ShopUp, leading full-stack business-to-business commerce platform out of Dhaka has raised the largest Series A financing in Bangladesh to digitise millions of neighbourhood stores.
ShopUp on Tuesday said it had raised a Series A round of $22.5 million co-led by Sequoia Capital India and Flourish Ventures, reports the Techcrunch.
Veon Ventures, Speedinvest, and Lonsdale Capital also participated in the four-year-old ShopUp's Series A financing round. ShopUp has raised about $28 million to date.
ShopUp is the first Bangladeshi startup that both Sequoia Capital India and Flourish Ventures invested in.
There are about 4.5 million such neighbourhood stores in Bangladesh and the vast majority of them have no digital presence.
ShopUp with an aim to change that has built a full-stack B2B commerce platform. It provides three core services to neighbourhood stores: a wholesale marketplace to secure inventory, logistics, and working capital, explained Afeef Zaman, co-founder and chief executive of ShopUp, in an interview with TechCrunch.
"These small shops are facing a number of challenges. They are not getting inventory on time or enough inventory and they are paying more than what they should," said Zaman.
And for these businesses, more than 73% (PDF) of all their sales rely on credit instead of cash or digital payments, creating a massive liquidity crunch. So most of these businesses are in dire need of working capital.
Zaman declined to reveal how many neighbourhood shops today use ShopUp, but claimed that the platform assumes a clear lead in its category in the country.
That lead has widened amid the global pandemic as more physical shops explore digital offerings to stay afloat, he said.
The number of neighbourhood shops transacting weekly on the ShopUp platform grew by 8.5 times between April and August this year, he said. The pandemic also helped ShopUp engage with e-commerce players to deliver items for them.
"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, in a statement.
"The startup has no intention to become an e-commerce platform like Amazon that directly engages with consumers," said Zaman. E-commerce is still in its nascent stage in Bangladesh. Amazon has yet to enter the country and increasingly Facebook is filling that role.
ShopUp sees immense opportunity in serving neighbourhood stores, he said. The startup plans to deploy the fresh capital to deepen its partnerships with manufacturers and expand its tech infrastructure.
They opened an office in Bengaluru earlier this year to hire local tech talent in the nation.
Indian e-commerce platform Voonik merged with ShopUp this year and both of its co-founders have joined the Bangladeshi startup.