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

Uzum, an e-commerce startup providing on-line buying, fintech and meals deliveries to thousands and thousands of shoppers in Uzbekistan, has raised $114 million in funding, turning into the nation’s first unicorn with a valuation of $1.16 billion.

Uzbekistan is fertile floor for startups, given the truth that individuals aged under 30 represent about 60% of its population of over 35 million. The nation additionally enjoys a near 100% literacy rate (based on its authorities), more than 76% internet penetration, and over 75% smartphone penetration rate. In 2020, the Central Asian nation had practically 1,200 startups, 85% of which had been on the seed stage. Fintech startups dominated the market with a 30% share, adopted by e-commerce startups at 27%, based on estimates (PDF) by the Asian Improvement Financial institution.

Nonetheless, the nation appears to have a surprising lack of e-commerce companies, which can be among the many the reason why the sector accounted for under 2.2% of Uzbekistan’s whole retail market as of December 2022, per a report (PDF) by KPMG. In line with Uzum’s co-founder and CEO, Djasur Djumaev, Uzbeks used to primarily store on-line via social media apps resembling Instagram, TikTok and Telegram. Prospects linked with sellers in teams on social platforms, who had restricted stock-keeping items (SKUs) and no logistics to talk of.

“It was a surprise for us to see that the penetration of smartphones was high and telecom infrastructure was in place, but there was no e-commerce, no proper fintech,” Djumaev advised TechCrunch.

Djumaev clearly noticed the potential for an organization to do in Uzbekistan what Amazon has accomplished in quite a lot of different nations: supply a cohesive market that guarantees end-to-end logistics and supply. Uzum began by organising its logistics, a fleet, and established pickup factors to supply next-day deliveries. {The marketplace} was launched in October 2022, and at the moment, it has greater than 8 million month-to-month energetic customers and over 9,000 retailers promoting 600,000+ SKUs. In distinction, the largest avenue bazaar within the nation has about 70,000 SKUs on any given day, based on Nikolai Seleznev, chief technique and enterprise growth officer at Uzum. In its first full yr of operations, the startup recorded gross merchandise worth (GMV) of $150 million, and expects run-rate GMV to succeed in a minimum of $300 million this yr.

Shortly after its success with {the marketplace}, Uzum forayed into fintech with a buy-now-pay-later (BNPL) product. About 45% to 50% of its e-commerce transactions are accomplished by way of the BNPL resolution, Djumaev stated. Uzum has additionally entered the meals supply enterprise and arrange a digital financial institution to bolster its progress.

“Because we attract customers on e-commerce, we retain them on high-transaction businesses like daily banking, which is 100% digital. We monetize them on our lending or credit products, which are 100% Sharia-compliant, which is also very appealing to at least 85% of the population in Uzbekistan,” Seleznev advised TechCrunch.

The Collection A spherical, comprising $52 million in fairness and the remaining $62 million in debt, was led by FinSight Ventures, and noticed participation from Xanara Funding Administration and Uzum’s senior administration. Uzum has diluted lower than 5% to buyers collaborating within the Collection A spherical, which is the startup’s first exterior funding. The startup additionally plans to boost about $200 million in a Collection B spherical this yr from buyers within the Center East, U.Okay. and the U.S.

Uzum plans to make use of two-thirds of the contemporary funding for its fintech enterprise and one-third for the e-commerce arm. There are plans to launch new merchandise for unsecured lending to people in addition to small and medium-sized enterprises, and put money into its personal IT and logistics infrastructure.

“We want to expand the products, enhance the infrastructure of our e-commerce, and fund our fintech,” Djumaev stated.

Seleznev stated the startup intends to broaden its GMV by 150% to 200%, develop its credit score portfolio a minimum of two instances, and improve the entire fee quantity circulated via its ecosystem.

By the top of this yr, Uzum plans to mix all its companies into two tremendous apps: one for its consumer-focused choices, and one other for its business-focused merchandise. It additionally goals to launch the nation’s “largest” logistics complicated for e-commerce in June, deliberate to span 112,000 sq. meters initially, and expanded to over 500,000 sq. meters within the subsequent few years.

Djumaev stated a couple of corporations globally function equally to Uzum, and named Latin America’s Nubank and Kazakhstan’s Kaspi.kz. Nonetheless, he doesn’t see any competitors in Uzbekistan, as Uzum has the benefit of having fun with totally different margins throughout merchandise, and may make greater margins by combining its e-commerce and fintech companies.

“We witnessed the success of Kaspi.kz in creating a super app in neighboring Kazakhstan, and we are confident that Uzum, which has the necessary talent, resources and products, will repeat this success to become a national tech leader in Uzbekistan,” stated Alexey Garyunov, managing associate of FinSight Ventures, in a ready assertion.