shopup raises $22.5 million to digitize millions of mom-and-pop shops in bangladesh
A company focused on bringing digital solutions to numerous small retailers throughout Bangladesh has recently secured the largest Series A funding round in the nation’s history.
ShopUp, headquartered in Dhaka, announced on Tuesday that it has obtained $22.5 million in funding, with Sequoia Capital India and Flourish Ventures serving as co-leaders of the investment. This marks the first instance of both venture capital firms investing in a startup based in Bangladesh. The Series A financing for the four-year-old ShopUp also included participation from Veon Ventures, Speedinvest, and Lonsdale Capital, bringing the company’s total funding to approximately $28 million.
Similar to India, the vast majority – over 95% – of retail sales in Bangladesh are conducted through local, independently owned stores. The country is home to roughly 4.5 million of these small businesses, and a significant portion currently lack an online presence.
ShopUp is working to address this gap by offering a comprehensive business-to-business commerce platform. According to Afeef Zaman, co-founder and CEO of ShopUp, the platform delivers three key services to these neighborhood stores: a wholesale marketplace for sourcing products, logistical support including last-mile delivery, and access to working capital, as he explained in a recent interview with TechCrunch.
These smaller retailers encounter several difficulties in their operations. They often experience delays or shortages in inventory, and frequently pay higher prices than necessary, Zaman noted. Furthermore, over 73% of their sales (according to this PDF) are completed using credit rather than immediate payment methods, which creates substantial cash flow challenges. Consequently, many of these businesses require working capital to maintain stability.While Zaman did not disclose the current number of stores utilizing the ShopUp platform, he asserted that the company holds a leading position within its sector in Bangladesh. He indicated that this position has been strengthened by the recent global pandemic, as more brick-and-mortar stores seek digital solutions to sustain their businesses.
The number of local stores completing transactions each week on the ShopUp platform increased by a factor of 8.5 between April and August of this year, Zaman reported. The pandemic also facilitated collaborations between ShopUp and existing e-commerce companies for delivery services.
“Sequoia India has consistently supported the company since its inclusion in the inaugural Surge program in early 2019, and we are thrilled to witness its emergence as a leader in driving digital transformation within Bangladesh,” stated Klaus Wang, VP at Sequoia Capital.
Zaman emphasized that the startup does not intend to evolve into a direct-to-consumer e-commerce platform similar to Amazon. He explained that e-commerce is still developing in Bangladesh, with Facebook currently playing a significant role in filling the void left by Amazon’s absence.
ShopUp recognizes a considerable opportunity in providing services to neighborhood stores. The company intends to use the newly acquired funds to strengthen its relationships with manufacturers and enhance its technological infrastructure.
Earlier this year, ShopUp established an office in Bengaluru to recruit skilled technology professionals from India. The Indian e-commerce platform Voonik merged with ShopUp this year, and both of Voonik’s co-founders have since joined the Bangladeshi startup as co-founders. Zaman stated that the company plans to continue expanding its engineering team in India.
Manish Singh