Pathao gets $12m for fintech push

Ride-hailing firm Pathao yesterday announced that it had raised $12 million to ramp up its fintech offerings in a much-needed boost for Bangladesh's start-up ecosystem, which has been grappling with shrinking funding in recent times.

 

In the first half of 2024, local start-ups raised $19 million across 22 deals, a 57 percent decline year-on-year, according to Lightcastle Partners, which tracks start-up funding.

The latest funding round takes the total capital raised by Pathao to over $50 million, the most for any pre-Series B start-up in Bangladesh.

The pre-Series B level of a star-up follows seed, pre-series A and series A stages and it is typically marked by expansion and investment requirements.

The latest Pathao funding round was led by the MENA-based VentureSouq, which has made "platform bets" across the Middle East, Africa and South Asia.

Additional investment came from Anchorless Bangladesh, Osiris Group, South Asia Tech, Openspace Ventures and other investors.

The trust placed in Pathao by global venture capital firms through this significant investment not only underscores the resilience and growth potential of Bangladesh's tech sector but also signals renewed investor confidence at a time when global economic uncertainties have cast shadows on the emerging market, according to industry people.

Having transformed into a profitable and financially robust entity over the past two years, Pathao now plans to provide fintech offerings, the company said in a press release.

"Pathao is far more than a brand or a suite of products -- it is a lifestyle. Just as it has radically transformed urban transportation, logistics and the gig economy, our efforts in fintech will reshape the financial landscape in Bangladesh," said Fahim Ahmed, managing director and chief executive officer of Pathao.

The company has already made forays into fintech with the introduction of Pathao Pay, a digital wallet, and Pay Later, Bangladesh's first and largest 'buy now, pay later' solution.

The fresh funding will be instrumental in scaling these fintech offerings, refining their technology and broadening market reach, Pathao said.

"Our core users are the digital native youth of Bangladesh. Traditional banks are too primitive for them, and the other digital wallets are focused more on targeting the underbanked. We are looking to build a tailored financial management ecosystem for our customers, young professionals and tech-enabled entrepreneurs in Bangladesh," Ahmed said.

Pathao's fintech offerings are designed to provide personalised financial solutions to over five million young professionals and over 500,000 tech-enabled small businesses in Bangladesh, utilising cutting-edge technology to enhance user experience.

Tammer Qaddumi, co-founder and general partner at VentureSouq, said: "Given Pathao's existing reach, trust in its markets, and the calibre and integrity of its team, we believe Pathao will be a significant and positive player across multiple service lines for years to come. We certainly view the company as the strongest potential distribution platform for fintech products across Bangladesh, bar none."

Rahat Ahmed, CEO and founding partner of Anchorless Bangladesh, said Pathao is uniquely positioned to capitalise on Bangladesh's economic growth.

Since its inception in 2015, the company has served over 10 million customers and created more than 500,000 employment opportunities in Bangladesh's gig economy and small businesses.