Pakistan’s fintech and logistics startup PostEx closes seed round at $8.6mn

Pakistan’s first fintech and logistics hybrid startup PostEx today announced raising another $7.1 million in seed funding to provide eCommerce merchants with upfront payments for cash-on-delivery orders, digital payments, and delivery solutions.  

The extension round brings the total raised in seed funding to $8.6 million. PostEx initiated fundraising for the seed round earlier this year and announced raising the initial $1.5 million only two months ago.

Profit has seen documents that confirm the amount raised in the seed round of PostEx.

The new round was led by US-based Global Founders Capital, which has earlier invested in Pakistan’s fintech company SafePay, B2B eCommerce marketplace Bazaar and delivery startup Rider. The round also had participation from US-based venture capital firms FJ Labs, ru-Net, a fund of RTP Global, and Alma Capital.

Both RTP Global and FJ Labs made their maiden investment in Pakistan in PostEx. The startup has earlier been backed by China’s MSA Capital and Shorooq Partners among others.   

Omer Khan, the CEO and founder of PostEx said that the need to extend the seed round arose to fund the growth of the startup, which he claims saw a 350% growth in a matter of a few weeks after the initial tranche was announced. 

In Pakistan, cash-based payments form the overwhelming majority of the economic transactions which creates liquidity problems for eCommerce businesses because of the long cash recovery cycles for cash-on-delivery orders. Inefficient logistic infrastructure creates last-mile delivery challenges which lead to high cancellations for merchants. 

Coupled with the lack of financing options, Pakistan’s eCommerce landscape had a sluggish growth, forming only about 1-2% of the overall retail. 

Founded in 2019 by Omer Khan, Saad Mahmood, Babar Razzaq, and Adil Naseem, PostEx’s fintech-first platform addresses both challenges by providing upfront payments on cash on delivery orders, complemented by an in-house logistics fleet for eCommerce businesses, thereby helping businesses grow via easy and instant access to cash and liquidity, and seamless delivery experience. 

As digital payments picked up, helped by the Covid-19 pandemic, PostEx also launched digital payments features this year, providing an all-encompassing platform for online merchants to manage their cash flows, payments and deliveries. The newly raised funds are also going to be used towards strengthening existing and introducing new digital payments products for a better digital payments experience for merchants and their consumers.   

The balance is going to be used to fund geographical expansion and grow the PostEx team, currently at 150 employees. 

PostEx’s competition in the space includes Rider, Swyft, and Trax, besides the heavyweights TCS and Leopards. But PostEx’s fintech-first approach makes it reach out to businesses with the value proposition of solving their liquidity problems first, coupled with a delivery service.

This strategy has helped PostEx grow by signing up merchants for financing their invoice values upfront, on which PostEx earns by charging a commission. The merchants can opt for delivery service as well.

This approach has helped PostEx gain share in the eCommerce delivery market as well which is saturated with the presence of at least 14 delivery players.         

Kirill Kozhevnikov, a partner with ru-Net, a new fund of RTP Global family, said: “Very excited to partner with Omer and team-PostEx, – they are our first commitment in the region. VC has no geographical boundaries, and we see tremendous potential in emerging markets such as Pakistan, Bangladesh, and MENA. Big and growing market, disruptive business model, and exceptional entrepreneurial talent – our must-haves criteria for portfolio companies – were matched on the 20th minute of the first meeting. Looking forward to building something big together!”

Tito Costa, Partner at Global Founders Capital said: “PostEx offers a unique product to e-commerce players in the Pakistani ecosystem, allowing them to unlock precious capital to accelerate their growth. We are excited to back the team as they build out their suite of financial and fulfillment products.”