Tag, a one-year-old startup that offers banking and financial services to users in Pakistan, has raised over $12 million in what is now the largest seed financing round in the South Asian market.
Liberty City Ventures, Canaan Partners, Addition, Mantis and Banana Capital and others financed the round, which brings YC-backed Tag’s to-date raise to over $17.5 million. This is the first time many of these investors, including Lee Fixel’s Addition, have invested in a startup in Pakistan.
The round values Tag at $100 million, two people involved in the deal told TechCrunch. The new funding took just two weeks to close, Tag founder and chief executive Talal Gondal told TechCrunch in an interview. He declined to comment on the valuation.
The investor’s excitement to Tag comes as the startup builds one of the crucial railroads for users in Pakistan. “We are trying to become both Revolut and Paytm in Pakistan,” the 29-year-old founder said.
Tag partners with public and private firms to offer their employees banking services including getting their salaries on the Tag account and Visa-powered virtual and physical cards. Signing up on Tag — which includes some verification of an individual’s identity — just takes three minutes, he said.
It also provides a range of B2C offerings such as the ability to pay others online and top-up utility bills that are available to any user in Pakistan who signs up to the platform.
“We eventually want to offer the complete set of banking and financial services to users in Pakistan,” he said.
Before starting Tag, Gondal worked as an investor for seven years in Europe. He said he had long decided to return to Pakistan and start a firm to serve people in his home nation, but was waiting for the right moment.
Pakistan’s startup ecosystem has received a major boost this year with the arrival of high-profile investors including those backing Tag as well as Harry Stebbings’ 20 VC and Josh Buckley’s Buckley Ventures.
A group of very young startups have made splashy funding announcements in recent weeks. Quick-commerce startup Airlift unveiled a record $85 million Series B last month, followed by business-to-business Bazaar’s record $30 million Series A round. Last week, the digital freight marketplace BridgeLinx announced a $10 million seed round, which at the time was the nation’s largest. Wednesday’s announcement also makes Tag one of the most valued firms from Y Combinator’s recent batches.
Gondal said startups are finally having a moment in the South Asian market. “Each country’s startup ecosystem goes through various waves. In India, we saw e-commerce firms like Flipkart flourish in the first wave. Firms like Ola, Zomato and Swiggy and fintech firms like PhonePe and Paytm made inroads in the waves after that,” he said, adding that he saw a similar trend in Berlin.
“I had the conviction that a similar thing would play out in Pakistan.”
Gondal said the startup is now working to broaden its product offerings and hire talent to win the trust of the market.
“Liberty City Ventures is proud to support a visionary leader like Talal in his efforts to expand financial inclusion for the underserved and underbanked,” said Murtaza Akbar, managing partner at Liberty City Ventures, in a statement. “We expect the world class team he has assembled at TAG to build a regional fintech powerhouse.”