ShopUp raises $22.5 million Series A financing round
ShopUp, a leading full-stack B2B commerce platform for neighbourhood shops and online sellers in Bangladesh, has raised a Series A round of $22.5 million. This is the largest Series A round in Bangladesh.
The Series A financing round was co-led by Sequoia Capital India and Flourish Ventures, with additional participation through VEON Ventures, Speedinvest, and Lonsdale Capital (Singapore).
ShopUp is Sequoia Capital India and Flourish Ventures' first investment in Bangladesh.
There are 4.5 million neighborhood retail shops in Bangladesh, that account for 98 percent of the country's retail sector, making Bangladesh one of the most fragmented retail markets in Asia. The majority of these small retailers face constant challenges in procuring goods from multiple distributors and wholesalers across an equally fragmented supply-chain.
A recent study found 73 percent of these retailers' sales are credit sales to end consumers, whereas only 27 percent of small businesses in Bangladesh have access to formal financing to support their liquidity. The unavailability of products, compounded by other challenges such as the lack of transparent pricing and inefficient delivery systems, create serious obstacles for these small entrepreneurs to run their day-to-day businesses.
ShopUp offers small businesses easy access to B2B sourcing, last-mile logistics, digital credit, and business management solutions. This helps these neighbourhood retail sellers achieve more profit with less effort, allowing them to focus towards engaging with their customers and business expansion.
Earlier this year, ShopUp opened its office in Bengaluru of India aiming to expand and hire talent aligned to the company's vision and goal. E-commerce platform Voonik also recently merged with ShopUp, with both founders of Voonik joining ShopUp as co-founders.
"We always believed this decade would be about the rise and maturity of small businesses in Bangladesh," said ShopUp Co-founder and CEO Afeef Zaman.
"We believed in the power of internet and technology adoption by small businesses and founded ShopUp as we wanted to be a key driver of this transformation. Covid-19 has further underscored the need for digital transformation for the country's smaller businesses. This fresh round of funding will support us in increasing our retail reach, deepening our partnerships with manufacturers, and focusing on building tech-first infrastructure. We have a deeply passionate team that is committed to playing its part in redefining Bangladesh's growth story," he said.
"ShopUp is the pioneer of the full-stack digital platform for mom-and-pop shops in Bangladesh, empowering its customers through high quality and timely product sourcing, reliable deliveries and accessible financing. Sequoia India has been a strong supporter of the company since it was part of the first Surge cohort in early 2019 and it's been exciting to see the company become a trailblazer facilitating digital transformation in Bangladesh," said Klaus Wang, vice-president of Sequoia Capital (India) Singapore.
"ShopUp has a unique tech-driven business model that combines commerce, logistics, and embedded finance to address the needs of small businesses in Bangladesh and helps them grow," said Smita Aggarwal, global investments advisor at Flourish Ventures.
"Small businesses were amongst the worst hit during the pandemic and it's heartening to see how ShopUp adapted to the crisis and is accelerating the formalisation and inclusion of hundreds of thousands of small businesses, including a large number run by women," she added.
Covid-19 has increased the strain on the traditional supply-chain ecosystem, with a sudden rise in demand from consumers looking for essential goods. The number of neighbourhood shops transacting weekly on the ShopUp platform has grown by 8.5 times between April and August 2020. Additionally, in order to cope with the impact of the pandemic, many smaller retail shops in Bangladesh have moved to online channels such as Facebook to reach new customers. This in turn has created a massive long-tail demand for last-mile logistics.
ShopUp's last-mile logistics team, RedX, is partnering with these shops and is now the largest last-mile delivery service provider in Bangladesh, processing 13 times more parcels daily than it did in April.