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

Uzum, an e-commerce startup that provides online shopping, fintech and food delivery services to millions of customers in Uzbekistan, has raised $114 million in funding, becoming the country’s first unicorn and valued at $1.16 billion.

Uzbekistan is fertile ground for startups because about 60% of the country’s more than 35 million people are under the age of 30. The country has a literacy rate of nearly 100% (according to government data), internet penetration of over 76%, and smartphone penetration of over 75%. In 2020, the Central Asian country was home to nearly 1,200 startups, 85% of which were in the seed stage. According to Asian Development Bank estimates (PDF), fintech startups dominate the market with a 30% share, followed by e-commerce startups at 27%.

However, the country appears to be severely lacking in e-commerce services, which may be one of the reasons why the industry accounts for only 2.2% of Uzbekistan’s total retail market as of December 2022, according to a KPMG report (PDF). 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, but sellers have limited stock keeping units (SKUs) and no logistics at all.

“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.

Zhumayev clearly sees the potential for a company in Uzbekistan to do what Amazon has done in many other countries: provide a cohesive marketplace that promises end-to-end logistics and delivery. Uzum first set up logistics, a fleet of vehicles, and set up pickup points to provide next-day delivery. 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, Uzum chief strategy and business development officer Nikolay Seleznev said the country’s largest street market has about 70,000 SKUs every day. In its first full year of operations, the startup achieved gross merchandise value (GMV) of $150 million and expects to reach at least $300 million in operating GMV this year.

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

“Because we attract customers through e-commerce, we retain them through high-transaction businesses such as daily banking, which are 100% digital. We monetize them through loan or credit products, which are 100% Shariah-compliant law, which is also very attractive to at least 85% of Uzbekistan’s 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 diluted less than 5% of its stake to investors who participated in the Series A round, the startup’s first outside funding.The startup also plans to raise about $200 million in Series B funding this year from investors in the Middle East, the UK and the US

Uzum plans to spend two-thirds of the new funding on its fintech business and one-third on its e-commerce unit. It plans to launch new unsecured loan products for individuals and small and medium-sized enterprises, and invest in 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%, grow its credit portfolio by at least three times, and increase the total payment volume circulating 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-commerce logistics complex in June, initially planning to occupy 112,000 square meters and expand 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, mentioning Nubank in Latin America and in Kazakhstan. However, he does not see any competition from Uzbekistan as it has the advantage of margins on different products and can achieve higher margins 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 a national technology leader in Uzbekistan.” Executive FinSight Ventures partner Alexey Garyunov said in a prepared statement.

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