The company competes with traditional online trading methods and attracts millions of users
Uzum, an online commerce, financial technology and food delivery startup in Uzbekistan, has raised $114,000,000 in funding, becoming the country's first unicorn with a valuation of $1.16 billion.
According to the government of Uzbekistan, the country provides a favorable environment for startups, given its fairly young audience — about 60% of the population of more than 35 million people is under 30 years of age. The country also has a nearly 100% literacy rate (according to government data), over 76% internet penetration, and over 75% smartphone penetration. In 2020, about 1,200 startups were registered in Uzbekistan, of which 85% were at the initial stage of development. According to the Asian Development Bank, fintech startups accounted for 30% of the market, which was the largest segment, and e-commerce startups — 27%.
Despite this, there is a lack of e-commerce services, which may be one of the reasons for the low share of online trading — only 2.2% of the total volume of the retail market of Uzbekistan according to KPMG as of December 2022. According to Uzum founder and CEO Jasur Jumaev, Uzbeks previously made online purchases through social networks such as Instagram, TikTok and Telegram. Buyers primarily interacted with sellers through social media groups, but these sellers had limited inventory and lacked logistics support.
Dzhumaev saw the potential to create in Uzbekistan what Amazon has done in many other countries — a market offering comprehensive logistics and delivery. Uzum began by creating logistics systems, a fleet of vehicles and pick-up points that provide next day delivery. The marketplace launched in October 2022 and currently has over 8 million monthly active users and over 9,000 sellers offering over 600,000 products. By comparison, the country's largest street bazaar sells around 70,000 items every day. In its first full year of operation, the startup recorded a total merchandise value of $150,000,000 and expects turnover to reach at least $300,000,000 this year.
Soon after its successful market launch, Uzum entered the fintech space with a buy now, pay later offering. (BNPL). According to Dzhumaev, about 45-50% of e-commerce transactions are BNPL. Uzum has also expanded its activities into food delivery and created a digital bank.
As part of its Series A round, Uzum raised $52,000,000 in equity and the remaining $62,000,000 in debt. FinSight Ventures, Xanara Investment Management and Uzum management took part in the financing. Investors in this round received less than a 5% stake in the startup, which attracted external funding for the first time. This year, the startup also plans to raise about $200,000,000 in a Series B round from investors from the Middle East, UK and USA.
Uzum plans to use two-thirds of the new funding to develop its fintech segment and one-third to develop e-commerce. The startup plans — development of products for unsecured lending for individuals, as well as small and medium-sized businesses. The company also plans to invest in its own IT infrastructure and logistics systems.
By the end of this year, Uzum plans to combine all its offerings into two super apps: one will be focused on the consumer segment, and the other — to the business sector. Also in June, the startup plans to launch its «largest» logistics complex for e-commerce in the country. The area was originally planned to be about 112,000 square meters, but it is planned to expand to more than 500,000 square meters in the coming years.