tazah Secures Pre-Seed Funding for Pakistani Agriculture

Tazah Technologies: Revolutionizing Pakistan's Agricultural Marketplace

The founding team of Tazah Technologies, a B2B agricultural marketplace operating within Pakistan, initially connected while holding leadership positions at Careem, an Uber subsidiary. Abrar Bajwa and Mohsin Zaka developed a strong working relationship during the challenging period of the COVID-19 pandemic. This eventually spurred discussions about establishing a venture of their own.

When questioned about the transition from ride-hailing services to agritech, Bajwa explained to TechCrunch that both he and Zaka originate from agricultural backgrounds. “We both hail from the central Punjab region, where agriculture is integral to nearly every family’s livelihood,” he stated. “We’ve directly observed the systemic disadvantages faced by smallholder farmers, hindering their opportunities for upward social mobility.”

The Importance of Agriculture in Pakistan

According to government data, agriculture constitutes Pakistan’s largest economic sector, contributing approximately 24% to the nation’s gross domestic product and employing 50% of its workforce. However, the sector is plagued by fragmented and complex supply chains, leading to increased costs, food spoilage, and diminished profits for farmers – issues Tazah aims to address.

Having launched just two months ago in Lahore, the startup recently announced the successful completion of a $2 million pre-seed funding round. This round was spearheaded by Global Founders Capital and Zayn Capital, with participation from Ratio Ventures, Walled City Co, i2i Ventures, Suya Ventures, Globivest, Afropreneur Syndicate, +92 Ventures, Sunu Capital, Musha Investments, and angel investors from Careem and Swvl.

Currently, around 300 small and medium-sized businesses are procuring inventory via the platform, with multiple truckloads of produce being moved daily. The current product offerings are centered around five key items: ginger, garlic, tomatoes, potatoes, and onions.

Tazah intends to broaden its product range to include other vegetables and fruits, but prioritizes maintaining consistent supply and quality. The company doesn’t simply connect farmers and buyers; it actively assesses produce quality, discarding spoiled items and categorizing them based on buyer needs.

Standardization and Customer Retention

Potatoes, for instance, are sorted for different uses – household consumption, restaurants, small retailers, or processing into French fries – based on insights gained from extensive market research. “Our months spent in wholesale markets and interviews with hundreds of retailers revealed a critical need for product standardization within Pakistan,” Bajwa explained. “We delve into the operational details, ensuring retailers have complete transparency regarding the contents of each sack.”

This approach has yielded a monthly customer retention rate exceeding 80%, with the majority of customers making purchases from the platform approximately four times per week.

“We are focused on more than simply moving goods,” Zaka emphasized. “A single sack of potatoes can contain spoiled produce, and simply passing that on to retailers doesn’t provide substantial value.” Tazah is presently concentrating on small to medium-sized sellers who are often overlooked by large fast-moving consumer goods and grocery inventory suppliers due to their inability to meet high volume purchase requirements.

The company is also initiating conversations with other potential customer segments, including B2C marketplaces, grocery applications, and retail stores.

Addressing Food Waste and Improving Logistics

Tazah’s founders highlight that fragmented supply chains contribute to significant produce waste, estimated between 30% and 40%, due to spoilage or damage during unloading, warehousing, and reloading. The company aims to mitigate this issue by establishing a more efficient and streamlined logistics infrastructure.

To minimize costs, Tazah plans to collaborate with third-party warehousing and trucking services rather than investing in its own facilities.

“We are constructing a parallel, customized supply chain alongside the traditional one, designed for greater efficiency,” Bajwa stated. “It requires essentially rebuilding the system to ensure the fastest possible movement of products from harvest to retail.” This will involve initial investments in best practices for handling produce within its warehousing and trucking network.

Given the need for early morning deliveries, Tazah operates small fulfillment centers in addition to warehouses to maintain proximity to its customers. A portion of the newly acquired funding will be allocated to expanding its fulfillment center network in Lahore, with a goal of full city coverage by mid-October, followed by expansion into new regions.

Data-Driven Farming and Financial Inclusion

Over-harvesting also contributes to food waste, and Tazah intends to develop a data and analytics platform to assist farmers in planning their crops, preventing oversupply in their target markets. Farmers typically rely on traditional markets and informal networks, lacking comprehensive information about supply and demand beyond their immediate communities.

They frequently face debt to intermediaries due to limited access to working capital. Tazah is currently focused on optimizing its supply chain but plans to introduce financing options for farmers in the future, following further research into their capital needs and repayment capabilities.

Challenges include the lack of formal credit histories and limited access to financial institutions in rural areas, often leading farmers to borrow from intermediaries charging exorbitant interest rates exceeding 60%, perpetuating cycles of indebtedness.

“We are actively exploring financing solutions as a future strategic initiative, working directly with farmers to understand their financial practices,” Zaka said.

A Vision for Pakistan's Agricultural Future

Tazah’s founders express hope for the emergence of more startups dedicated to addressing the challenges faced by Pakistan’s farmers. “The agricultural sector in Pakistan has historically been underserved from a technological standpoint, and I believe that increased participation will foster collaboration rather than competition,” Bajwa noted. “More entrants into the market will accelerate problem-solving in this complex landscape.”

He concluded, “Given the sheer scale and inefficiency of Pakistan’s agricultural sector, even a modest impact from our efforts could significantly improve the livelihoods of hundreds, potentially thousands, of farmers, enhance the availability of fresh produce, reduce food waste, and mitigate food price inflation.”