ShopUp Raises $1.62 Million Seed Round Led By Omidyar NetworkFuture Startup InsightNovember 13, 2018 0
ShopUp announced on Monday that it raised USD $1.62 million in seed funding led by Omidyar Network, the impact investment firm established by Pierre Omidyar, the founder of eBay and participated by angel investors from Facebook, Google, Amazon, Grab, and leading global banks. The fund also includes a grant from UK AID.
ShopUp is a digital credit platform that helps online MSMEs access affordable working capital micro-loans at a reduced cost by automating their online sales and credit assessment process.
What you need to know
ShopUp helps micro, small and medium businesses and home-based entrepreneurs using Facebook and other social platforms in Bangladesh automate their online sales and get access to microloans.
Merchants can register via ShopUp’s mobile app or through the website to gain access to a range of shop management tools, including order management, catalog management, preferred rates for online ads, digital payments, and shipping solutions. Merchants, who are registered with ShopUp, can apply for a collateral-free loan via ShopUp’s mobile app.
ShopUp has a partnership with BRAC, one of the largest microfinance institutions globally providing working capital loans, to connect its micro-credit program to ShopUp merchants.
ShopUp said it will use the funding to enhance the core technology infrastructure of ShopUp’s credit algorithm, accelerate acquisition to 100,000 merchants, and establish partnerships with e-commerce players, logistics companies, and offline aggregators.
ShopUp currently has 28,000 micro, small and medium enterprises (MSMEs) on its platform, the majority of which are led by female entrepreneurs.
Why this matters
More than 60 percent of Bangladeshis are self-employed, and there are over 90 million internet subscribers in the country. Given the global trend, an increasing number of people are going to start companies in the coming days.
Finance and lending are fast becoming a critical space for technology companies in Dhaka. Ride-hailing and eCommerce companies and social media platforms have helped usher a new era of small entrepreneurs in Bangladesh who don’t get access to the traditional form of financing. ShopUp offers an alternative to these entrepreneurs. At the same time, we have seen companies like Pathao, Shohoz have shown interest in the space.
There are 350,000 shops on Facebook and nearly 300 e-commerce portals.
According to the World Bank, the total MSME credit gap stands at USD $2.6 trillion worldwide, due to the high operating cost (18 cents per dollar lent). The majority of this gap exists in developing and underdeveloped countries such as Bangladesh, where the majority of the 10 million MSMEs remains outside the formal credit system. Right now there are 350,000 MSMEs on Facebook in Bangladesh—growing at a 70 percent rate yearly. This creates a massive potential for algorithm-driven credit models like ShopUp, without high operating costs.
“Many entrepreneurs in Bangladesh still lack access to formal credit services, making it hard to grow and scale their small businesses,” said Afeef Zaman, the CEO, and cofounder of ShopUp in a statement. “There is a long tail of micro- and nano-enterprises with annual turnover of less than $20,000 who generally don’t have access to affordable credit due to high operating cost of micro-loans. Our unique model allows us to reach, engage and assess these MSMEs at a fraction of the cost using deep analytics and algorithm-driven models.”
“Access to flexible, affordable credit is the key to unlock growth in the MSME sector in emerging markets, and ShopUp’s mobile-friendly platform is helping to drive economic development, innovation, and employment in Bangladesh,” said Smita Aggarwal, Investments director at Omidyar Network.
https://futurestartup.com/2018/11/13/shopup-raises-1-62-million-seed-round-led-by-omidyar-network/
