Uzbekistan has its first tech unicorn. E-commerce startup Uzum announced on March 26 that is has claimed the “billion dollar” crown, having raised $114mn in funding on a valuation of $1.16bn.

"It was a surprise for us to see that the penetration of smartphones was high [in Uzbekistan] and telecom infrastructure was in place, but there was no e-commerce, no proper fintech," Uzum's co-founder and CEO, Djasur Djumaev told TechCrunch after the unicorn status was confirmed.

Uzum’s Series A funding round, made up of $52mn in equity and $62 million in debt, was led by FinSight Ventures. It saw participation from Xanara Investment Management and Uzum's senior management. Uzum diluted less than 5% to investors participating in the Series A round, which brings in the startup's first external funding. The startup now has plans to raise around $200mn in a Series B round this year from investors in the Middle East, UK and the US, according to trade media.

Uzum, which launched its marketplace in October 2022, offers online shopping, fintech and food deliveries. As followed by bne IntelliNews, Uzum had big plans from the start, planning to launch an app last year and grow its business, ready for an IPO. One aim of the Uzum project was to create the largest developed e-commerce ecosystem in Uzbekistan.

The app was launched last year and quickly became the most downloaded app in the country in 2023, with over 13.5mn downloads, underscores Uzbekistan's status as the fastest-growing e-commerce market in Central Asia. The app's download numbers in Uzbekistan were on par with global giants Telegram and Instagram, reflecting a burgeoning online retail sector in Uzbekistan.

It is developing in a country that analysts say has a stark lack of e-commerce services, with the sector only accounting for 2.2% of Uzbekistan's total retail market as of December 2022, as outlined by a KPMG report.

However, KPMG's global network of professional services firms projected a sevenfold increase in the Uzbek e-commerce market, estimating its value to reach $2.2bn between 2022 and 2027. The exponential growth is supported by government digital initiatives, an uptick in internet users, the burgeoning and young population and the rise of significant domestic players. Uzum Market is the only marketplace in Uzbekistan with its own fintech and logistics solutions.

Moreover, the government has been throwing itself into promoting Uzbekistan tech profile, headed up with the flagship IT Park project that has actively been wooing US investors.

And Uzbekistan is hoping to establish itself as a major IT outsourcing centre, Uzbekistan’s ICT Minister Sherzod Shermatov told bne IntelliNews this month in an exclusive interview. He wants to be able to compete with the likes of India, Belarus, Ukraine and Romania, and has already seen its export revenue grow exponentially in the last four years.

“Last year the revenues we earned from IT outsources increased three-fold to over $300mn and they have been more than doubling every year over the last four years,” said Shermatov told bne IntelliNews in an interview in Tashkent.

Shermatov added that the goal is to raise Uzbek IT export revenues to a whopping $5bn by 2030 and has set up numerous universities and training centres to teach software engineers and create a burgeoning work force as part of the policy.

Uzum business growth

Having built to end-to-end logistics, next-day deliveries and established pickup points, Uzum has more than 8mn monthly active users and over 9,000 merchants with 600,000+ stock-keeping units (SKUs). The biggest street bazaar in Uzbekistan has only around 70,000 SKUs on any given day, Nikolay Seleznev, chief strategy and business development officer at Uzum, told TechCrunch.

Uzum has also commenced a food delivery business and established a digital bank. "Because we attract customers on e-commerce, we retain them on high-transaction businesses like daily banking, which is 100% digital. We monetize them on our lending or credit products, which are 100% Sharia-compliant, which is also very appealing to at least 85% of the population in Uzbekistan," Seleznev told the trade publication.

In its first full year of operations, Uzum posted gross merchandise value (GMV) of $150mn. It expects run-rate GMV to hit at least $300mn this year.

The company runs a buy now, pay later (BNPL) product, used for towards half of its e-commerce transactions.

Uzum reportedly has plans to combine all its businesses into two super apps, with one for consumer-focused products and the other for business-focused products. The start-up also has plans to launch Uzbekistan’s largest e-commerce logistics complex in June, which is to span 112,000 square metres initially and expand to more than 500,000 sqm in the coming years.

Uzbekistan, Central Asia’s most populous country with around 35mn people and the region’s second largest economy behind Kazakhstan, has an internet penetration of more than 76%, and smartphone penetration rate of more than 75%.  People aged below 30 make up around 60% of the population. That’s an appealing attribute for startups.

In 2020, Uzbekistan had almost 1,200 startups, with 85% at the seed stage, according to estimates published by the Asian Development Bank (ADB). Fintech startups had a 30% market share, followed by e-commerce startups at 27%, the data also showed.