Pakistan’s CreditBook raises $1.5 million seed to digitize bookkeeping for small business

 CreditBook, a Karachi-based fintech, has raised $1.5 million in a seed round, the company announced today. The round was led by Pakistan’s BitRate VC which is Dubai’s VentureSouq and included a combination of local and foreign investors. Better Tomorrow Ventures, Ratio Ventures, and Toy Ventures were among the investors in the round, which was their first in Pakistan. The offer included investors such as Quiet Capital, i2i Ventures, and angel investors such as the owners of Indonesia’s BukuWarung and Colombia’s Rappi.

CreditBook was founded by Hasib Malik and Iman Jamall, a husband and wife team, and Hisham Adamjee, with the aim of digitizing small businesses in Pakistan. They began with a digital ledger app to assist Micro, Small, and Medium Enterprises (MSMEs) with financial management. CreditBook’s mobile version, which was launched in June 2020, has since received over 500,000 downloads on the Play Store, representing a 450 percent increase in the last six months. The startup did not disclose the size of its active user base, but it did say that the app is used by micro-entrepreneurs all over the world.

CreditBook is free software that allows small companies that sell on credit to record all of their credit transfers and then send free SMS or WhatsApp updates to their clients to submit payments.“Through these reminders, payment recollection is as much as 3 times faster,” noted a statement by CreditBook.

And now, a significant percentage of these firms use pen and paper for bookkeeping, reconciliation, and other related activities. CreditBook not only makes it easier for companies to alert their clients of due dates, but it also saves time by keeping a digital log of purchases – which is why it has been able to attract a huge number of MSMEs as users.

CreditBook, despite its huge user base, does not make any revenue at the moment, since the software is entirely free to download. The startup is actively exploring various monetization options, but isn’t able to reveal anything just yet.“There are many paths to monetization in this space when one thinks of the current contribution of MSMEs to Pakistan’s GDP and the opportunity to optimize a series of unaddressed workflows. We see multiple opportunities for collaboration between incumbents and startups around these workflows but it’s still early days for this space. At CreditBook, we are learning every day from our users while observing macroeconomic trends closely. We will need to experiment and validate some of these emerging trends over the coming months,” said Iman Jamil, co founder of CreditBook.

Similar models have been adopted by startups in other emerging markets, such as Khatabook and OkCredit in India, and BukuWarung in Indonesia, with an emphasis on creating a broad user base before turning on monetization. Digital payments and lending are two obvious income sources for such businesses.CreditBook may be exploring all of them, as well as a variety of other revenue streams, but for the time being, the primary priority is on meeting the bookkeeping needs of its users. “Our ultimate goal is to equip micro-enterprises with information to help them increase their income,” said Iman.

Faisal Aftab, who co-led the round through BitRate VC, his newly founded early-stage venture capital firm for Pakistani startups, said  “Being on the ground, I have been moved by the team’s ability to move fast and ship features regularly. This marks the start of a very exciting chapter for the company, given what we have seen from them with limited resources has been incredible, but to see what’s ahead is truly exciting for the entire ecosystem.”

CreditBook now has partners on the cap table that have funded related businesses in other parts of the world. VentureSouq, located in Dubai, is one of them. Khatabook was a prior investment. Suneel Gokhale, its co-founder and general partner, said of the venture, “We are always on the lookout for founders that are deeply tapped into their local markets, and are utilizing a user-centric approach as an advantage. The team at CreditBook have demonstrated their ability as market leaders with their understanding of their customers while bootstrapping the company, which has made their growth all the more impressive.”

The Pakistani startup intends to use the new funds to expand its 15-person staff as well as its user base.

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