Shohoz raises funding in a bid to become Bangladesh’s super app

Bangladesh’s homegrown super apps Shohoz and Pathao are competing to bring users into their ecosystems. But building out the infrastructure and keeping the marketplace active means spending boatloads of cash, so raising money becomes inevitable.

That’s exactly what Shohoz has done. The startup announced that it has secured an undisclosed amount of funding in a round led by Sweden-listed investment firm Vostok New Ventures. Partech Ventures, Heritas Venture Funds, Cypress Capital, Tekton Ventures, and existing backer Golden Gate Ventures also participated.

Prior to this, Shohoz had raised a US$15 million round.

Shohoz’s main business is ride-hailing, providing 1.5 million rides a month – up from 1 million six months ago.

Despite this rapid growth, the company didn’t start out as a ride-hailer. Shohoz sold bus tickets when it debuted in 2014 and then ventured into ferry ticket sales. It now sells event tickets, too.

“[We were] initially focusing on digitizing the bus industry and then selling tickets online. We do only large events. Compared to ride-hailing, ticketing is a smaller market. However, there are synergies between the two,” Shohoz founder and managing director Maliha Quadir tells Tech in Asia.

Shohoz only introduced ride-hailing last year, beginning with motorbikes before branching out into cars. Food delivery is its newest service: it has reached 30,000 deliveries a month soon after it was rolled out in December 2018.

Shohoz’s competitor Pathao has been ramping up operations, too. Almost a year ago, the company reportedly raised US$10 million in a round led by Indonesian super app Go-Jek. Back then, Pathao had surpassed 1 million rides a month. Like Shohoz, Pathao offers consumers a myriad of services. It also does food delivery, though its offers parcel and ecommerce deliveries on top of that.

Despite being on opposite sides, both Shohoz and Pathao face the same long-term challenge: reaching profitability. Lyft and Uber are years away from getting there. The same goes for super apps like Grab and Go-Jek, as well as global food delivery company Delivery Hero.

Meituan Dianping – a super app in its own right – is the exception. Its food delivery and travel booking services are profitable, though its balance sheet is in the red due to is bike-sharing business Mobike, which is currently retreating from parts of Asia-Pacific.

Yet Meituan benefits from serving a country with a huge population and relatively high per-capita GDP compared to India, Indonesia, and Bangladesh.