Pakistan-based cashback fintech startup Savyour, which is the first indigenous startup to develop the dedicated cashback app and pay-per-sale affiliate marketing network in the country, Tuesday announced completing a $3.3 million raise in their seed round.
The $3.3 million amount raised for the round was confirmed through internal documents seen by Profit.
The round was co-led by Silicon Valley-based Global Founders Capital and Pakistan’s Zayn Capital. The round also saw participation from Fatima Gobi Ventures, Disrupt.com, Rally Cap Ventures, +92 Ventures, Suya Ventures, Mir Aamir, the former CEO of Quotient Technologies and Pere Hospital, and co-founder of Secways.
The seed round is the first venture round raised by Savyour since its inception in August 2020, as claimed by the startup. The startup was founded by Umair Gadit and Saad Gadit using their own initial capital and the growth has since been bootstrapped.
Cashbacks are very popular internationally. Platforms like Amazon and Rakuten pay hefty commissions to third-party marketers for bringing customers to their websites.
In Pakistan, the concept of cashback has been unfamiliar, with eCommerce purchases happening through brands’ own websites, platforms like Daraz or aggregators like PriceOye and Shopsy. Recently, BNPL platforms have entered the foray to provide more avenues for eCommerce purchases.
Under the cashback model, a third-party service like Savyour lists eCommerce brands or platforms like Sapphire, Daraz and foodpanda, on its website or app, and if a purchase is made through Savyour, the brand or platform pays a commission to Savyour for the sale that it enables.
Savyour pays a percentage from the commission per sale it earns from an eCommerce player, in the form of cashback to the customer that made the purchase through Savyour. Because the cashback is a saving for the customer, Savyour also counts itself as a service that is going to help drive financial inclusion.
The discounts from an eCommerce store and the cashback from Savyour become an alluring proposition for customers to shop online that can help drive the growth of eCommerce further.
According to Euromonitor, 17% of goods will be bought online in 2021, nearly doubling from 2016. The pandemic accelerated this shift toward eCommerce, as many consumers experimented and became reliant on the digital channel while in isolation. In 2020, goods bought online globally grew by 24% while stored-based sales declined by 7%. In Pakistan, eCommerce sales grew by 100% last year.
With the stores going online, they need to have a comprehensive digital marketing strategy for online success. Platforms like Savyour present themselves as third-party marketing platforms for brands, especially smaller ones, to outsource their digital marketing functions to Savyour.
The decrease in costs because of third-party marketing, coupled with the increase in sales makes it a compelling proposition for brands to sign up for such services. On the consumer side, cashback which can go up to 20% of the purchase amount, can be a strong demand driver that will further grow online selling and help eCommerce grow further.
The difference in percentages received from the brand, not disclosed to us, and paid to customers as cashback by Savyour still yields a profitable business, Umair claims.
“We have positive margins at the moment, which attests to the profitability of the business but we are investing more on the growth of the business and hence the raise,” says Umair.
Interestingly, however, while its functions and the value proposition of Savyour appear to be a third-party digital marketing service, it does not call itself a digital marketing startup. Instead, it calls itself a fintech (financial technology) company because the cashback it provides to customers flows through the Savyour systems and can be withdrawn as hard cash from a bank account.
“The way it works is that when the user comes on the Savyour app and goes to let’s say Daraz from there, after the purchase from Daraz, even if it is cash on delivery, the customer receives cashback in his Savyour wallet,” explains Umair.
“That money is flowing through the Savyour system which can be transferred to the respective customer’s bank account or wallet. And because the money is flowing through the Savyour system, we call ourselves a fintech startup because that opens up a lot of opportunities for us in fintech,” he adds.
There are currently no other apps or websites offering cashback to customers in Pakistan. Effectively, there is no competition for Savyour against what it is doing, except the discount-oriented brands and websites, which Savyour actually partners with to offer cashback to their customers on top of any discounts offered on bank cards, deals at eCommerce stores or vouchers.
Because of these factors, Savyour claims to have processed more than 200,000 orders and onboarded over 250 partner brands including leading players such as Daraz, foodpanda, Bata, Bagallery, elo, Naheed.pk and Pizza Hut since its inception in 2020.
The startup now plans to ramp up its presence in Lahore and Islamabad after the round. It has earlier had a main focus on Karachi and little presence in Lahore and Islamabad. The startup plans to spend money on growing its team and for initial testing to have their presence in-store as well.
Commenting on the round, Tito Costa, partner at Global Founders Capital said, “We believe in Savyour’s mission to deliver savings to online shoppers while driving revenue growth for retailers, making it an essential building block for the eCommerce ecosystem in Pakistan.”
Faisal Aftab, co-founder and managing partner of Zayn Capital’s Frontier Fund said: “Savyour’s offerings come at a crucial time when online and offline users are seeking deals and cash rewards to meet their monthly budgets, against the backdrop of a global monetary environment where consumers’ purchasing power is increasingly eroded.”
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