Nigerian Startup Topship Secures $2.5 Million To Combat The Challenges In The International Shipping Space

The international shipping industry is filled with challenges that range from logistics, and customs to excessive fees, especially for African merchants. Startups are stepping up to them with the aim of tackling these impediments and leveraging all the available opportunities in the industry. Topship, a Nigerian startup, is one of the budding startups on the African continent looking to tackle the challenges faced in the international shipping space.

Nigeria’s Topship has raised $2.5 million in a seed financing round led by American freight forwarding and customs brokerage company Flexport. The seed round received investments from other investors including Y Combinator, Soma Capital, Olive Tree Capital, Capital X, True Capital, and Sterling Ventures. Individual investors Immad Akhund (CEO of Mercury) and Dropbox’s co-founder Arash Ferdowsi participated.

The seed funding round follows just months after the startup graduated from the recent YC Combinator accelerator program’s winter batch.

Topship was founded by CEO Moses Enenwali in 2020 during the pandemic. He noticed a spike in merchants’ demand for shipping services outside the country. He once worked with logistics company ACE Logistics and e-commerce fulfillment provider Sendbox and had built relationships with some of these merchants. According to him, while he worked with the two aforementioned companies between 2015 and 2020, demand was stable but the demand experienced during the pandemic period was more than usual.

“The world was shutting down, but there was this high demand for stuff, and demand for international shipping was going up simultaneously. So I was like, ‘this is interesting.’ It wasn’t a business then as we just helped these people move stuff like a scrappy, little hustle,” he said.

The startup went live in March of 2021. Its aim is to provide African businesses with the easiest and fastest way to conduct international shipping. Although there are already startups doing this, Topship adds that it wants to improve the overall shipping experience in Africa. In a statement, it said that “its mission is to make the shipping experience in Africa as easy and stress-free as booking an Uber ride.” The startup says that its plan to focus on air cargo is one thing that may put it ahead of other players in the freight space.

Topship and other African startups in the international shipping space are walking in the footsteps of Flexport, a market leader in the freight space which operates a mix of air, ocean, and truck haulage. Topship’s CEO argues that Flexport’s model which many African startups use as a yardstick may not work completely in Africa. Flexport’s model relies heavily on ocean cargo movement. Topship’s CEO explained that “The reason why the Flexport model wouldn’t work here is it’s heavily invested in ocean freight and we don’t have enough ports on the continent. For example, in Nigeria, we have one function port, and for ocean freight to work, we need ports, railways, and roads for trucking. But we don’t have the roads, and we don’t have the railways.”

He went on with his explanation giving more reasons why the startup avoids ocean cargo and focuses on air cargo. “It’s difficult to connect the continent with ocean freight. Flexport’s business model makes a lot of sense even with how they attack problems aggressively, and I love that. But for Africa, we need to tweak it to fit the use case here. So what we’ve seen is the way to connect the continent is via air. Every country and major city on the continent has a functioning airport, and airlines are flying to all those airports daily,” he said.

Topship enables 1,500 merchants to move cargo and parcels from Nigeria to at least 150 countries around the world. It, however, only accepts cargo from the US, the UK, and China. The company makes money from taking a commission on transactions and selling shipping insurance to merchants. According to its CEO, Topship plans to explore other revenue streams including custom clearance charges and trade financing.

Topship has seen a 50 percent month-on-month growth since January of this year when it got into the YC Combinator accelerator program. Commenting on this, the startup’s CEO said that “I think what YC does more than anything is just push you to dive as deep as possible in understanding your users.”