Introducing Uzbekistan’s Inaugural Unicorn: E-commerce Startup Uzum

Uzum, an e-commerce platform in Uzbekistan, has achieved unicorn status by raising $114 million in funding, boasting a valuation of $1.16 billion. Serving millions of customers, Uzum offers online shopping, fintech solutions, and food deliveries in the country.Uzum caters to millions of customers across Uzbekistan

Uzbekistan presents a fertile landscape for startups, with its young demographic—60% of the population is under 30—and impressive literacy and internet penetration rates. In fact, the nation boasts a near 100% literacy rate and over 76% internet penetration, along with a smartphone penetration rate exceeding 75%. In 2020, Uzbekistan harbored approximately 1,200 startups, with 85% still at the seed stage. Fintech startups led the pack with a 30% market share, followed closely by e-commerce ventures at 27%, as reported by the Asian Development Bank. Despite these favorable conditions, e-commerce services have been surprisingly scarce in the country, comprising just 2.2% of the total retail market as of December 2022, as indicated by a report from KPMG.Uzum's co-founder and CEO, Djasur Djumaev, notes that prior to the emergence of dedicated e-commerce platforms like Uzum, Uzbek consumers primarily relied on social media apps such as Instagram, TikTok, and Telegram for online shopping.

However, these platforms presented ligmitations in terms of product variety and logistics capabilities, often restricting customers to small inventories and informal seller groups.Recognizing this untapped potential, Uzum's co-founder and CEO, Djasur Djumaev, envisioned establishing a comprehensive marketplace akin to Amazon, offering end-to-end logistics and delivery services. 

Uzum commenced operations by building robust logistics infrastructure, including a fleet and pickup points for next-day deliveries. Since its marketplace launch in October 2022, Uzum has rapidly expanded its reach, boasting over 8 million monthly active users and collaborating with more than 9,000 merchants offering over 600,000 SKUs.In its inaugural year, the startup achieved a gross merchandise value (GMV) of $150 million, with projected GMV reaching at least $300 million this year.

This remarkable growth underscores Uzum's successful endeavor to revolutionize e-commerce in Uzbekistan and meet the burgeoning demands of its tech-savvy population.
In addition to its remarkable success in the e-commerce realm, Uzum has diversified its portfolio by venturing into fintech and food delivery sectors. The introduction of a buy-now-pay-later (BNPL) solution has garnered significant traction, constituting 45% to 50% of the platform's e-commerce transactions. Furthermore, Uzum has ventured into the realm of digital banking, offering Sharia-compliant financial products tailored to the preferences of Uzbek consumers.By capitalizing on its robust e-commerce platform to drive customer acquisition and retention, Uzum has successfully expanded into high-transaction businesses such as daily banking, bolstering its revenue streams and fostering sustainable growth. With its innovative approach and ambitious vision, Uzum stands poised to further revolutionize the digital landscape of Uzbekistan and beyond.

Uzum's Series A funding round, totaling $114 million, consisted of $52 million in equity and $62 million in debt financing. FinSight Ventures spearheaded the equity investment, with contributions from Xanara Investment Management and Uzum's senior management. Notably, Uzum's equity dilution to Series A investors remained below 5%, marking the startup's inaugural external funding initiative.Looking ahead, Uzum is gearing up for a Series B round, aiming to raise approximately $200 million from investors across the Middle East, U.K., and the U.S. This forthcoming funding round underscores Uzum's ambitious growth trajectory and underscores its commitment to expanding its foothold in the global market.

With regard to fund allocation, Uzum plans to allocate two-thirds of the fresh capital to bolster its fintech division, with the remaining one-third earmarked for enhancing its e-commerce operations. Specifically, Uzum intends to introduce innovative products tailored for unsecured lending targeting both individual consumers and small to medium-sized enterprises (SMEs). Additionally, significant investments are slated for enhancing Uzum's proprietary IT infrastructure and optimizing its logistics capabilities, underpinning the company's strategic objectives of driving innovation and operational efficiency across its business verticals.Djumaev emphasized Uzum's strategic focus on expanding its product offerings, bolstering e-commerce infrastructure, and fueling its fintech initiatives. Concurrently, Seleznev outlined ambitious growth targets, aiming for a 150% to 200% increase in Gross Merchandise Value (GMV), doubling its credit portfolio, and scaling up total payment volume circulated through its ecosystem.

Looking ahead, Uzum has outlined plans to consolidate all its operations into two super apps by the end of the year: one catering to consumer-centric services and the other focusing on business-oriented products. Moreover, the company is set to launch Uzbekistan's largest logistics complex for e-commerce in June, initially spanning 112,000 square meters and slated for expansion to over 500,000 square meters in the coming years.

Drawing parallels with successful global counterparts like Nubank in Latin America and Kaspi.kz in Kazakhstan, Djumaev highlighted Uzum's unique position in Uzbekistan's market. With diverse margins across its product spectrum, Uzum stands to leverage synergies between its e-commerce and fintech offerings, enabling the company to capture untapped opportunities and drive sustainable growth.

Alexey Garyunov, managing partner of FinSight Ventures, expressed confidence in Uzum's potential to emerge as a national technology leader in Uzbekistan, drawing parallels with the success of Kaspi.kz in neighboring Kazakhstan. Garyunov cited Uzum's talent pool, robust resources, and comprehensive product portfolio as key drivers propelling the company toward achieving its strategic objectives.