market for cross-border logistics services is projected to reach $32 billion in revenue by 2025, with several companies vying for market share in the increasingly competitive industry. Ghanaian e-logistics start-up Jet stream Africa is on the list, and today it announces that it has secured $13 million in equity and debt from pre-Series A financing.
Fintech lender and private equity firm Cauris was the sole provider of the debt financing, while equity investors include Octerra, Wuri Ventures, Seed9, The MBA Fund, French development institution Proparco and ASCVC, a venture capital fund founded by executives of the platform for supply chain visibility. Project44. Existing investors Alitheia IDF and Golden Palm also participated.
The round comes about 18 months after the Tema-based cross-border logistics platform announced a $3 million seed round (including $1 million in debt). Jetstream says this new investment will enable it to expand into new countries – it is currently in 29 (12 in Africa) countries – and continue to develop its technology platform, which will enable vertically fragmented logistics and financing providers in the African trading world.
At the time of the seed round, Jetstream Africa had two business lines: one that provided logistics services to cargo owners dealing with imports and exports and another that distributed financing to freight forwarders. However, Jetstream has bundled both products in recent months to serve cargo owners only. That says the CEO of the startup Miishe AddyAccordingly, Jetstream achieved product-market fit.
“By running those two lines side by side, we noticed that the import or export business controls the supply chain,” she said of the pivot. “Although the cargo owners and forwarders have a lot of information asymmetry, the importer and exporter can put pressure on the forwarder to digitize the supply chain. We have simplified our business to just the import-export product line by directing them with a combination of trade finance and logistics.”
Jetstream’s new business model has shifted to that of a freight forwarder. The company now handles the end-to-end transportation of freight from shippers (both import and export), charging a fee and, most importantly, providing financing to those who need it. Typically, the traditional method for most cargo owners when they want to take out a loan to run their business is to go to banks to obtain a letter of credit. Whether they get it or not depends on their counterparty’s bank. To clarify, suppose a Ghanaian importer transacts with a Chinese exporter – the bank in Ghana collects cedi and communicates with the exporter’s bank in China, which, after guarantoring the cargo owner, collects the yuan pays out.
It is a time consuming process that can take several weeks. And for cargo owners on both sides of the transaction who want access to faster credit, the letter of credit system is inefficient, forcing them to seek other sources of capital that require some form of collateral for their loans. Jetstream essentially provides them with working capital backed by actual shipping. According to Addy, the three-year-old startup is taking a security interest in the cargo. Instead of handling the letter of credit itself, Jetstream underwrites loans – which must be repaid within 15-90 days – through its banking partners and disburses the proceeds of the loan to each supplier in the supply chain.
“If you import 10 containers, in addition to paying for the actual good, importers also have to pay the shipping company, customs broker on both sides, truck drivers on both sides, in some cases you have to pay a warehouse worker, or container terminal. There are at least nine different suppliers that you have to pay,” says Addy, who co-founded Jetstream with COO. Solomon Torgbor in 2018.
And when someone applies for a Jetstream loan, they don’t just say, give me $50,000, but enough money to fund this entire shipment and pay these nine suppliers. Moreover, we do not give the money to the cargo owners, but directly to the nine sellers.”
R: Miishe Addy (CEO Jetstream Africa)
Jetstream has expanded its trade finance product from the $1 million debt it secured in mid-2021 to about $9 million in total loans disbursed to date. The forecast is to increase that amount fivefold by the end of this year, Addy said. The chief executive also mentioned that Jetstream has scaled up from disbursing one loan per month to a maximum of 50 loans per month after changing its business model, making it EBITDA positive. Also, revenue has grown 48% over the past year and active customers 102%, according to a statement shared by the e-logistics startup, which handles shipments made up of 47% air freight, 44% ocean freight and 9% ground transportation.
The 44-strong team, which competes with Sote, among others, SEND, One35 Port and MVX, among others, have been able to form several essential partnerships for the next phase of growth, including multinational banks such as Societe Generale and startups such as Lami and MFS Africa. Tokunboh Ishmael, co-founder and lead partner at Alitheia IDF, one of Jetstream’s investors, says this funding round, which will support the startup’s expansion into new markets, will benefit from trade policies such as AfCFTA, “enabling richer intercontinental trade that is needed is to support inclusive economic development and unleash the full potential of the continent.”
