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Friday, December 9, 2022

Pakistani Fintech Startup Bazaar Raises A Record $70m in Funding

The funding comes just a month after Bazaar raised $30 million in another milestone in Pakistani startups: the largest Series A in the country’s history. 

By A Correspondent

Bazaar founders Saad Jangda and Hamza Jawaid. (Photo, courtesy Bazaar)

Bazaar Technologies, a Pakistan-based B2B eCommerce startup, has raised $70 million in a Series B funding round, it was announced on March 15. The latest funding, led by Dragoneer Investment Group and Tiger Global, makes the platform one of the best capitalized in the country’s young startup ecosystem.

Founded in 2020 by friends Hamza Jawaid and Saad Jangda, Bazaar provides small merchants in Pakistan with services that include procurement, fulfillment, operating software, digital lending, and supply chain products.

According to PYMNTS, the company operates in 21 cities throughout Pakistan, reaching more than 500 towns, and is on track to become the country’s biggest tech-backed last-mile delivery provider by year’s end. According to Bazaar, it has more than 2.4 million businesses on its Easy Khata and recorded more than $10 billion in transactions in yearly bookkeeping.

The funding comes just a month after Bazaar raised $30 million in another milestone in Pakistani startups: the largest Series A in the country’s history. The largest funding round so far came last year as well, when quick delivery startup Airlift raised $85 million.

Pakistan, the fifth most populous country in the world, saw an investment boom last year, as foreign investors gave record amounts of money to the nation’s startups: $233 million in the first nine months of 2021, exceeding the funding raised in the previous six years combined, a report by PYMNTS said.

“But as PYMNTS has noted, many of the country’s small merchants have been overlooked as the shift to digital hasn’t afforded them with an easy way to accept cashless payments,” it added.

Pakistan saw an eCommerce boom during the global pandemic, and retailers who weren’t using digital payments or selling online were forced to embrace online payments and eCommerce, said JazzCash then-CEO Erwan Gelebart.

(Photo, courtesy Bazaar)

“Even if consumers have the money and the willingness to pay for goods and services and the mobile wallets to use, merchants are the ones either accepting or declining” the method of payment based on what they can support,  he said in an August interview with PYMNTS.

‘The privilege of a Good Education’

“We wanted to create an awesome company in Pakistan that people would want to work for,” a report in the Forbe’s quoted Hamza Jawaid as saying. “We’d both had the privilege of a good education and spent time working abroad, and we were very conscious of this feeling that you had to leave Pakistan to make it.”

Saad Jangda adds: “This fundraising sends a huge message – it proves that you can build large and scalable businesses in Pakistan, and that should be an inspiration to other founders and entrepreneurs.”

The business has certainly come a long way in a short space of time. Two years ago, Saad and Jawaid, who are childhood friends, had not even launched Bazaar. They were still looking around for a big idea that provided the potential to build a business on the scale they were aspiring to.

Eventually, they settled on Pakistan’s retail sector, where huge fragmentation and inefficiency provided a real opportunity for a technology-enabled solution. The pair launched Bazaar in June 2020. “We wanted to create a generation-defining business that would put Pakistan on the map,” Jawaid told Forbes.

Bazaar targets the 5 million or so small and medium-sized retailers operating across Pakistan. These businesses faced a huge procurement challenge, the founders realized, dealing with complex supply chains that could involve them receiving 30 or more small deliveries each day; some supplies of daily use items such flour and sugar which had to be bought from local wholesalers, forcing retailers to shut up shop while they are out.

Instead, Bazaar offers an integrated procurement solution. Using a simple digital interface, available via a smartphone app, retailers can choose from several thousand items of stock listed on the Bazaar platform, with next-day delivery guaranteed. Suddenly, they’re sourcing most of their stock from a single provider, receiving it in a single delivery, and often at cheaper prices – not least because they no longer need to deal with a string of intermediaries.

“It’s all about convenience and value,” Jawaid told Forbes. Not only are retailers replacing their intricate webs of supply with one point of procurement, but they also access savings courtesy of Bazaar’s purchasing power.

(Image, courtesy Forbes)

According to Forbes, the idea caught the imagination of retailers at a faster rate than the founders expected, Jawais freely admits, but that prompted Bazaar to look at additional services. Last year saw it launch Easy Khata, an accounting tool for the retailers it serves, many of whom are still doing most of their bookkeeping on paper. Bazaar founders believe that by digitalizing payments, procurements, and customer engagement, retailers have a huge opportunity to professionalize their businesses.

Moreover, that product is creating huge amounts of data about the businesses of the retailers using the platform. That has enabled Bazaar to launch Bazaar Credit, offering short-term working capital loans to retailers, many of which have long struggled to secure services from the banking sector.

“We understand their credit profiles in huge detail,” says Jawaid. “By lending to them in this way, we enable them to buy more through our procurement platform – our non-performing loans rate is zero.”

The combination of these services is attracting huge interest from retailers across the country. Already, Bazaar has onboarded 2.5 million businesses to Easy Khata in 500 cities and towns. As it extends its procurement service to more of the country, many of these businesses can be signed up for that.

The new funding would enable Bazaar to expand its reach and services. It now has plans to build out logistics infrastructure so that it can serve retailers in 50 towns and cities across the country. The additional financial firepower will also enable Bazaar to expand its range of products and to serve retailers in more categories.

It’s an exciting prospect for investors Dragoneer Investment Group and Tiger Global Management, which are leading Bazaar’s Series B round. The latest investment will take the funding raised by the company since its launch to more than $100 million. “We believe that Pakistan is at an inflection point in its tech ecosystem development,” says John Curtius,a partner at Tiger Global Management. “Bazaar is tapping into the massive merchant opportunity and is leading the charge in the country.”

As for Saad and Jawaid, they believe they are moving closer to their ambition of proving that entrepreneurs and business builders do not have to leave Pakistan to make it. They point to a recent survey carried out in Pakistan’s universities, in which Bazaar was named as the startup company that students would most like to work for after graduation. The founders hope many will indeed join the business and find out what it takes to build a growing company.

Related story: With A Larger Population Than Brazil, Pakistan’s Newly Digital SMBs Offer Huge Opportunity

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