CreditBook, a fintech startup based in Karachi, has raised $1.5 million in a seed round. The round was led by Pakistan’s BitRate Venture Capital and Dubai’s VentureSouq. The round was led by Better Tomorrow Ventures, Ratio Ventures, and Toy Ventures, each of which made their first investment in Pakistan. The deal was also backed by Quiet Capital, i2i Ventures, and angel investors, including the founders of Indonesia’s BukuWarung and Colombia’s Rappi.
CreditBook was created by Hasib Malik and Iman Jamall, as well as Hisham Adamjee, with the aim of digitizing Pakistan’s small businesses. They began with a digital ledger app that assists Micro, Small, and Medium-Sized Enterprises (MSMEs) with financial management. CreditBook’s mobile app, launched in June 2020, has now surpassed 500,000 downloads on the Google Play Store, growing at a rate of 450 percent in the last six months. The startup did not disclose its active user base, but did state that the app is used by microentrepreneurs throughout the world.
CreditBook, which is available in six local languages, allows small businesses that sell on credit to record all credit transactions and then send free SMS or WhatsApp reminders to customers to request payments. “Through these reminders, payment recall is up to three times faster,” CreditBook noted in a statement.
Even today, a sizable proportion of these companies rely on pen and paper for bookkeeping, devoting hours to reconciliation and other related activities. CreditBook enables companies to save time by keeping a digital log of transactions – which is why it has been able to attract a significant number of MSMEs as consumers – the majority of whom discovered the app through word of mouth.
Despite this huge user base, CreditBook is currently profitable – the software is entirely free to use. The startup is currently considering various revenue models but is not able to share details just yet. “When one considers the current contribution of MSMEs to Pakistan’s GDP and the ability to optimise a series of unaddressed workflows, there are numerous monetization opportunities in this space. We see many possibilities for collaboration between incumbents and startups in relation to these workflows, but this area is still in its infancy. At CreditBook, we are constantly learning from our users and closely monitoring macroeconomic patterns. We will need to experiment and validate a few of these emerging patterns over the next few months,” CreditBook co-founder Iman Jamall said.
Other startups in the same space in other emerging markets – including Khatabook and OkCredit in India, and BukuWarung in Indonesia – have adopted a similar model, prioritizing user acquisition over revenue generation. Digital payments and lending are two very clear revenue sources for such businesses. CreditBook can consider both of them – along with a variety of other revenue streams – but for the time being, its primary focus is on meeting the bookkeeping needs of its user base. “Our ultimate aim is to equip micro-enterprises with knowledge that will help them increase their income,” added Iman.
Faisal Aftab, who co-led the round through BitRate VC, his newly formed early-stage venture capital fund for Pakistani startups, said, “Having been on the ground, I’ve been impressed by the team’s ability to move quickly and launch features on a consistent basis.” This is the beginning of an extremely exciting chapter for the business, considering what we have seen from them with limited capital, but what lies ahead is truly exciting for the entire ecosystem.”
Other local players/products that compete with CreditBook include DigiKhata, Udhaar, and Easy Khata (by Bazaar). CreditBook co-founder Hasib Malik said, “It is always beneficial, particularly in a space like this, where customers have historically been ignored for so long.” We are pleased to see that this category will have a variety of choices, which should encourage additional creativity and generate additional value for any microenterprise or entrepreneur.”
“Our objective is to rapidly and profoundly embed such importance. As a result, our strategic alliances set us apart from the market. We believe that these collaborations allow us to develop products and services that bring real value to our customers more quickly than any other solution,” he added.
CreditBook also has partners on its capital raising team who have previously funded similar businesses in other geographies. VentureSouq, based in Dubai, is one of them. It previously made an investment in Khatabook. Suneel Gokhale, the fund’s co-founder and general partner, commented on the investment, “We are always on the lookout for entrepreneurs who are deeply rooted in their local markets and who use a user-centric approach to their advantage.” CreditBook’s team has demonstrated their ability to be market leaders through their knowledge of their customers while bootstrapping the business, which only adds to their impressive growth.”
The Pakistani startup intends to use the new funding to more than double the size of its 15-member team and expand its user base.