Tiger Global has invested in Pakistan’s first pre-seed company for the first time.
According to the founders of Zaraye, obtaining raw materials is a big pain point for Pakistan’s manufacturers, who must make repeated phone calls to suppliers while waiting for quotes.
The firm, which operates a platform that links manufacturers with suppliers directly, revealed today that it has received $2.1 million in pre-seed investment from Tiger Global and Zayn Capital. Tiger Global is making its first pre-seed investment in a Pakistani firm. +92 Ventures, Alan Rutledge, Jack Rizvi, and current and former Careem workers are among the other investors.
Taha Iqbal Teli, Hashair Junair Ahmedani, and Ahshan Ali Khan, who went to school together, formed the firm in late 2021. In addition to raw supplies, Zaraye provides operating finance to industrial enterprises. It presently services the textile and construction sectors, with over 300 partners and suppliers spread over around 20 locations.
Teli and Khan collaborated at Careem, Swvl, and other enterprises, whereas Ahmedani’s family engaged in traditional manufacturing.“The manufacturing sector in Pakistan has been operating with very marginal innovations [for] decades, [with] WhatsApp being the only notable change in how processes have evolved. Zaraye intends to change that,” said Khan.
Cotton yarn, which CEO Khan said TechCrunch is the single most important raw material used to create end-use fabric in the textile business, is among the materials available on the platform. Zaraye produces cement, sand, gravel, and crushed stone to the building sector. The firm focuses on smaller manufacturers with yearly sales ranging from $250,000 to $2 million USD.
Manufacturers often engage with middlemen or directly with suppliers and wait for them to provide quotes. Zaraye, on the other hand, allows producers greater control by allowing them to submit their needs and wait for quotations from suppliers. This implies that suppliers will be able to monitor aggregated demand from Zaraye’s buyer network.
According to data aggregated by Zaraye from the Pakistan Credit Rating Agency, Pakistan’s industrial manufacturing sector contributes to 20% of the country’s economy with $35 billion in raw materials annually, with raw materials accounting for 60% to 65% of total costs for manufacturers who must deal with small net margins.