Few startups born in the Middle East have managed to expand outside of the region and scale across the world, but this is a mission that UAE-based mobility startup Cafu has set for itself.
Founded in 2018 by Rashid Al Ghurair, a third-generation member of one of the UAE's most influential business families, Cafu initially positioned itself as an on-demand fuel delivery service for busy drivers in Dubai. Since its launch, the startup has expanded its roster of products and services to include car wash, battery and oil changes and insurance, aiming to become a one-stop shop for all things car-related, all over the world.
“Our mission is to provide every service imaginable and convenient for drivers and vehicle owners and operators of vehicles,” says Alaa El-Huni, chief business officer who joined Cafu in 2020.
The conventional way of filling a car up with petrol is based on a model that dates back more than a 100-years, what El-Huni calls “static infrastructure”. This model of going to a physical station to buy petrol is inconvenient for both consumers and businesses, resulting in long waiting times during peak hours. Cafu’s model brings the petrol to the customer at a time of their choosing.
Like other on-demand services, delivering a product like petrol to the user is not a revolutionary concept. Where it does become innovative is in the use of technology to enhance not only the experience, but to make it efficient. Petrol stations are typically located in areas with high rent. They also require a lot of space, which for most of the day is not fully utilised.
“A lot of investment has gone into [Cafu’s] technology, that has resulted in our operations becoming efficient and more cost effective than most of those static models and infrastructure where it gets busy [twice] a day. We operate 24 hours a day and per litre, we are more efficient than gas stations,” says El-Huni.
Cafu’s proprietary routing algorithms allow it to determine the most efficient delivery routes, creating a dynamic supply chain model that aligns with demand. The platform uses AI technology to create heat maps in a city, identifying the busiest areas and matching its truck supply accordingly. Unlike taxis, which roam around cities hoping for a customer, Cafu focuses on specific zones, enabling it to target more customers in a shorter timeframe. Cars in general are only used about 10 per cent of the time in a typical day, the rest of time, it is parked either at home or at the office and it is during these periods that Cafu hopes its services will be used.
Cafu’s model is not entirely unique. Other on-demand fuel services exist in other markets, but they primarily cater to the B2B market, whereas Cafu offers its services to the B2C sector too.
“The key to successful operations is to maximise your assets. This looks differently for B2B and B2C customers. We deliver energy for fleets, we go onsite and fill them in a row. One truck can fill 40 vehicles in an hour, on the B2C side we have been able to achieve 12 fill ups in an hour, zones that are more densely populated can fill a lot more so the numbers for fuelling are very different on the B2C side,” says El-Huni.
The company does not charge its customers for delivery of petrol, instead, it creates customer loyalty by bringing them onto the Cafu platform, where they are rewarded with points that can be redeemed against its other services and products. The company does however, charge for its emergency service and relies mostly on the margins on the sale of its services and petrol.
“In different countries the margins look different. In the UAE the price is regulated and dictated by the Supreme Energy Council,” says El-Huni, adding that it is mostly a volume game, the more petrol Cafu purchases, the cheaper the price. “[Our margins] are healthy and scaling and growing.”
Cafu's platform also extends to deliver other forms of energy, including hydrogen and electric vehicle (EV) charging. It is the latter that has taken the Dubai startup across the Atlantic to Canada, where it is piloting its on-demand EV charging service, the first of its kind in the world.
“We operate in the heart of the mobility sector. When we looked at what was happening, there was a transition in mobility. When we saw the shift to EV and saw the adoption, we realised the pain points being felt. A lot of people see us as a truck that provides fuel to a car, but we are a mobile infrastructure and we tried to take everything we’ve learned in developing that solutions and apply it to the EV side,” says El-Huni.
Cafu partnered with Quebec-based Institut du vehicule innovant (IVI) to develop and test and its mobile EV chargers, which are now being piloted in Montreal, a city with the highest concentration of EVs in Canada. The government of Quebec is aiming to have two million electric cars on its road by 2030, with the ultimate aim of all cars on its roads being electric by 2035. This pushes up the need for EV charging facilities in the country, which when dealing with legacy infrastructure is both expensive and cumbersome to build.
“EV charging is facing a lot of pain points, global adoption of electric vehicles is happening much faster than the rate of infrastructure being developed,” says El-Huni. “If vehicles are smart, connected to the internet and IOT-enabled, why are we using a fixed infrastructure model as opposed to a mobile, dynamic model that can go to where the asset is?”
El-Huni argues that Cafu’s model is more scalable and easier to upgrade as the technology for EVs develops.
“When you develop fixed infrastructure, you’re taking key locations in cities,” he says, adding that it essentially requires its own electricity grid which needs to be connected to the main grid. “And because the technology is evolving so quickly, five to 10 years from today, that infrastructure you developed becomes obsolete and it [requires] significant investment to replace it.”
The startup has been predominantly funded by Al Ghurair himself, with some debt leveraged for growth and expansion. It is now eyeing up the regional markets for its fuel delivery service and hoping to roll out its EV service beyond Montreal. But the farther it expands, the greater the regulatory hurdles it will face.
“We’re operating in areas that did not exist before we launch, which means we have to work closely with regulators, which takes time,” says El-Huni. “Financing is another major challenge, especially because we took an approach to reduce the amount of equity fundraising. Talent is also a big challenge. The reality is we are aiming to be global leaders of what we do, we want to attract the best talent globally, but we’re no longer competing on a domestic level for talent, it’s on a global level which is a lot more competitive.”
Yet despite this, El-Huni retains a positive outlook.
“We’re in a global economy, why just focus on the markets around us? We’ve developed something that has a global application and implication, why restrict ourselves to imaginary borders?” “Rashid [al Ghurair] always had a global ambition and not be the startup that gets acquired by a global player, but to be that global tech company that expands.”