Introducing Uzbekistan's first unicorn, e-commerce startup Uzum

Image credits: Uzum

Uzum, an e-commerce startup offering online shopping, fintech and food delivery to millions of customers in Uzbekistan, raises $114 million in funding and becomes the country's first unicorn with a valuation of $1.16 billion It became a company.

Uzbekistan is fertile ground for startups, given the fact that around 60% of the country's population of over 35 million people are under the age of 30. The country also boasts an almost 100% literacy rate (according to the government), an internet penetration rate of over 76%, and a smartphone penetration rate of over 75%. In 2020, the Central Asian country had nearly 1,200 startups, 85% of which were at the seed stage. According to Asian Development Bank estimates (PDF), fintech startups dominated the market with a 30% share, followed by e-commerce startups with a share of 27%.

However, there appears to be a surprising lack of e-commerce services in the country, with the sector accounting for only 2.2% of Uzbekistan's total retail market as of December 2022, according to a KPMG report (PDF). This may be one of the reasons why it is not. Jasul Jumaev, co-founder and CEO of Uzum, said Uzbeks primarily shopped online through social media apps such as Instagram, TikTok, and Telegram. Customers connected with sellers in social groups on the platform, but sellers had limited inventory-keeping units (SKUs) and could not discuss logistics.

“It was surprising to us that there was no e-commerce or proper fintech, given the high smartphone penetration and the communications infrastructure,” Jumaev told TechCrunch.

Jumaev sees the potential for companies to do in Uzbekistan what Amazon has done in many other countries: provide a cohesive marketplace that promises end-to-end logistics and delivery. was clearly seen. Uzum started by establishing the logistics, fleet, and pickup points to offer next-day delivery. This marketplace was launched in October 2022 and currently has over 8 million monthly active users and over 9,000 merchants selling over 600,000 SKUs. By contrast, the country's largest street bazaar has about 70,000 SKUs at any given time, according to Nikolai Seleznev, Uzum's chief strategy and business development officer. In its first full year of business, the company recorded a gross merchandise value (GMV) of $150 million, and this year's run rate GMV is expected to reach at least $300 million.

Shortly after its marketplace success, Uzum expanded into fintech with its buy now, pay later (BNPL) product. According to Jumaev, about 45-50% of e-commerce transactions are done through BNPL solutions. Uzum has also entered the food delivery business and created a digital bank to fuel growth.

“As we attract customers through e-commerce, we retain them in high-volume businesses such as daily banking, which is 100% digital. We engage them with lending and credit products that are 100% Shariah compliant. We are monetizing it, but this is also very attractive for at least 85% of Uzbekistan's population,” Seleznev told TechCrunch.

The Series A round consisted of $52 million in equity and the remaining $62 million in debt and was led by FinSight Ventures with participation from Xanara Investment Management and Uzum senior management. Uzum provided less than 5% dilution to investors participating in the Series A round, the startup's first external funding.The company plans to raise about $200 million in a Series B round this year from investors in the Middle East, UK and US.

Uzum plans to use two-thirds of the new funding for its fintech business and one-third for its e-commerce arm. The company also plans to launch new unsecured loan products for individuals and small businesses, as well as invest in its own IT and logistics infrastructure.

“We want to expand our products, strengthen our e-commerce infrastructure and fund fintech,” Jumaev said.

Seleznev said the startup intends to grow its GMV by 150% to 200%, expand its credit portfolio by at least 2x, and increase the total payment volume circulating through its ecosystem.

Uzum plans to consolidate all its operations into two super apps by the end of this year. One is a consumer product and the other is a business product. It also aims to open in June the country's “largest” e-commerce logistics complex, which will initially cover 112,000 square meters and expand to more than 500,000 square meters over the next few years. I plan to

Jumaev said several companies have operations similar to Uzum around the world, naming Latin America's Nubank and Kazakhstan's Kaspi.kz. However, he believes there is no competition in Uzbekistan as Uzum has the advantage of enjoying different margins for different products and can earn higher margins by combining e-commerce and fintech services. .

“We have witnessed the success of Kaspi.kz, which has developed a super app in neighboring Kazakhstan. We are confident that Uzum, with the necessary talent, resources and products, will repeat this success and become Uzbekistan's national technology leader. ” he said. Alexey Garyunov, managing partner at FinSight Ventures, said in a prepared statement.