Bangladeshi retail tech startup raises $74m from US fund [Nikkei Asia]

Bangladeshi retail tech startup raises $74m from US fund [Nikkei Asia]

Originally posted on Nikkei Asia

By Rachel Phua

Image credit: A man sells vegetables on the street in Dhaka on July 6. Bangladesh is one of the most fragmented retail markets in Asia and has huge potential to grow.   © Reuters

SINGAPORE — ShopUp, a Bangladesh-based startup that is trying to digitalize mom-and-pop shops in the country, has raised $74.4 million in a round led by Valar Ventures, according to Accounting and Corporate Regulatory Authority filings seen by DealStreetAsia.

ACRA filings only reflect the equity funding received so far in a round, and the overall funding round could be larger and have other components such as debt.

U.S.-based venture capital fund Valar Ventures, a new investor in ShopUp, committed $45 million in the round and is now ShopUp’s largest investor with a 19.1% stake, according to DealStreetAsia’s calculations.

Another new investor in the round is Naspers Ventures, the venture capital arm of South Africa’s internet and media giant Naspers.

Existing investors Sequoia Capital India, Flourish Ventures, KDV Capital, Lonsdale Capital (Singapore), and Veon Ventures re-upped in the latest round. Veon is now the second-largest investor with a 12.3% stake in the company.

ShopUp’s valuation stands at $236 million following the latest funding.

Founded in Dhaka in 2016 by Afeef Zubaer Zaman, Siffat Sarwar and Ataur Rahim Chowdhury, ShopUp last raised $22.5 million in a Series A round co-led by Sequoia Capital India and Flourish Ventures.

In November 2018, impact investment company Omidyar Network led a $1.62 million investment in the startup.

ShopUp provides business-to-business sourcing, logistics and financial services to micro, small and medium enterprises through its mobile-first digital platform and last-mile logistics service RedX. Its embedded financial services product provides these small shops with access to digital credit through partnerships with local financial institutions.

There are 4.5 million neighborhood mom-and-pop shops in Bangladesh, known locally as mudi dokaans, that account for 98% of the country’s retail sector, making Bangladesh one of the most fragmented retail markets in Asia, according to ShopUp.

The startup also opened an office in India after it merged with the Bengaluru-based e-commerce platform Voonik in February 2020.

According to an article last month by the Indian newspaper Business Standard, ShopUp’s Director of Brands and Communication Raquib Chowdhury said the company has 500,000 sellers and 200 distribution hubs.

The race to digitalize mom-and-pop stores has heated up in emerging Asian economies.

In Indonesia, for instance, startups focused on digitalizing small stores have been on a fundraising spree since the start of the year. Jakarta-based GudangAda raised more than $100 million in a Series B round led by Asia Partners and Falcon Edge in July.

MSME bookkeeping app BukuKas closed a $50 million Series B round led by London-based investment firm Hedosophia in June. In the same month, accounting startup BukuWarung raised $60 million in a Series A round led by U.S.-based venture capitals Valar Ventures and Goodwater Capital.

For the original story from DealStreetAsia, click here.