Startup Jugnu raises $22.5 million in Series A Round funding

KARACHI: An e-commerce startup Jugnu raised $22.5 million in Series-A round funding to digitise country’s retail sector, it said on Friday.

The Lahore based business to business (B2B) firm secured the funding after it entered into a strategic alliance with Sary, a MENA-based online commerce marketplace.

According to Jugnu, it has connected more than 30,000 kiryana stores, which are small retail stores, and small and medium size enterprises directly with manufacturers through its app. It aims to address digitisation challenges across Pakistan's e-Commerce industry.

Earlier, Systems Limited has made an equity investment in Retailistan, parent company of Jugnu, acquiring a 20 percent stake in the business, joining hands with the now-progressing retail accelerator.

“With Systems Limited as a catalyst for growth, Jugnu can upscale the digital retail landscape on all fronts,” said a Systems limited official.

Jugnu is a Systems Limited associate through its wholly owned subsidiary Systems Ventures.

Recently, another Pakistani B2B startup Bazaar Technologies raised $70 million in Series B funding round.

Last year, B2C (business-to-customer) e-commerce platform Airlift Technologies Pvt. scored largest single private funding round in the country’s history by bagging $85 million Series B financing.

Technology startups in Pakistan have attracted interest from investors within the country. Overall, startups attracted $350 million in funding last year.

AVP Research Pak Kuwait Company Adnan Sami Sheikh says it’s a good development for Pakistan’s startup horizon. He said that e-Commerce platforms were burning cash for customer acquisition at the moment.

“I believe e-Commerce platforms have captured only 3-4 percent of the retail and wholesale market share. They are burning cash for customer acquisition and market penetration. What will happen if there’s some financial crunch and inflow of investment slows down?” Sheikh questioned.

They needed continued inflow of investment before the e-commerce market matures, he emphasised.

He added it would take three to five years for the market to mature and consolidate. Good performing platforms would acquire struggling ones and some might shut down.

He further said many of traders in the retail and wholesale sector lack education and they were finding it difficult to convert their decades-old system on new platforms’ apps. “There’s a trust deficit too.”

Businesspersons are wary of putting details of their millions of rupees business on these apps.

Badar Khushnood, chairman Pakistan Software Houses Association for IT and ITES (P@SHA) said the wholesale and retail trade sector was the largest sub-sector of services in the country, maintaining a growth of 7.5 percent in the FY 2017-18, and contributing around 18.2 percent to GDP in FY 2019-20.

He said e-commerce platforms like Jugnu, Bazaar, and Airlift would help fintechs by providing data of whole-sellers, retailers, and customers spending and buying patterns.