How ShopUp Raised $200M to Build the Digital Layer for the $100B Retail Value Chain

Leaders share their story building the next unicorn from Bangladesh, breaking fundraising records and creating a national network of 150K retailers along the way.

ShopUp is one of the most important startups from Bangladesh. They are digitizing the retail value chain in Bangladesh through a suite of solutions in logistics, inventory and finance, with a mission to "put 4.5 million small retailers in the driving seat of Bangladesh's economic growth." They have raised $200M in funds til date, including the biggest ever Series B in Bangladesh in 2021 and 2022 (extension) from investors such as Tiger Global Management, Prosus Ventures and Valar Ventures (Peter Thiel’s VC firm). It focuses its value proposition across three main product lines, which are now stand-alone units: Mokam (product sourcing), RedX (delivery & logistics) and Baki (digital credit).

Bangladesh Angels recently hosted its first ever in-person fireside chat with BAN members Shaheen Siam, Founding Member and Chief Strategy Officer at ShopUp and Ataur Rahim Chowdhury, Co-Founder and Chief Product Officer at ShopUp's HQ in Dhaka.

In this session attended by investors and founders from the ecosystem, the founders discussed how the founding team built ShopUp from the ground up, putting it on track to become Bangladesh's next unicorn. Check out the video below.

Our favourite takeaways and learnings from the session:

1. When you came into the scene, around 2016/2017, how did you test the idea and go into the market?

We started by bootstrapping from our previous companies. Our entry in the market coincided with the tech wave in Bangladesh, like bkash going mass market. Back then f-commerce was more prevalent than e-commerce. We built the first product around Facebook merchants. The first thing we did was get some traction. We approached angels with this model of building around Facebook commerce. Although we were getting rejections left and right, the turning point was when we got our first angel to give us some runway.

If we think about the early stages of ShopUp, what we have today is a completely different company. There have been lots of pivots and the first product doesn’t exist anymore.

2. Back in 2016, what was the angel landscape in Bangladesh like?

One of the things that is still relevant is the expectation to receive a large stake and early returns. As we navigated towards more relevant angels and investors back in those days, we got two pieces of feedback:

• Is the the market in Bangladesh ready for this [a tech enabled f-commerce platform]? Is it large enough? Are there enough merchants?

• Is the problem acute enough to solve?

Angels were more basic in terms of their understanding the target market. However, if you understand the problem, you realise it's not for a small portion of the market that you are solving for but instead there’s opportunity to solve it for the larger market, in the offline world. That was an important early learning, pushing back on the TAM. In many cases, the problem you are solving for may be shared by a larger market, and that’s the one to go after.

3. How did you go about building the product and the feedback loop for the customers?

It has always been rooted in understanding customers and solving their pain points. When we were doing f-commerce for small merchants, we saw merchants were not able to grow due to a lack of capital with their money getting stuck with courier companies. That’s how the idea of the micro-loan product came about. Then we saw that delivery and cash collection is also a problem — deliveries would take time and getting cash back from the customer would take time - that's how RedX (ShopUp’s logistics unit) came about.

4. How many angels should you have on the cap table?

7 to 8 is considered too much. We had 25 (most of whom were later bought out during our Series B round). It’s important noting, however, that everyone played a role. It's not how necessarily always about many about angels are on the cap table, but rather who is in it. The first raise is the hardest one, the rest follow after.

Afeef (ShopUp’s CEO) was meeting a potential investor in Singapore and he was hopeful he would be able to close the deal with him during the meeting. However, the person said he is going to the US next day and would be able to touch base once he returns. So it wasn’t a yes right there. At this point, we were running out of money. Afeef went to the airport that day and booked himself a flight from Singapore to US for the next day. He went to the airport and confidently bumped into the person and casually brought up the conversation. Afeef was like, “Let's close it now”.  The investor really admired the grit and he invested immediately. Not only that, he referred us to other investors which eventually led to the $1.6M seed round. You need to have the closing grit - close within 48 hours. You cannot leave it to fade. And this applies for hiring as well.

One of our first angels did only one investment in a startup (us), and that person got a 50x return on his investment. He didn’t have the full idea about what we were doing when he invested. Fast forward to after he exited, when we asked him why he invested in ShopUp, he said he only really invested on the team. As a seed level investor, you are really investing in the founders.

5. During the scale and growth phase 2019/2020 onwards, you got into Sequoia's Surge program, being the first Bangladeshi company to be able to make into it. What did Surge like about ShopUp?

It was all about basics: Figuring out the retention cohorts, conversion rates, usual basics of product, Afeef’s hustle. Once again, we "accidentally'“ bumped into the someone from the Surge team and continued the conversation there. When the cohort started, no one would have imagined a Bangladeshi company in the first cohort. We would sell Bangladesh itself, we did not start with ShopUp. Everyone knew that Bangladesh is coming up but they didn’t know the numbers. The visualization of the market size changed their thinking.

We focused on basic metrics: Cost of data, internet usage, growth among the population, purchasing power, GDP and Dhaka being the second largest city in the world with Facebook users. These opened their eyes about the market.

6. Could you tell us more about ShopUp’s merger with Bengaluru-based online shopping platform Voonik?

Being a Pre-Series A startup, acquisition of an Indian company wasn’t an easy decision but that was the kind of mindset Surge instilled in us - to be able to make those daring decisions with conviction. The tech stack Voonik prepared was helpful in giving us quick successes and expanding into more services. The tech hub is something that we still have in Bengaluru.

The merger stemmed from our struggle with hiring engineers for out tech team in Bangladesh since we could not find quality applicants given ShopUp wasn’t a big name back then.

What was really important was that we really clicked with the founders of Voonik and had a shared vision.

7. In the middle of the pandemic, you raised the largest ever Series A ($22M) till date in Bangladesh. What did investors in that round like abut the company?

Sequioa, Floruish Ventures and Veon (European parent company of Banglalink, a major telco) participated in this round. We showed how the pandemic did not hamper us but rather accelerated our growth and of course, the Bangladesh story. We showed a vision around building the iron triangle: Commerce, logistics, finance. We showed these can be built by us. We had growth, a team and the ambition to get there.

8. In 2021, you raised a $100M plus series B round. What were the metrics you focused on this stage?

The Series B round was one of the most intense. At this stage, you have to show tangible traction to practically back your larger ambition. In the pre-series to seed stage you can say a lot of things you want to do. For instance, for our financial services component, we had to show traction and tangibility. You don’t necessarily have to show growth across all categories but growth with proof is important. On the TAM, we on-boarded researchers to do deep market research to show investors. Conviction on the TAM is very important for somebody who is looking at Bangladesh.

9. Based on your experience so far, what are some common mistakes you see founders making?

Saying “I want to be the X of Bangladesh” vs. “I am solving this problem for Bangladesh.” The latter entails working backwards while the former one is a solution in search of a problem. This doesn’t mean they can’t be successful but it’s more tangible to have the working backwards element. Having the ambition to solve a massive problem rather than the ambition of becoming X of Bangladesh is key.

Secondly, execution. We spoke about reiterating faster, making mistakes early. You need to maintain that rigour as a founder everyday. Whether it’s having that daily standup for engineering teams or the sales call in the morning - these things seem small but are very important seems and it is what makes your team connected with your vision at the end of the day.

Thirdly, the importance of taking decisions quickly. You may not always have 100% of the information - if you have 60% to 65% giving you conviction, then you should go for it.

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