Barely three years old, Presto Eat has grown to become Libya’s leading startup. But venture investors seem to be steering away from investing in the logistics startup and the country.
Presto Eat, founded in 2020 to help deliver food and groceries to Libyans’ doorsteps, has become a household name in Tripoli, Libya’s capital city, and arguably the biggest startup in the entire country. With a workforce of 177 people, over 120,000 Libyans actively ordering food and groceries, and over 5,000 drivers actively serving its users, Presto says it processes over 5,000 orders daily—five times more than all its competitors combined.
According to documents seen by TechCabal, Presto’s gross merchandise value (GMV) grew 167% from $22,848,205 in 2021 to $61,092,628 in 2022, with a total revenue of $30,174,724—a 185% growth from $10,589,852 in 2021. Gross profit also grew to $6,110,947 in 2022, a 1153% from the $487,785 it recorded in 2021. Due to its growth and position as market leader, the company is considering expanding into more cities like Benghazi, Libya’s second largest city, and Misratah. Presto Eats also wants to add more verticals like ride-sharing, pharmaceuticals delivery and mobile payment on its platform, and eventually becoming the first super app in the oil-rich Maghreb country.
The Presto dream
“We want to be the app for everything for Libyans,” Ammar Hamid, founder and CEO of Presto Eats, told me during a video call on Tuesday. His face lit up as he spoke. “But,” he paused. “Despite the growth, VCs and other investors aren’t keen on investing in the business.”
Hamid said most VCs don’t reply his emails. “The ones that replied wanted me to do risk analysis on the Libyan market for them. But that’s not my job, my job as a founder is to grow my business.”
Hamid told TechCabal that carrying out risk analysis for VCs opens up the investors to half-truth analysis since founders’ incentive is to secure funding from them. Even though Hamid isn’t happy with rejections, he understands why investors are skeptical about the Libyan market. He’s certain that all investors have ever heard, read or seen about Libya in the media is anarchical.
A quick search of Libya on Google tells a tale of a failed state—scanty streets with remnants of burnt cars and buildings designed with bullet holes as well as a series of images of militants and their ballistic weapons. This portrayal of the country can be attributed to the Libyan Civil War which began on 15 February, 2011 as a chain of civil protests. It later evolved into a widespread uprising against the regime of Muammar Gaddafi. Although the uprising didn’t last a year, the country remains susceptible to crisis 12 years later, and this continues to create a blocker between Libyans and the rest of the world.
“One of the major factors working against the growth of startups and business in Libya is the political instability,” Pierre Tachot, co-founder of Super Novea, a French not-for-profit organisation building and supporting entrepreneurs in conflict-affected areas, told TechCabal.
“Besides the chaos, the other reason is that there’s no ecosystem in Libya,” he continued. It seems entrepreneurs are working in silos, but that’s not even the major problem. According to Najla Almissalati, managing director at Tadawul Financial Group, one of Libyan top financial firms, “not knowing how to build a sustainable business is.”
The Libyan ecosystem is young and green
According to Almissalati, entrepreneurship in Libya picked up mostly after the uprising. One of the solutions instituted to help the fledgling economy at the time was human capital development initiatives mostly chaired by international organisations. For instance, Stream incubator, backed by the UK government and run by French Expertise, in partnership with local mobile telecoms company Libyana, launched a four-year entrepreneurship development program in Tripoli in November 2017. The European Union (EU), the United Nations Development Programme (UNDP) and Tatweer Research also launched an impact fund in 2018. Many similar initiatives would follow and bring a lot of impact funds into the oil-rich country. Entrepreneurs received non-refundable grants to start and float their businesses. This flush of free funds created a culture of non-equity funding among founders. Since the funds were non-refundable, founders were quick to burn through them without building sustainable businesses.
“Most of the founders burnt cash quickly and had to shut down the business,” Almissalati said. “Now, because they are used to grant and non-equity funding, they have no idea about valuation and equity sharing. This is where we intend to educate them through our incubation.”
Almissalati said her firm is setting up a 5 million Dinar (~$1 million) VC fund to invest in Libyan startups, but before they start writing cheques, they want to bridge the knowledge gap amongst founders. Tadawul, Almissalati’s firm, has partnered with Super Novea to launch an accelerator program that trains founders for free and then connects them to investors. Almissalati said investors like Naaman Elbouri and Husni Bey, the two richest Libyan family businesses, will be among investors the startups will pitch to at the end of their program. These two families control over 45 companies including financial services, logistics, and pharmaceuticals—essentially a large chunk of Libya’s private sector. This is a surprising development because building and investing in startups has never been an idea that seemed to interest rich Libyans.
“Libyans don’t have a strong startup mindset because there are other profitable sectors to work and invest in, like importation and FMCG, or even civil service,” Hamid said.
Where are Libya’s deep pockets?
In 2017, when Hamid moved back to Libya after studying and living in the UK for over eight years, he wanted to do groundbreaking work in his country but was unsure of how to do it. Things had changed and Hamid needed to learn the new ropes. So he opted to work in consulting for a while and then later at an FMCG company. In 2020 during the COVID-19 pandemic, he saw an opportunity for on-demand grocery errands so he launched Presto Eat. But there was no money to kickstart.
It’s not news that Libyans are a rich people. For context, despite taking a beating from years of political and economic instability, the GDP per-capita, which stood at $12,000 in 2010, was still the highest in the Maghreb region in 2021 at over $6,300. Though it has since dropped to $3,300 in 2022 it still remains the highest. According to Hamid, there are enough local millionaires who can become angel investors by writing the seed cheques needed to grow the ecosystem, but they don’t yet see startups as valuable investment options. Hamid faced the huddle of locally sourcing capital for months until his friends decided to seed him. Today, Presto has raised over $3 million from friends and family as well as a few unnamed businessmen who are testing the waters of startup investment with Presto—making it the most funded startup in Libya. However, things might be improving now that Naaman Elbouri and Husni Bey are interested in the country’s baby startups movement.
Another major challenge facing Libyan businesses is the weak financial institutions. The Libyan banks are not connected, making interbank transactions non-existent. For instance, Tawadul has an e-payment solution that only works for customers who have accounts in Saray Bank for Trade and Investment. Customers of Wahda bank, another Libyan commercial bank, can only use the e-banking mobile app Mobicash for electronic transactions. “It’s a big headache and this makes Libyans depend heavily on cash,” said Almissalati.
Diamond in the rough
“96% of our payments are cash. We even have cash collection hubs,” said Hamid. But this isn’t peculiar to Libya, as many emerging countries mostly depended on cash before the advent of digital banking. Egypt and Nigeria, for instance, despite the amount of venture capital raised by their fintech startups, are still big cash-based economies.
“Libya, like any frontier market, is volatile but abounds with great untapped opportunity. But unlike most frontier markets, it has a very high GDP per capita,” said Tachot.
Besides all the chaos, business knowledge gap (there’s no business school in Libya), and the primitive financial sector, Libya, according to all of the available datasets, is a venture capital dream. It’s a fallow land that can be unlocked by a few million dollars of venture funds, said Tachot, whose organisation is partnering with Tadawul to launch the accelerators.
The internet penetration in the country was (and still is) the highest in the Maghreb region, standing at 75%. The internet penetration rate beats two of the big four tech hubs in Africa—Nigeria (38%) and Kenya (42%). Out of a population of close to seven million, there are more than four million internet users. Tachot, said
Hamid said his business is making enough money to stay in business and maintain a steady growth rate but their ambition is bigger than what they currently have. The business wants to be Libya’s first super app and to expand across the country. “We need venture capital to do all that and to also get valuations,” Hamid told TechCabal.
Hamid believes they are building a business that can liberate Libya and inject fresh energy into the country. He believes that young Libyans can start building world-class businesses. “All we need is just the first VC checks that will make all of these come true,” he concluded.