PostEx, a Pakistani startup that provides financial and logistics services to online merchants, plans to enter new markets this year, starting with Saudi Arabia, TechCrunch has learned exclusively.
“We want to go into other markets and really disrupt them, because we see a gap there,” PostEx founder and CEO Mohammed Omar Khan said in an interview.
E-commerce in Pakistan currently accounts for around 1.5% of the total retail market but has grown by 50% in the past 12 months, and PostEx can be credited with contributing to this growth.
Online merchants in Pakistan find it difficult to sustain their business and achieve growth as 95% of transactions are paid for through cash on delivery. Courier companies in this South Asian country take 10-15 days to settle transactions, from dispatch to delivery. All this leads to working capital issues for online merchants.
In 2020, Khan founded PostEx to solve these problems, offering merchants advance payments and accompanying logistics services for cash-on-delivery orders. After being regulated as a non-banking financial institution in Pakistan, the startup also began offering growth capital to online merchants. However, to mitigate risk, the startup does not offer pure financial support to merchants, granting credit only if they avail of its logistics services.
Khan told TechCrunch that this model has helped PostEx keep bad loans at less than 0.03% since its inception.
Image credit: PostEx
“Because we control the cash flow, which means if we give credit, we make the delivery ourselves and then collect the cash directly from the consumer,” he said.
The co-founder added that of the 15,000 active merchants, more than 80 percent have contracted for prepaid logistics only, while the remaining 20 percent are availing logistics services only.
Initially, PostEx launched its financial services with its own capital because Pakistan's capital controls made it difficult to borrow large amounts from traditional lenders. But as it gained scale and gained a proven number of merchants and credit repayment history, the startup began partnering with traditional banks to lend directly from merchants' balance sheets.
PostEx expanded its logistics footprint in Pakistan with the acquisition of rival Call Courier in August 2022. The acquisition enabled the startup to expand from three major markets to more than 650 cities in one go. It also enabled it to onboard large retailers as well as SMEs and enterprise customers, becoming a national service for e-commerce businesses of all sizes.
Kahn said PostX turned a profit in November, just over a year after acquiring Cole Courier, and that monthly transactions recently hit 4 million, with annual recurring revenue exceeding $21 million and projecting it will exceed $25 million by the end of this year.
“There is no acquisition cost, only debt or capital cost,” he said. “So we are focused on healthier margins for profitability. We are growing 10-15 percent month on month.”
Entering new markets with $7.3 million in new funding
The startup has now raised $7.3 million in an all-bootstrapped funding round led by Dubai-based Conjunction Capital and has plans to expand beyond Saudi Arabia into the United Arab Emirates (UAE) in the future.
PostX plans to expand into Saudi Arabia within the next three months, and the startup is also looking to raise another $15 million to expand in new markets, with Khan confirming that talks with investors for a new round are ongoing.
PostEx is also testing its platform in the UAE, where it has already received a lending license, and plans to launch its services there following its success in the Saudi Arabian market.
In Saudi Arabia, Khan told TechCrunch, PostEx plans to apply for a lending license from the local regulator, the Saudi Central Bank, while the company is working with local lending partners to begin pilots with a handful of small online merchants and one or two larger corporations.
At the same time, PostEx plans to expand its presence in Pakistan, increasing its employee headcount from 6,500 to 9,000 across 600 cities by the end of the year.
“We expect growth to be higher in certain cities compared to others, so we are increasing our investments in those cities,” Khan said.
The startup is also testing digital payment services for online merchants in Pakistan, digitizing payments at the store's doorstep or checkout page. The company already offers an expense management system that helps merchants manage payroll, supplier and vendor payments, and expenses through a single portal.
PostEx's latest investment round was led by existing investors VSQ, FJ Labs and Zayn VC, as well as Dash Ventures and Sanabil 500. Prior to this round, the startup had raised $8.6 million.