Dastgyr, a B2B marketplace in Pakistan that connects suppliers with mom-and-pop shops, has secured $3.5 million in a seed round headed by SOSV. It seeks to connect over 2 million underserved retailers in Pakistan, as well as millions more in similar emerging countries, directly to manufacturers, distributors, and wholesalers, in order to solve the present supply chain, which is fragmented. Dastgyr will use this seed capital to deliver financial inclusion products in Q3 2021.
Dastgyr is a B2B marketplace app that allows shops to order wholesale inventory of over 2,000 stock-keeping units (SKUs) with guaranteed next-day delivery and telephone helpline service. It was founded in 2020 during the peak of Covid-19. Fast-moving consumer products, stationery, smartphone accessories, and other items are among the app’s product categories.
SME retailers are the backbone of Pakistan’s economy, accounting for around $125 billion in combined sales, or about 30-40% of the country’s GDP. Dastgyr wants to empower and uplift this group by providing a near-perfect supply chain and financial inclusion, allowing them to contribute even more.
SOSV led Dastgyr’s seed round, which comprised ADB Ventures, the Asian Development Bank’s venture capital arm, Seedstars, and Edgebrook Partners, all of which were making their first investments in Pakistan. Zayani Venture Capital and Tricap investments were among the strategic institutional and angel investors from the MENA area who participated in the round. Dastgyr has already raised $4 million in total, including an angel round in July 2020.
Dastgyr has worked closely with London-based consultants EquiTie over the last 12 months to allow this fundraising round and optimise the route to scale. “At EquiTie, we only collaborate with impact-driven founders like Owais and Zohaib, and we’ve seen firsthand how their customer-centric approach has positively impacted the lives of 30,000 shops and millions of consumers. We’re looking forward to seeing how Dastgyr’s dedication will continue to revolutionise the B2B logistics market and serve as a driver for Pakistan’s economic growth,” said EquiTie Managing Partner Ahmed El Hamawy.
“Pakistan is seeing the same patterns as India five years ago and China 10 years ago: with 75% of the population owning a smartphone, the first-movers in mobile-first services will be the winners. We are particularly impressed with the Dastgyr’s culture of growth: the company’s fintech offering is truly a game-changer for the unbanked and underbanked while ensuring the success of their businesses. We are particularly impressed with the company’s culture of growth and are proud to have the company as part of our portfolio,” said William Bao Bean, General Manager at SOSV, Managing Director of MOX.
“ADB Ventures is incredibly excited to support the Dastgyr team on its journey to serve retailers across Pakistan. Dastgyr is scaling up at a time Pakistani individuals and businesses are going online, and this gives the company a unique opportunity to build more efficient and inclusive supply-chain operations in the country. With Dastgyr, ADB Ventures is backing our first startup in Pakistan, a dynamic emerging market brimming with new impact-tech innovations,” said Minsoo Kim, Investment Specialist at the Asian Development Bank.
Dastgyr’s asset-light concept is based on cross-docking: items are brought to sorting centres, where they are sorted into individual orders and routes before being despatched to merchants. It has fulfilled hundreds of thousands of purchases worth millions of dollars to about 30,000 clients since its formal launch in September 2020 in both Karachi and Lahore.
Dastgyr hasn’t raised a huge sum of money in this seed round, but its management has been careful to make sure that their capital use is as efficient as possible. It currently has a $1 to $58 investment to gross merchandise value (GMV) ratio.
Dastgyr’s team includes former members of some of the region’s fastest growing startups, including Daraz (Rocket Internet venture acquired by AliBaba), Careem (acquired by Uber), and Airlift (raised Pakistan’s largest Series A at the time led by First Round Capital).
Muhammad Owais Qureshi, Co-Founder of Dastgyr, says on this announcement: “Both our co-founder Zohaib and I have previously done extensive work in moving people. We’ve studied and even remedied many of the problems in transit logistics, but the movement of goods is a far larger problem for the economy as a whole. Once the pandemic rolled around, this problem was exacerbated and no one was hit harder than small businesses. We launched Dastgyr to help those small businesses like Abdul in Lahore and Saeed in Karachi, two of our very first customers. This seed round is a small milestone on our journey to continue to grow that impact. Our plan moving forward is to launch fintech products for our customers and expand to other cities in Pakistan very soon.”
“Building a multi-sided marketplace in Pakistan is one of the most stimulating problems I’ve had the chance to work on, particularly in an industry that has traditionally remained offline, with users who are sceptical of technology’s value addition to their lives,” says Haseeb Siddiqui, Founder and Head of Product at Dastgyr. It excites me to be able to influence behaviour by focusing on our users’ motives, abilities, and triggers while developing products. For both external and internal product offerings, the basics remain the same: make your users’ life easier.”
The seed money will be used to improve Dastgyr’s tech stack, scale operations and client acquisition, and hire more team members, as the company’s current headcount has risen to over 280 employees. Most significantly, the cash will be used to officially launch innovative financial solutions that Dastgyr’s team has already been testing, such as “Buy Now, Pay Later.” Dastgyr’s fintech products will help merchants become more financially integrated, as the bulk of them are still unbanked. Access to credit choices will allow them to increase their purchasing power and grow their enterprises into other areas, impairing their ability to compete.
Dastgyr’s business model has always prioritised financial inclusion and wellness for retailers. The average SME retailer, known in Urdu as kiryana, often has a total monthly working capital of $2,000 to $3,000 and no recourse to external finance.
Dastgyr will launch microlending solutions to overcome this barrier and provide loans to its customers to help them grow their enterprises. It will also provide “Buy Now, Pay Later” schemes, allowing users to purchase products on a credit card.
Source: www.techjuice.pk
