Udhaar Book, a Pakistani provider of cash flow management services for small businesses, raised $6 million (RM24.94 million) in seed funding to digitize mom-and-pop stores that rely heavily on manual registers and handwritten entries.
The Karachi-based startup’s parent company is Toko Lab Inc. The seed round was led by Fatima Gobi Ventures and included investors such as Plaid co-founder William Hockey’s Muir Capital, Tinder co-founder Justin Mateen’s JAM Fund LLC, Integra Partners, and Commerce Ventures LLC.
Investors in venture capital and private equity are increasing their investments in Southeast Asian countries and India. Pakistani startups, too, have benefited from the funding rush this year, with inflows topping US$300 million (RM1.24 billion), which is more than the previous six years combined, according to Crunchbase and Invest2Innovate data.
Pakistan’s economy is largely cash-based, but startups are working to change that. The country is home to up to 30 million micro, small, and medium-sized businesses that operate manually and exclusively in cash.
Many small business owners, such as grocery stores, are unable to expand because they must constantly monitor the drawer containing all the cash, according to Fahad Kamr, co-founder of Udhaar.
Udhaar Book, which launched last year, currently has 1.4 million registered users and slightly more than 500,000 monthly active users. The company’s app enables small businesses to manage their finances, inventory, invoicing, and payroll digitally, among other features.
“We’ve only scratched the surface, so expanding the product’s reach is critical at the moment,” said Kamr, who relocated from Canada for the venture and previously co-founded data portal Capital IQ. “That is also where a significant portion of the funding will be directed.”
Earlier this month, Abdul Razak Dawood, Prime Minister Imran Khan’s adviser on commerce and investment, stated that the country’s startups raised $305 million between January and September 2021.
In recent weeks, a slew of young startups has made splashy funding announcements. Airlift, a quick-commerce startup, raised an unprecedented $85 million in a Series B round last month, followed by Bazaar, a business-to-business (B2B) venture, which raised an unprecedented $30 million in a Series A round. Tag, a one-year-old Pakistani startup that offers banking and financial services, raised over $12 million last month in what is now the country’s largest seed financing round, and Oraan raised $3 million in the country’s largest seed financing round for a female-led startup.