Abhi, a Karachi-based startup, that provides employees salary advances based on accrued wages, has raised $2 million for their seed round.
The funding round, led by VEF, the emerging market fintech investor, and Sarmayacar, the local lead, also included a number of international and local investors including Village Global, i2i Ventures, and Zayn Capital. This is Village Global’s first FinTech investment in Pakistan, according to a press statement issued by Abhi.
In Pakistan, many employees live paycheck to paycheck, and by the end of the month, most have exhausted their salaries on bill payments, household expenses and emergencies. Abhi, co-founded by Omair Ansari and Ali Ladhubhai, plans to transform the way people spend their money, aiming to become the first and largest financial wellness platform in Pakistan.
Co-founder Ansari, who previously advised and invested in fintech solutions in emerging & frontier markets, noted, “We believe financial wellness and access to credit are basic human rights, which we aim to bring to all our customers. Our goal is to digitise consumer credit, address pain points in the manual payments process and be there when consumers need us most. Your wage is your right, and we want you to have access to it abhi (right now)."
“Before launching publicly, Abhi signed MOUs with 20 companies, and is currently conducting a three-month pilot programme with them,” the statement reads, adding thjat the exercise was centered around gaining insights on the pain points of employees, their lending needs and what situations triggered that need.
Besides, the exercise will also show employers that Abhi does not disrupt the cash flow or business process and adds no cost to HR or Accounts. Instead, the companies benefit from a more motivated workforce leading to increased productivity, satisfaction and retention.
“The companies taking part in the pilot come from sectors like insurance, steel manufacturing, pharmaceutical, textile and retail, allowing Abhi to validate the product as well as gather information for future growth metrics.”
Dave Nangle, Partner at VEF shared, “We are very excited to partner with Omair, Ali and the Abhi Team. This investment allows VEF to continue our mission of improving the financial well-being of the average Pakistani.”
Co-founder Ali Ladhubhai, who previously founded Pakistani fintech startup KarloCompare and led business development at Foree noted, “Less than 2 million people in Pakistan have access to formal credit. We saw the need for an early wage access product that could allow them to access alternative digital finance together with a knowledge centre to educate them about using personal finance responsibly and to their benefit.”
With an eye already on future innovations, Ladhubhai added, “This is just the beginning for us. We have plans to provide a range of digital financial services to allow for customers to conduct all financial transactions from a single financial app.”
Sarmayacar’s General Partner, Dr. Bernhard Klemen added: “The annual salaries of the urban employed labour force across 100,000 public and private companies in Pakistan is estimated to be over $65 billion, yet official reports suggest that formal lending channels account for credit of just over $3 billion only, with millions of Pakistanis accessing informal channels at egregious rates.
Sarmayacar, according to a statement, says it believes in Abhi’s vision and delighted to back Omair and Ali in transforming the way Pakistanis access credit and over time build the region’s leading finance wellness platform.”
Misbah Naqvi, co-founder and General Partner at i2i Ventures said: “Access to earned wages should be a right of all employees and we are delighted to support Omair and Ali as they launch a pioneering business in Pakistan”.
“Fintech is an exciting space in Pakistan right now and we feel that the Abhi team has the right experience and is well-positioned to leverage this market opportunity to build Pakistan’s first financial wellness platform and broaden financial access in one of the largest untapped markets in the world”, she added.
The statement quotes the State Bank of Pakistan, citing just over 20 per cent of Pakistanis have bank accounts. “This leaves out almost 80pc of the population from being able to have access to a transaction account. Bridging this gap is a first step towards financial inclusion and more and more businesses in Pakistan are realising this and launching digital wallets and more easy to access transaction models."
Ben Casnocha, co-founder and partner at Village Global adds, “Financial inclusion has lots of room for growth in Pakistan, since many individuals are not able to access basic banking services due to their lack of financial stability. Because of this we think Pakistan’s market is ripe for disruption and we believe Abhi’s model is the best way to do it. We’re excited to join them on this journey.”
"Team Abhi are now gearing up to join the Summer cycle of Y-Combinator, an American seed funding accelerator that aims at equipping startups with the skills and knowledge to help their ideas grow. They join the ranks of alumni companies like Airbnb, Dropbox, Reddit, and Coinbase to name a few,” the statement said.