A one-year-old startup that is building a business-to-business marketplace for merchants in Pakistan and also helping them digitize their bookkeeping is the latest to secure a mega-round in the South Asian market.
Bazaar said on Tuesday it has raised $30 million in a Series A round. The new financing round — the largest Series A in Pakistan — was led by Silicon Valley-based early-stage VC Defy Partners and Singapore-based Wavemaker Partners.
Scores of other investors including current and former leaders of Antler, Careem, Endeavor, Gumroad, LinkedIn and Notion as well as new investors Acrew Capital, Japan’s Saison Capital, UAE’s Zayn Capital and B&Y Venture Partners and existing investors Indus Valley Capital, Global Founders Capital, Next Billion Ventures and Alter Global also participated in the new round.
One way to think about Bazaar is — especially if you have been following the Indian startup ecosystem — that it’s sort of a blend between Udaan and KhataBook. “That’s a good way to describe us,” said Hamza Jawaid, co-founder of Bazaar in an interview. “We had this benefit of hindsight to not just look at India but other emerging markets,” he said.
“We saw lots of synergies between these two. If you look at commerce, you have to acquire every single merchant in every single category differently. Whereas with Khata, merchants in any city and category can download it. So effectively, it’s a great customer acquisition tool for you,” he said on a WhatsApp call, adding that this also provides greater insight into businesses.
Bazaar’s business-to-business marketplace, which provides merchants with the ability to procure inventories at a standard price and choose from a much larger catalog, is currently available in Karachi and Lahore, the nation’s largest cities, while Easy Khata is live across the country.
At stake is a booming $170 billion retail market in the world’s fifth-most populous nation that is yet to see much deployment of technology, said Saad Jangda, Bazaar’s other co-founder. Both of them have known each other since childhood and reconnected in Dubai a few years ago. At the time, Jawaid was at McKinsey & Company while Jangda was working with Careem as a product manager for ride-hailing and food delivery products.
There are about 5 million micro, small and medium-sized businesses in Pakistan. Like India, even as a significant portion of the population has come online, most merchants remain unconnected, said the founders, who surveyed shops going door-to-door.
“We’ve been investing in FMCG B2B marketplaces across the region since 2017. After working with Hamza and Saad over the past year, we’ve been impressed by their customer-centric approach to product development and the speed of their learning and execution,” said Paul Santos, managing partner at Wavemaker Partners, in a statement.
“It’s no surprise that they’ve received glowing reviews from their customers and partners. We’re excited to support Bazaar as they solidify their market leadership and digitize Pakistan’s retail ecosystem,” he added.
The startup said it has amassed over 750,000 merchants since launch last year. And it appears to have solved a problem that many of its South Asian peers are still grappling with: Retention. Bazaar said it has a 90% retention rate.
I asked Jangda if he plans to expand to the “dukaan” category. Several startups in Asia are currently building tools to help merchants set up online presence and accept digital orders. He said the market is currently not ready for a dukaan product just yet. “The B2C market is still developing, so there is not so much demand from the consumer side yet,” he added.
Instead the current new focus is financial services. In recent months, the startup said it has tested a buy now, pay later product and early results have shown 100% repayment.
“Bazaar is going after a massive opportunity with the ultimate aim of creating a generational story in and from Pakistan. In a country with incredible talent and huge market opportunity, it’s about time we create an inspirational story that brings together the country’s best talent who can go on to create many such stories in the future,” said the founders.
Bazaar eventually wants to become a super app, or a broader operating system for retail in Pakistan. It plans to deploy the fresh funds to expand its services to more cities across Pakistan and build and scale more products.
“What Bazaar has managed to accomplish in the last year is incredible. We are extremely impressed by the speed and robustness with which they build and deploy. As Defy’s first investment into Pakistan’s burgeoning tech ecosystem, we feel Bazaar is on its way to create a category defining company for the country” said Kamil Saeid, partner at Defy Partners.
Tuesday’s announcement comes a week after Airlift, another Pakistan startup, announced a big round as high-profile global investors begin to explore the South Asian market.