Sequoia India, Flourish Ventures lead $22.5m round in Bangladeshi B2B commerce startup

ShopUp, a Bangladesh-based business-to-business (B2B) commerce platform for neighborhood shops and online sellers, announced that it has raised US$22.5 million in a series A funding round co-led by Sequoia Capital India and Flourish Ventures.

ShopUp co-founders (from left): Ataur Rahim Chowdhury, Siffat Sarwar, and Afeef Zaman / Photo credit: ShopUp

Veon Ventures, Speedinvest, and Lonsdale Capital (Singapore), also participated in the round.

The move marks Sequoia Capital India and Flourish Ventures’ first investment in Bangladesh. It’s also the largest series A round in the country, Sequoia claimed in a statement.

According to ShopUp, there are 4.5 million neighborhood mom and pop shops in Bangladesh, which account for 98% of the country’s retail sector. This makes Bangladesh one of the most fragmented retail markets in Asia.

A majority of these small retailers face challenges in procuring goods from distributors and wholesalers across a fragmented supply chain. A study by the UN Capital Development Fund found that 73% of these retailers’ sales in Bangladesh are credit sales to end consumers. Another report by the World Bank Group and Policy Research Institute also pointed out that only 27% of micro, small, and medium-sized enterprises (MSMEs) in the country have access to formal financing to support their liquidity.

See also: Could Bangladesh be the next Indonesia?

Launched in 2017, ShopUp offers B2B sourcing, last-mile logistics, digital credit, and business management solutions to help these MSMEs.

Earlier this year, the company opened its office in Bengaluru, India. And recently, it also merged with Indian ecommerce platform Voonik, with both the company’s founders – Sujayath Ali and Navaneetha Krishnan – joining ShopUp as co-founders.

The fresh capital will be used to increase the Bangladesh firm’s retail reach, deepen its partnerships with manufacturers, and build tech-first infrastructure, said Afeef Zaman co-founder and CEO of ShopUp.

The company said it has seen a rise in demand amid Covid-19. The number of neighborhood shops transacting weekly has grown by 8.5x between April and August on the platform, while its last-mile logistics team RedX is processing 13x more parcels daily than it did in April.

In 2018, ShopUp raised over US$1.6 million in a seed round from Omidyar Network, followed by US$1.5 million from Sequoia India’s startup accelerator Surge last year.

It is up against local players in the space such as PriyoShop, which won Tech in Asia’s Pitch Night in May.