Meet Uzbekistan’s first unicorn: e-commerce startup Uzum | TechCrunch

UzumIt is a new e-commerce startup that provides online shopping, financial technology and food delivery services to millions of customers in Uzbekistan. It has raised US$114 million in funding and became the country’s first unicorn company, with a valuation of US$1.16 billion.

Uzbekistan is fertile ground for new startups as the population under 30 years old makes up About 60% of its population exceeds 35 millionThe country also enjoys Literacy rate is close to 100% (according to its government), Internet penetration rate exceeds 76%and Smartphone penetration rate exceeds 75%According to statistics, in 2020, there were nearly 1,200 new startups in this Central Asian country, 85% of which were in the seed stage. Fintech startups dominate the market with 30% share, followed by e-commerce startups with 27%. estimate (PDF) Asian Development Bank.

However, there appears to be a severe lack of e-commerce services in the country, which may be one of the reasons why the industry only accounts for 2.2% of the total Uzbek retail market as of December 2022. Report (PDF) by KPMG. Uzum co-founder and CEO Djasur Djumaev said that Uzbeks used to mainly shop online through social media applications such as Instagram, TikTok and Telegram. Customers connect with sellers in groups on social platforms, and these sellers have limited inventory – reserved units (SKUs), and no logistics to speak of.

“What surprised us was that smartphone penetration was high and telecom infrastructure was in place, but there was no e-commerce, no proper fintech,” Zhumayev told TechCrunch.

Djumaev clearly sees the potential for a company in Uzbekistan to do what Amazon has done in many other countries: offer a cohesive marketplace that promises end-to-end logistics and delivery. Uzbekistan first established logistics, fleets and set up pickup points to provide next-day delivery services. Launched in October 2022, the marketplace now has more than 8 million monthly active users and more than 9,000 merchants selling more than 600,000 SKUs. By comparison, Nikolay Seleznev, chief strategy and business development officer at Uzum, the country’s largest street market, said there are about 70,000 SKUs a day. In its first full year of operations, the startup generated gross merchandise value (GMV) of $150 million and expects run-rate GMV to reach at least $300 million this year.

Soon after achieving success in the market, Uzum entered the fintech space with a buy now, pay later (BNPL) product. Djumaev said that approximately 45% to 50% of its e-commerce transactions are completed through BNPL solutions. It has also entered the food delivery business and established a digital bank to facilitate its growth.

“Because we engage customers through e-commerce, we retain them in high-transaction activities such as day-to-day banking, which is 100% digital. We monetize them through loans or credit products, which are 100% compliant Sharia law, which is also very good.” Attracts at least 85% of Uzbek population. Seleznev told TechCrunch.

The Series A round, which includes $52 million in equity and the remaining $62 million in debt, was led by FinSight Ventures, with participation from Xanara Investment Management and Uzum senior management. Uzum’s equity dilution to investors participating in the Series A round is less than 5%, which is the startup’s first outside financing.The startup also plans to raise about $200 million in Series B funding this year from investors in the Middle East, the United Kingdom and the United States

Uzum plans to spend two-thirds of the new funds on its fintech business and one-third on its e-commerce unit, and plans to launch new unsecured loan products for individuals and SMEs, as well as invest in owning its own IT and logistics. infrastructure.

“We want to expand our product range, strengthen our e-commerce infrastructure and fund our fintech,” Zhumayev said.

Seleznev said the startup intends to expand its GMV by 150% to 200%, at least triple its credit portfolio and increase the total payment volume revisited through its ecosystem.

By the end of this year, Uzum plans to consolidate all of its operations into two super apps: one for consumer-focused products and another for business-focused products. It also plans to launch the country’s “largest” e-logistics complex. – Commercial area in June, initially planned to cover an area of ​​112,000 square meters, will be expanded to more than 500,000 square meters in the next few years.

Djumaev said there are several companies around the world that operate in a similar way to Uzum, citing Nubank in Latin America and in Kazakhstan. However, he does not think there is any competition in Uzbekistan because Uzum’s advantage is that different products enjoy different profit margins and can earn higher profits. Increase profits by combining e-commerce and fintech services.

“We have witnessed the success of in creating a super app in neighboring Kazakhstan, and we believe that Uzum, with the necessary talent, resources and products, will repeat this success and become the national technology leader in Uzbekistan.” Managing Partner of FenSight Ventures Alexey Garyunov said in a prepared statement.

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