B2B startup ShopUp secures $30m debt financing
Business-to-business (B2B) startup ShopUp yesterday announced that it had secured $30 million in debt financing from both local and global lenders.
The funds will be used to drive expansion efforts and strengthen the company's supply chain operations, benefiting small businesses and consumers across the country, the company said in a statement.
The financing comprised $20 million from Lendable, a global debt financing provider for fintech companies in emerging markets, marking their first investment in South Asia.
The remaining was secured from City Bank, albeit in taka, the local currency.
The development comes at a time when global investment in local startups is on the decline due to global economic uncertainties.
"Normally startups in Bangladesh get investment from global venture capital firms but debt financing for a local startup is a first. So, I think it is a positive thing for Bangladesh," said Fahim Mashroor, CEO of bdjobs.com.
"Besides, this is the first time any bank is giving a big amount of loan to a startup. So, it is also a milestone," he said.
However, the only matter of concern is that if the taka depreciates further in the future, the startup will face problems repaying the loans, he added.
Debt financing is a kind of funding given to startups by any type of lender, including banks, for a certain period of time. It is similar to a traditional loan as a startup borrows the money and pays it back with interest.
Meanwhile, startup investments come from venture capital firms which in turn seek an equity stake in the business in the form of shares.
Although ShopUp already raised over $200 million in investments from global investors, for a startup to avail a loan implies that it is finding it difficult to attract big amounts in recent times, said an industry insider wishing anonymity.
"The new debt facilities will help us reach our goal of creating a seamless distribution network for food and essentials that serves 80 million people in Bangladesh," says Afeef Zaman, CEO and founder of ShopUp.
"Our recent success in securing financing is a reflection of our financial stability and our efforts towards having a positive impact in Bangladesh," he said.
ShopUp's commerce platform Mokam partners with manufacturers, brands, and mills to streamline the distribution of food and household necessities among small shops.
Currently, 20 million people in Bangladesh access food and essentials through Mokam's network of shops.
The company operates REDX, a last-mile logistics network in Bangladesh and is committed to addressing gaps in the country's food supply chain infrastructure.
"We have been impressed by the scale of business and quality of team that ShopUp has built to date," said Hani Ibrahim, chief investment officer of Lendable.