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The logistics industry is not immune to the search for the next big thing, between the latest technology and the most innovative startups. With all of the innovation happening and venture capital flowing into FreightTech in the U.S., it’s easy to forget to look outside the United States, where there are startups on course for a substantial impact within their countries.
Many American VC firms have been investing outside of our borders for many years; that’s not new news. However, some of the few logistics-focused VCs in the U.S. are starting to build their presences in the global startup market. Santosh Sankar is the managing partner of Dynamo Ventures, a FreightTech-specific venture fund that has backed winners like Plus One Robotics, Steam Logistics, and vector.ai. In an email conversation recently, Sankar said of Dynamo’s foray into international FreightTech investing, “We believed that disruptive forces come from unsuspecting people and places. The supply chain is conducive to this given that it is a global concept, and that requires us to be open-minded to investing overseas. Roughly a third of our investments are outside of North America, and my partner, Jon Bradford, is based in the U.K. to steward this effort that is predominantly U.K. and European.”
Across the globe and throughout the supply chain, investors are looking for startup value outside of the U.S., and it’s paying off for innovative founders and their companies. Tajir Logistics is one such company standing out by being the first to solve a problem unique to its economy in Pakistan.
Babar Khan and Ismail Khan, brothers and co-founders of Tajir Logistics, recognized an opportunity and formed their business to fill the need. Tajir Logistics brings convenient inventory sourcing to small stores in Pakistan through a mobile application in Urdu. These small kiryana stores, what we might call mom-and-pop stores, often lack an easy way to procure inventory, requiring these one-man operations to close for an entire day while the owner travels to purchase inventory from wholesalers.
The brothers come from a family with 30 years of experience in consumer packaged goods (CPG) product distribution and through Tajir, solved the sourcing problem they knew firsthand. Founded in 2019, Tajir Logistics offers value through transparent pricing (with a small transaction fee), a wide selection of fast-moving consumer goods, and fast, next-day delivery, all made simple through their app. They also offer fulfillment services through Tajir Express.
Tajir Logistics gained attention in the United States by participating in Y-Combinator in early 2020. The startup accelerator focuses on bringing a small amount of money to a large number of promising startups. Since then, Tajir Logistics has raised $1.8 million from its most recent financing round, in 2020.
The Khan brothers see the potential that new technology solutions have in their home country of Pakistan. Before Tajir Logistics, they created HumBike to serve a need in a different industry, a ride-request service for motorcycles in the city of Lahore, the app for which was around for 2016 and 2017. Saad Shahzad, one of Tajir’s angel investors, recently said of the company, “Tajir is one of the most exciting supply chain startups from the recent YC W20 class. Babar and Ismail have combined their experience as founders with their deep knowledge of CPG to empower small businesses to grow their retail distribution. Tajir operates in the fifth-most populous country in the world, where broadband and smartphone penetration are growing rapidly. I’m excited to be on this journey with them.” Business startups such as these are especially well timed in the past few years in Pakistan, as there are sizable market opportunities caused by the country’s recent growth.
Within the past five years, Pakistan has risen to become the world’s fifth-most populous country and one with a relatively young population: The median age is 23. In addition, we’ve seen significant growth in technology usage — smartphone/broadband penetration in particular. As of December, there were 91 million 3G/4G subscribers, a penetration of 42%. Just five years ago, this number was 10 million; one year ago, it was 76 million. More smartphone users mean the potential for a larger user base for tech-related businesses. In 2019, Pakistan startups raised a record-breaking $36 million across 15 deals at the seed or Series A stage.
There have been other countries in the past, such as Indonesia several years ago, that have experienced a similar startup boom. These investment opportunities often go unnoticed by those focused only within the United States, as it takes intentional learning to understand the different challenges and opportunities in other countries. The inflows of venture capital into smaller economies can produce outsized results if labor and other general expenses are lower in the region. The access to capital, compounded by active, supportive investors at the VC firms, can create substantial acceleration for companies. “We have a process and approach to investing abroad that focuses on cross-pollinating best practices, technologies, and strategic perspectives from the U.S. It’s been fruitful for us thus far — consider that sennder is our first unicorn and we invested at seed as the sole American investor!” said Sankar of Dynamo. The huge potential startups like Tajir and others have is clear, and their early growth is exciting to witness.