Pakistani fintech Dastgyr raises $3.5 million in seed round

Dastgyr, a B2B marketplace based out of Karachi connecting suppliers to mom-and-pop retailers, has raised a $3.5 million seed round led by SOSV. This takes the total capital secured so far to $4m, including the angel round in July 2020.

With fresh capital in the kitty, the startup wants to mark its entry into the fintech space by offering products to kiryana stores. As per the press release, it aims to connect over two million underserved retailers in Pakistan directly to manufacturers, distributors, and wholesalers to fix what is currently a fragmented supply chain and will deploy this seed funding to launch products for financial inclusion in Q3 2021.

On top of further building the tech stack and expanding the already 280-odd team, “the funds will be deployed towards officially launching new fintech solutions that Dastgyr’s team has already been experimenting with, including ‘Buy Now Pay Later’.

Its fintech products will strive for financial inclusion of the retailers that Dastgyr aims to serve, the majority of whom remain unbanked. “Access to financing options will ultimately enable them to have more purchasing power and expand their businesses to include more categories, improve store capacity, or purchase new equipment like refrigerators and shelves,” the press release states.

Founded in 2020 during the height of Covid-19, Dastgyr is a B2B marketplace app that enables retailers to order wholesale inventory of over 2,000 stock-keeping units (SKUs) with guaranteed next-day delivery and telephonic helpline support. Product categories on the app include fast-moving consumer goods, stationery, mobile accessories, and more. The startup claims to have grown the gross merchandise value 7x between September 2020 and July 2021, while boasting 5,240 daily active users on the app.

SME retailers are the backbone of Pakistan’s economy, representing a combined market of roughly $125 billion dollars, about 30-40 per cent of the country’s GDP. Dastgyr aims to empower and uplift this segment with a near-perfect supply chain and financial inclusion to increase that contribution even further, the press release states.

In addition to SOSV, the round also included ADB Ventures, the Asian Development Bank’s venture capital arm, Seedstars, and Edgebrook Partners, marking their first investments into the Pakistan market. Strategic institutional and angel investors from the MENA region also participated, including Zayani Venture Capital and Tricap investments.

“Pakistan is seeing the same patterns as India five years ago and China 10 years ago: with 75pc of the population owning a smartphone, the first-movers in mobile-first services will be the winners. We are particularly impressed with 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 and Managing Director of MOX.

Dastgyr’s asset-light model functions on a cross-docking approach: goods are delivered to sorting centres, sorted into individual orders and routes, and are then dispatched to retailers. Currently operational in both Karachi and Lahore after its official launch in September 2020, it has fulfilled hundreds of thousands of orders worth millions of dollars to roughly 30,000 customers.

Dastgyr hasn’t raised an incredibly large dollar amount in this seed round, but its management has been conscientious about ensuring that their deployment of capital remains exceedingly efficient. Its current investment to gross merchandise value (GMV) ratio is $1 into $58.

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).

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