Unilever-backed startup raises one of Pakistan's largest early stage funding

Karachi-based quick delivery startup Munchies announced on Wednesday that it has raised $2.5 million from strategic investors including Unilever and VentureDive, making it the third-largest pre-seed investment in Pakistan's history.

Only fintech startup TAG Innovation Pvt and Truck It In, a road freight solutions platform, have raised higher amounts in pre-seed rounds so far, according to data compiled by Crunchbase website.

Munchies, currently catering to the snacking universe and positioning itself as a "one-stop solution for impulse buying" as CEO and co-founder Saad Fazil puts it, started operations a couple of months ago. The company is focusing on Karachi's retail segment where an estimated 20-million people and a bulging youth population make the case for a big market.

It plans to utilise the funds to establish dark stores – a retail distribution centre that caters exclusively to online shopping – and warehouses, remaining focused on acquiring customers in Karachi for now.

"The pilot prior to the incorporation was successful enough to warrant a full-scale investment as well as life as its own legal entity," said a company statement, referring to the year-long pilot run under the auspices of Unilever and VentureDive, a technology solutions company.

Fazil, who was managing director and co-founder at VentureDive and led product, design, and engineering teams at Careem prior to co-founding Munchies, said the company has been registering volume close to the level of a few start-ups that have been funded recently.

“We are growing at a tremendous pace — and hitting an easy 40% month-on-month increase in daily orders and even higher for gross merchandise value," Fazil was quoted as saying in the statement.

However, Munchies is competing in a space that also sees the likes of pandamart and Airlift vying to deliver quick orders through the congested city.

"Competition is heating up," Fazil told Business Recorder. "The customer acquisition cost is going to go up for all companies, not just us.

"But we're focused on being hyper-local, and getting retailers on board. We're also adding our own dark stores — this hybrid approach should position us well."

Amir Paracha, Chairman and CEO of Unilever Pakistan Limited, said the consumer staples maker partnered with VentureDive because it "believes Munchies will benefit greatly from technology and the growth know-how of VentureDive, and Unilever’s understanding of the consumer goods industry".

Meanwhile, the funding comes as another positive development for the South Asian economy that is targeting nearly 5% GDP growth in the ongoing fiscal year.

In just nine months of 2021 (January-September), Pakistan's startups have raised a record amount with investments at over $305 million, according to data compiled by Karachi-based Alpha Beta Core (ABCore), an early-stage tech-based investment firm.

Pakistan's startup funding rush

The amount is over 1.5 times higher than the previous six years combined with investments focused on early-stage funding rounds, pointing to the growth potential, say experts.