The year 2021 was indeed a boastful year for the startup ecosystem of Pakistan. Where we saw the best of the best business models raising millions of dollars and easing away the lives of the masses. From fresh produce startups to cash-on-delivery to everyday essentials and now to even raw materials providers for manufacturing businesses.
Although, this only leaves us wondering how many other business models are just waiting to be tapped and enter our lives? I guess we’ll know this in due time. Although, one such startup is Zaraye.
Pakistan’s $50 Billion industrial manufacturing markets still rely on primitive sourcing methods, which ultimately leads to efficiency losses in procurement value chains. This makes Pakistani Industries not only uncompetitive in both global and local markets but also keeps them in a loop of low-profit margins.
Enter Zaraye, a platform that brings together all the supplies one needs to run a business, with convenience, efficiency, and reliability. Zaraye aims to revolutionize the process of traditional raw material procurement with its reverse-bidding platform, assuring the best prices and highest quality of raw materials.
What is Zaraye?
Founded in late 2021, Zaraye is a business-to-business platform that helps manufacturing businesses procure raw materials and finance working capital. It currently serves the textile and construction industries, with more than 300 partners and suppliers in about 20 cities.
Zaraye works through an app and a website where buyers meet a fairly large number of suppliers. A buyer posts an inquiry that he wants a certain quantity of a product by a certain date. The suppliers of that product post rates at which they would sell, giving the buyer the option to choose from the best available prices in a transparent manner, instead of just relying on a broker.
Once the buyer has made a deal with a suitable supplier of his choice, Zaraye then delivers the materials to the desired location of the buyers through third-party logistics providers and also provides after-sales service. Through its financing facility, the company provides credit to both buyers and sellers to help them meet their working capital requirements.
Presently, the materials on the platform include cotton yarn, which is the single biggest raw material used for creating fabric in the textile industry. While for the construction industry, Zaraye provides cement, sand, gravel, and crushed stone. The company focuses on smaller manufacturers, whose annualized revenue margins vary between $250,000 and $2 million USD.
Background of Founders
In September 2021, three schoolmates and friends, Ahsan Ali Khan, Hashair Junaid, and Taha Iqbal envisioned making procurement of raw materials for buyers and sellers efficient and founded Zaraye.
Taha Iqbal Teli
Taha is an IBA alumnus, with a bachelor’s in Business Administration. After his bachelor’s, he completed his post-graduation from the University of Bath with a Master’s in Marketing.
After his Masters’s, he joined Careem as a Supply Associate and left after over two years from the position of Expansion Manager of Careem Now. In April 2020, Taha joined Swvl as Corporates and Categories Manager. Then in September 2021, he alongside his other co-founders launched Zaraye.
Hashair Junair Ahmedani
Hashair is also an IBA graduate with a bachelor’s in Business Administration. After completing his Bachelors, he went for a Masters in Business Management and Marketing at the University of Bath.
He kicked off his professional career as a Director at New Zeenat Textile Mills. He is also the founder of Cafe Praha, in Prague, Czech Republic. In 2021, he co-founded and launched Zaraye.
Ahsan Ali Khan
Ahsan is also an IBA graduate, with a bachelor’s in Business Administration. He started off his professional career as a Category Manager at Dawai. Later, Ahsan joined Careem as Supply Lead. After that, he got affiliated with Swvl as a Supply Manager.
In 2021, Ahshan alongside his other two friends co-founded and launched Zaraye.
Pakistan’s Industrial manufacturing sector makes up 20% of the country’s economy, with the annual $35 billion raw-materials markets accounting for as much as 65% of the total costs for the manufacturers. Zaraye brings together multiple buyers and suppliers, reducing the need for manufacturers to make multiple phone calls to get prices.
Traditionally, the buyers and suppliers of industrial raw materials operate by reaching out to a handful of brokers that help buyers procure and sellers sell their raw materials and goods. The process is painfully long and time-consuming and involves the broker getting a cut from both parties involved in a transaction. According to a general consensus, the presence of a middleman creates inefficiencies that a marketplace-like model can fix.
This is where Zaraye comes in, it helps buyers source raw materials at competitive and transparent prices from sellers. This helps businesses procuring raw materials achieve cost efficiencies which are crucial for surviving and thriving in the thin net margin industries they operate in. Not only this but suppliers of raw materials also see consolidated demand from Zaraye’s network of buyers.
Besides solving the problem of pricing, the company also provides working capital financing to both parties. Small buyers and sellers are mostly overlooked by formal financial institutions like banks for credit facilities but Zaraye solves this problem.
Pre-Seed Funding: Raised $2.1 million
In April 2022, Zaraye raised $2.1 million in pre-seed funding from Tiger Global and Zayn Capital. This also marks the first time Tiger Global has made a pre-seed investment in a Pakistani startup. Other investors include:
- +92 Ventures
- Alan Rutledge
- Jack Rizvi and current and former employees of Careem.
Ahshan told the profit that the startup’s focus right now is collecting data to make well-informed lending decisions. “The fragmentation in the market is huge, so the challenge for our fintech leg is how do we collect the right data,” Ahshan said.
Once they have collected sufficient data on buyers and sellers, it will help Zaraye assess credit and disburse credit based on actual creditworthiness.
Although Zaraye has started off with securing customers in the textile and construction industries, it plans to expand the platform’s offerings in these sectors, as well as open new categories as they grow. Its mission is to help manufacturers find opportunities to scale and optimize their business to compete not just in the local but in the global markets as well.