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

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

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

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

“It was a shock for us to see that the penetration of smartphones was excessive and telecom infrastructure was in place, however there was no e-commerce, no correct fintech,” Djumaev advised TechCrunch.

Djumaev clearly noticed the potential for a corporation to do in Uzbekistan what Amazon has finished in numerous different international locations: supply a cohesive market that guarantees end-to-end logistics and supply. Uzum began by establishing 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 lively 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, in line with Nikolay Seleznev, chief technique and enterprise improvement officer at Uzum. In its first full 12 months of operations, the startup recorded gross merchandise worth (GMV) of $150 million, and expects run-rate GMV to achieve no less than $300 million this 12 months.

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 finished by way of the BNPL answer, Djumaev mentioned. Uzum has additionally entered the meals supply enterprise and arrange a digital financial institution to bolster its progress.

“As a result of we entice prospects on e-commerce, we retain them on high-transaction companies like day by day banking, which is 100% digital. We monetize them on our lending or credit score merchandise, that are 100% Sharia-compliant, which can also be very interesting to no less than 85% of the inhabitants 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 traders 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 12 months from traders 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 spend money on its personal IT and logistics infrastructure.

“We need to broaden the merchandise, improve the infrastructure of our e-commerce, and fund our fintech,” Djumaev mentioned.

Seleznev mentioned the startup intends to broaden its GMV by 150% to 200%, develop its credit score portfolio no less than two instances, and enhance the entire fee quantity circulated by its ecosystem.

By the top of this 12 months, 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 advanced 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 mentioned a couple of firms 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 completely different margins throughout merchandise, and might make greater margins by combining its e-commerce and fintech companies.

“We witnessed the success of Kaspi.kz in creating an excellent app in neighboring Kazakhstan, and we’re assured that Uzum, which has the mandatory expertise, sources and merchandise, will repeat this success to turn into a nationwide tech chief in Uzbekistan,” mentioned Alexey Garyunov, managing companion of FinSight Ventures, in a ready assertion.