Two years ago, a group of entrepreneurs in Pakistan began surveying the market to understand why financial services weren't reaching the majority of merchants in the world's fifth most populous nation.
Tiger Global said it is backing CreditBook to address those challenges. This is the firm's first investment in Pakistan.
The $11 million pre-Series A round was participated in by Better Tomorrow Venture, Firstminute Capital, Banana Capital, VentureSouq, Ratio Venture, and i2i Venture. This is the first investment by Firstminute Capital in the South Asian market.
Iman Jamall, co-founder of CreditBook, said in an interview that they started the research in late 2019. I was working as a service designer on a project for one of the largest banks in Pakistan and was observing different persona types to understand why financial inclusion is low at the time.
One of the few female founders in the country identified the challenges she faced were cash flow, the role of credit and the social relationships around it, and the over reliance on paper.
CreditBook has images.
Merchants in many markets in South Asia and Southeast Asia share a challenge of over reliance on paper to maintain ledger and always running low cash flow. Small businesses often rely on informal credit to buy their next batches, and customers buy things for weeks or months before they clear the tab.
Small businesses and mom and pop stores are being hurt by these weaknesses at a time when large e-commerce giants are trying to court customers.
Merchants can now use a bookkeeping app from CreditBook to keep track of their daily accounts.
The startup said that the eponymous mobile app has merchants in over 400 towns and cities. The number of people using the service has increased by 10 times since last year, but CreditBook wouldn't reveal the number of merchants who are using the service.
CreditBook is working on building and testing financial products on top of digital bookkeeping, but it is the startup's marquee offering today. She said it was too early to say what those financial products would look like. She said that it is definitely not e- commerce.
CreditBook is exploring some areas. There is a huge whitespace in payments in Pakistan. She said that the local regulator has made a push in recent years to accelerate the adoption of mobile payments and is focusing on building an instant payments infrastructure. India's UPI has become the most popular way users transact online.
It is a huge opportunity. There is a financing gap for small businesses. Pakistan is home to over 220 million people and 60 percent of them are under the age of 30.
Tiger Global will make its first investment into Pakistan through a partnership with CreditBook, according to a statement. The team has demonstrated incredible traction and vision.
The announcement builds on what has been a landmark year for Pakistan's startup scene as several global investors, including Kleiner Perkins, Addition, 20VC and Buckley Venture make their first bets in the country. This year has seen a record amount of money raised by startup companies in Pakistan. Krave Mart raised $6 million in its pre-seed funding round.
