ShopUp, a startup aiming to digitise millions of neighborhood stores in Bangladesh, has raised the country’s largest ‘Series A financing round’ to help pandemic-hit small businesses to grow.
It has raised $22.5 million in a round co-led by Sequoia Capital India, and Flourish Ventures –both of the firms backed the Bangladeshi startup for the first time.
Veon Ventures, Speedinvest, and Lonsdale Capital also participated in the ‘Series A financing round’ of the ShopUp which has received the best startup award from Prime Minister Sheikh Hasina in 2019.
Series A financing round means the first round of financing that a new company receives from external investors.
There are 4.5 million neighborhood mom-and-pop shops in Bangladesh, known locally as Mudi Dokaans, that account for 98 percent of the country's retail sector.
But most of them have no digital presence, resulting in serious obstacles for the owners to run their day-to-day business due to unavailability of products, and other challenges such as the lack of transparent pricing and inefficient delivery systems.
ShopUp offers solutions to their problems with what it calls full-stack business-to-business (B2B) commerce platform that provides those neighbourhood stores a wholesale marketplace to secure inventory, logistics (including last mile delivery to customers), and working capital.
This helps these neighborhood mom-and-pop sellers achieve more profit with less effort, allowing them to focus their efforts towards engaging with their customers and business expansion, ShopUp said.
“We always believed this decade would be about the rise and maturity of small businesses in Bangladesh,” said Afeef Zaman, Co-founder & CEO of ShopUp.
“We believed in the power of internet and technology adoption by small businesses and founded ShopUp as we wanted to be a key driver of this transformation.
“COVID-19 has further underscored the need for digital transformation for the country’s smaller businesses. This fresh round of funding will support us in increasing our retail reach, deepening our partnerships with manufacturers, and focusing on building tech-first infrastructure. We have a deeply passionate team that is committed to playing its part in redefining Bangladesh’s growth story.”
“ShopUp is the pioneer of the full-stack digital platform for mom-and-pop shops in Bangladesh, empowering its customers through high quality and timely product sourcing, reliable deliveries and accessible financing,” said Klaus Wang, VP, Sequoia Capital (India) Singapore.
“Sequoia India has been a strong supporter of the company since it was part of the first Surge cohort in early 2019 and it’s been exciting to see the company become a trailblazer facilitating digital transformation in Bangladesh”.
“ShopUp has a unique tech-driven business model that combines commerce, logistics, and embedded finance to address the needs of small businesses in Bangladesh and helps them grow,” said Smita Aggarwal, Global Investments Advisor, Flourish Ventures.
“Small businesses were amongst the worst hit during the pandemic and it’s heartening to see how ShopUp adapted to the crisis and is accelerating the formalisation and inclusion of hundreds of thousands of small businesses, including a large number run by women.”
COVID-19 has increased the strain on the traditional supply-chain ecosystem, with a sudden rise in demand from consumers looking for essential goods. The number of neighborhood shops transacting weekly on the ShopUp platform has grown by 8.5 times between April and August 2020.
Additionally, in order to cope with the impact of the pandemic, many smaller retail shops in Bangladesh have moved to online channels such as Facebook to reach new customers.
This in turn has created a massive long-tail demand for last-mile logistics. ShopUp’s last-mile logistics team, RedX, is partnering with these shops and is now the largest last-mile delivery service provider in Bangladesh, processing 13 times more parcels daily than it did in April.
