Pakistan-based fintech, Abhi, has raised $2 million for its salary advance platform in a seed round led by Vostok Emerging Finance, it announced on Monday. Abhi will be the second Pakistani fintech to join Y Combinator’s next batch after TAG, according to a statement released by the startup.
Village Global, i2i Ventures, Sarmayacar, Zayn Capital, Portman Wills, the co-founder and CTO of Wagestream, also participated in this equity-only round.
Founded by Omair Ansari and Ali Ladhubhai earlier this year, this Karachi-based startup hopes to become the first financial wellness platform by aiming to change how people spend their money through its web and mobile app.
Abhi’s platform aims to enable employees of its partners to withdraw salary advances based on their accrued wages at any time. As the fintech will be funding these advances, they will have no effect on Abhi’s partner employer’s balance sheets and repayments will be deducted from the employee’s salary before it is paid by the employer.
The startup plans on targeting both corporate and blue-collar employees in Pakistan and plans to further extend its services to other markets in Africa, South Asia and GCC, according to Menabytes.
Abhi’s co-founder and former Morgan Stanley fund manager Omair Ansari also explained his motivation behind launching Abhi.
“I believe in financial inclusion and have seen/invested in companies that address this across different geographies, and never understood why Pakistan gets forgotten about in the Emerging Markets universe," Ansari told Business Recorder.
"Credit to the consumer is what will help build the nation and we wanted to help in whatever way we could to be able to make that happen. Having had the privilege of working abroad and seeing this work, I believed it was time to give back but not just in a charitable way, but a way with tangible impact. That impact is helping with financial literacy, wellness and inclusion,” he commented.
In addition to this, fintech has shown a lot of potential in Pakistan with a spike in the number of deals within this sector in 2020 and a year-on-year increase in the average ticket size from an initial $522,000 in 2016 to $3.6 million in 2021. Furthermore, fintech startups in Pakistan have also raised more than $ 7.2 million, according to a review of startup deals in Pakistan by invest2innovate (i2i).
Co-founder Ali Ladhubhai, who had previously founded a financial comparison startup KarloCompare, also elaborates on the need for an early wage access product in Pakistan, where less than 2 million people have access to formal credit.
“We saw the need for an early wage access product that could allow them to access alternate digital finance together with a knowledge center to educate them about using personal finance responsibly and to their benefit. This is just the beginning for us. We have plans to provide a range of digital financial services to allow for customers to conduct all financial transactions from a single financial app,” Ali Ladhubhai explained, according to Menabytes.
Impressed by the support Abhi received from regulators and banks, Ansari also believes that the fintech story of Pakistan is only just beginning and has many legs to go. He explained that “everyone bashes the banks and the regulators, but both have been instrumental in our success. It's time for fintech and banks to work together, it's not a sum zero game. Remember our focus is to help the consumer in Pakistan, and the only way we can do that is by working together.”
Abhi also shared that it plans on using this new investment to further build its team and technology stack to be able to serve all its current and new clients. “We luckily have been able to build strong momentum, which has surpassed our expectations. We believe in building one brick at a time and not diluting our attention. So our focus will be to excel in the Early Wage Access space before looking at anything else,” said Ansari.