LAHOR: Lahore-based B2B fresh produce marketplace Tazah Technologies raised an additional $ 4.5 million in its pre-seeding expansion cycle, bringing the total pre-seeding lift to 6.5 million. dollars.
Tazah’s initial $ 2 million pre-seed tranche was raised in October. The extension round was co-led by Fatima Gobi Ventures (FGV) of Pakistan and Vibe Capital, based in the United States.
The round was joined by Shorooq Partners, Nuwa Capital, Ru-net, Alter Global, Julian Capital, Kinnow Capital, Early Gray Capital and K3 Fund. The round also had the participation of angel investors based in Silicon Valley, including Sahil Bloom, Siqi Chen, Matt Brezina, among others.
For Nuwa Capital, one of the largest funds in the Middle East, this will be their first investment in Pakistan. Existing investors including Global Founders Capital, Zayn Capital, i2i Ventures and notable angel investors have also reinvested in the cycle.
Profit has seen internal documents and can confirm the amount of $ 4.5 raised in the new round.
According to the Pakistan Bureau of Statistics (PBS), the agricultural sector is the largest, contributing around 24% of the country’s gross domestic product and accounting for half of the employed workforce. In a mostly offline agricultural supply chain from farmers to retailers, fresh produce such as fruits and vegetables from farms are sold by farmers to middlemen, who then sell them to wholesalers. Individual retailers buy from wholesalers at an inflated price due to the margins generated by both players: middlemen and wholesalers.
Retailers then sell it to end consumers, deciding their margins based on where they sell.
The massive rise in farm-to-retail prices occurs due to multiple players taking reductions in the form of margins at every stage where these products are marketed. There are multiple handling and logistics points for goods of a perishable nature.
Handling and deliveries are done through an inefficient and archaic infrastructure which increases costs, further raising prices. It also results in post-harvest waste and affects the quality of products of a perishable nature.
Intermediaries and wholesalers are the ultimate winners as they are able to exploit the farmers and enjoy better margins. As farmers lose on those margins while relying on predatory loan sharks to finance their working capital needs.
On the other hand, the retailer must pick the fruits and vegetables from wholesalers at the start of the day at prices that fluctuate daily. Product quality is also not great due to inefficiencies in the supply chain.
The end customer naturally suffers from the prices he has to pay for basic vegetables and fruits, which have a very low price at the start of the supply chain. Also in terms of quality, the retailer and possibly the customer pay a high price for a product that has lost quality by the time it reaches these stakeholders.
Founded in August 2021 by two former Careem executives, Abrar Bajwa and Mohsin Zaka, the B2B marketplace Tazah aims to solve these problems by connecting farmers directly to fruit and vegetable retailers, eliminating traditional middlemen and wholesalers. In turn, the prices at which retailers can buy from farmers are better.
Tazah also has a parallel storage and delivery service whereby it is able to deliver directly to retailers instead of forcing them to go out and buy at the start of the day, and the quality of the product is also better.
The startup claims that since its launch, it has been able to achieve an annualized gross value of goods (GMV) of $ 7 million. Based in Lahore, the startup has expanded its operations to Karachi with another launch in the city in the works.
The B2B agrotech space is heating up, with one of Tazah’s competitors, Jiye Technologies, raising $ 2.5 million in pre-seed funding yesterday. On how Tazah plans to stay ahead in this market, Abrar Bajwa, co-founder of Tazah, said it all depends on ability to execute.
“It’s a tough space and there are execution challenges at all scales. It’s going to become difficult to execute on a large scale and we believe we have the best team to move quickly, ”said Abrar Bajwa, co-founder of Tazah.
Regarding future plans, Abrar said: “With the pedigree of technology and talent that we are building, we believe that expanding into regional markets with similar dynamics is a logical decision. ”
In addition to using the funds for expansion, the startup also plans to diversify its offerings and roll out financial products for farmers and retailers.
Tazah claims to have achieved a high rate of customer retention month over month, with many users being repeat customers and showing a subscription-like order frequency very rarely seen in other industries.
Mohsin Zaka, Co-Founder of Tazah, said, “Our experience leading large national teams and growing complex markets has helped us immensely in rapidly growing our business and building the capacity to manage multi-city operations. . We have also built a very strong founding team by acquiring top talent from different industries. “
Ankur Nagpal, Founder of Vibe Capital said: “It is inevitable that this business exists. It’s a very inefficient supply chain at the moment, and Tazah is streamlining it.
“The company is growing very rapidly and is on track to hit eight digits in annualized GMV over the next few months and that still represents a very small percentage of the overall market. What excites us the most is the ability to create additional products (especially financial products) for this market. For example, Tazah is in an excellent position to start providing lines of credit to their commercial buyers which they pay back after reselling the inventory, ”he said.