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Writing to you from Lahore, this week’s ~3 minute read covers some key insights about the market in light of Dasytgr’s Series A round. But first, a round up of everything you might have missed while we were gone!👇🏾
The Past 3 Weeks in Startups
💰 Funding
24Seven.pk has raised a $1m round led by Betatron Venture Group for their B2C and B2B offerings in the grocery and retail space.
Farmdar has raised $1.3m in seed funding led by Indus Valley Capital to improve farming yields
Dastygr, a B2B marketplace, has raised $37 million in the largest Series A in Pakistan led by VEON Ventures.
Rider, a last-mile logistics player has announced a $3.1m seed extension.
🎧 Listening
As usual the Misaal Podcast has had a range of guests providing insight into the startup landscape covering topics like brand-building, startup legals and e-commerce enablement. Check out the latest episodes here.
📖 Reading
Alibaba recently announced that they will be extending their logistics arm to Pakistan to support their e-commerce unit Daraz.
Ozair Ali shares a great exposition on the impact of the macro environment on the startup landscape in Pakistan - it’s more nuanced than you might expect!
🎟️ Attending
+92Disrupt was held by Katalyst Labs over the weekend in Lahore with a lot of exciting speakers (including yours truly!), follow them on social media as they’ll be running another two conferences this year in Islamabad and Karachi.
Three Insights from Dastygr's Series A
In case you missed it, Dastygr recently closed a $37M Series A. Dastygr is a B2B e-commerce platform serving Kiryana stores in Pakistan by helping them procure their inventory. Here are three thoughts from the deal about how existing trends are deepening.
Big rounds are still being done
Dastygr’s Series A marked the largest Series A round ever raised in Pakistan. Despite the global market slowdown, it’s clear that strong businesses will continue to be funded.
Yes the market has slowed down, but there are still investors out there looking to make deals happen. At the earlier stages it’s clear that round sizes and corresponding valuations are significantly lower. At the later stages, it does remain challenging to close larger rounds but it always has been. Less than 15 companies have ever raised Series A rounds in name, and probably an additional 10 in size (still opting to call them seed, extension, or pre-series As).
A number of investors, both locally and internationally are more focused on the Series As in the coming 24 months. It’s likely that we will see a handful of Series As in the remainder of the year but that said it’s unlikely that they will hit this size.
Strategic investments are increasing
Another interesting point here is that the round was led by VEON Ventures. VEON, the Amsterdam HQ’d telecom operator owns and operates Pakistani telco giant Jazz, their mobile money play Jazz Cash and their Microfinance Bank Mobilink Microfinance Bank. It’s clear that VEON has a range of interests in Pakistan and their investment into Dastygr is likely to have synergies with their broader set of business propositions. Interestingly, competitor Jugnu also raised their Series A from a strategic investor lead, Sary, the leading player in the space in KSA.
Back to Dastygr, cross-selling can help deepen the relationship that Jazz Cash has with its agent network while helping drive Dastygr’s expansion. In the longer term, the financial services angle is incredibly interesting. Jazz has a rich data set in their consumer habits and their agent network while Dastygr has a similar understanding of their Kiryana store customer base. Coupling both sets of data can keep CAC low, improve LTVs and provides a compelling base to begin lending to businesses and further expanding fintech offerings.
Big markets continue to attract funding
Dastygr’s Series A closes off a string of very large rounds in the B2B e-commerce space. Each of the large players including Bazaar, Retailo, Jugnu and Tajir have raised upwards of $20m. While many were predicting consolidation in the space, it’s likely that with all of this funding all five of these large players will push forward for another 12-18 months at least before we see any consolidation.
I find it is highly unlikely that at scale, there is space for so many players in Pakistan alone - varying sources claim the current market size for this model to be anywhere from $60B-$100B but the true market is likely significantly smaller. That said, with all this money in the market, it’s likely that the market size for B2B e-commerce will increase significantly through education and fintech enablement. From my perspective, it will be exciting to follow along as the landscape evolves through new product offerings, geographical expansion, and consolidation.
As always, thanks for reading! Know someone raising, building, or just curious? Give this a share! And as always, please subscribe if you’d like to hear more! If you have topics you’d like me to cover, just hit reply :)
" In the longer term, the financial services angle is incredibly interesting. Jazz has a rich data set in their consumer habits and their agent network while Dastygr has a similar understanding of their Kiryana store customer base."
I am still not sure about where the cheap money for lending will come from. With current interest rates, how do they make good on the financial services angle, usually the standard pitch is that of de-risking lending to the unbanked via data.
Unless there is another pitch from the financial services angle that i might not be aware of.
Recovery will be an issue too as always in our society.