Swvl, an Egyptian ridesharing company, has seen a significant decline in value due to financial struggles, resulting in a 99% drop in stock price year-to-date (YTD), hovering around $0.10 and a market capitalization of less than $15 million. Reported Bloomberg.
Swvl was founded in Egypt in April 2017, by Mostafa Kandil and two of his school friends, Ahmed Sabbah and Mahmoud Nouh.
The company was initially funded with $30,000 from the founders. Four months later, Swvl received an additional $500,000 in funding from the ridesharing company Careem. Originally, the company developed an app to address traffic congestion in Cairo but later shifted its focus to creating a platform for booking affordable bus trips in the city.
In 2018, Swvl completed two rounds of funding: a Series A game that raised $8 million and a Series B round between $25-35 million.
The company was valued at around $100 million during these funding rounds, which were co-led by BECO Capital, DiGAME, and Silicon Badia.
Why is Swvl falling?
Since its inception, Swvl has operated by renting buses with drivers for a monthly fee and then using them to run on fixed routes. Unlike the Uber model, which relies on marketing as it offers a marketplace to match drivers who own the cars to users who use the mobile app – they make a profit by getting a cut from the ride.
On the contrary, Swvl’s model owns the entire operation (renting the bus in advance, drivers’ salaries, and marketing for the app). This puts more cost on the company while its revenues are fixed or, most of the time, less because no bus will go complete all day, all routes.
Without going through the exact numbers, it’s evident that Swvl cannot profit with the current business model, and it’s a matter of time before the company’s cash dries out.
How can Swvl recover? Tell us in the comments below.
Inspired by: a Linkedin post by Zubair Naem.