In Uzbekistan a bold digital revolution is transforming society. Spearheading this transformation is Uzum, an e-commerce start-up which recently raised $52mn in funding, making it Uzbekistan’s first tech unicorn (valued at over $1bn).

Taking after Turkey’s Trendyol and the UAE’s Careem, Uzum is building Uzbekistan’s digital ecosystem from scratch by fusing e-commerce, fintech, banking and more in one super-app. The app was launched in October 2022 and quickly became the most downloaded app in the country in 2023, with 10mn average monthly users – nearly a third of the country’s population – and almost $100mn in profit in its first year. Its e-commerce business accounted for the largest number of users and orders in Uzbekistan in 2023, with an approximate gross merchandise value (GMV) of $150mn.

According to KPMG statistics cited by Uzum, Uzbekistan is home to the fastest-growing e-commerce market in Central Asia, with the potential to grow seven-fold by the end of 2027.

“Over a very short period of time, the Uzum team has built a spectacular business with serious scale. It’s really unlike anything the country has seen before in terms of tech, convenience and innovation,” said Quinn Martin, who runs an investment bank called Bluestone that is focused on Central Asia. “This funding round is going to drive interest in the other star tech stories emerging from Uzbekistan”.

“Uzbekistan has a population of 36mn and they are adding nearly a million people a year,” Martin said. “The average age is 29 and it’s actually declining. The potential is actually quite a bit greater than Kazakhstan. Wages are rising and traditional business models are getting crushed by these tech insurgents. Investors brave enough to get in now will be rewarded.”

A recent Series A funding round consisting of $52mn in equity has given Uzum the capital push it needed to expand its activities. The start-up now has ambitious plans to introduce new products, increase unsecured lending and upgrade its IT and logistics infrastructure in an effort to double its credit portfolio and enlarge its GMV.

The company’s plans this year include a Series B funding round, which is expected to raise $200mn from investors in the US, UK and the Middle East. The latter has played an active role as a regional investor, with Xanara Investment Management, a multifamily office in the UAE, being one of the primary investors in Uzum’s Series A funding round led by FinSight Ventures.

With 60% of its 36mn population being under the age of 30 and with one of the highest rates of internet access, Uzbekistan has become a highly attractive investment hub, particularly for the Middle East, as countries like the UAE and Saudi Arabia seek to venture out to new markets. The government has been investing into the sector to promote its growth and set up the flagship IT Park as an innovation hub. Likewise, Uzbekistan’s ICT minister, Sherzod Shermatov, told bne IntelliNews in a recent interview that the country’s outsourcing sector is taking off and aims to generate $5bn a year of revenue by 2030.

“Uzbekistan is one of the countries that is increasingly getting on the radar of emerging market investors. In the past few years, efforts have been made to reduce trade and legal barriers for business, liberalise the economy and strengthen rule of law with the aim of fostering local development and attracting foreign investment. It’s working,” says Chris Weafer, CEO of Macro-Advisory, an independent strategic consultancy in the Eurasia region.

Over the past five years there has been a 2.5-fold increase in UAE involvement in Uzbekistan, with energy, logistics and transportation being key sectors and digital advancement remaining high on Uzbekistan’s agenda. The two countries recently signed an MoU to promote Falcon AI adoption and incorporate artificial intelligence in Uzbekistan’s digital infrastructure.  

The Uzbek entrepreneurship and IT incubator at the IT Park also launched its "One million Uzbek Coders" initiative in 2019 in collaboration with the authorities as a way to foster IT talent in the country. More recently, the World Bank signalled its support for Uzbekistan’s digital transformation efforts after it approved a  $50mn concessional loan for the Uzbekistan Digital Inclusion Project.

In recent years, multiple fintech companies like Kazakhstan’s Kaspi, Revolut, Clarna and others in emerging nearby markets like Southeast Asia have succeeded in spreading their services locally and worldwide. Uzum is the first start-up to offer this level of services on the Uzbek market, and it does so in a Sharia-compliant manner. Few companies compare in scale and services.

Uzbekistan’s youthful demographics, coupled with a booming GDP, helpful policies and high internet penetration rates, will keep fuelling demand for digital services from e-commerce platforms to fintech solutions. Uzum provides both.

According to a statement made in Forbes, Uzum founder Djasur Djumaev considers an IPO a to be a “logical and necessary” step in an ever-changing market. The company’s IPO could be rolled on the Tashkent Stock Exchange and/or the Abu Dhabi Stock Exchange while simultaneously having parallel placements in Western markets.

And by June 2024 Uzum aims to launch Uzbekistan’s “largest” e-commerce logistics complex. One thing looks certain: the potential for digital growth in Uzbekistan is limitless, and so is Uzum’s potential for success in this untapped market.