Earlier this month, Rocket Internet announced that it would be stepping up aggressive growth in Asia once more, with one new launch per quarter to expand in emerging markets. Today, the e-commerce giant is following through on that strategy: Daraz — an e-commerce portal modelled on Amazon and serving Bangladesh, Pakistan and Myanmar — is today announcing a $56 million (€50 million) round of financing.
This is the first major funding for Daraz, which started in 2012 as a fashion portal before expanding to home and other categories. The funding is also notable because it’s not coming from a local organization or one of Rocket’s regular investing partners like Kinnevik, but from the United Kingdom.
The lead in this round is the CDC Group, a development finance institution wholly-owned by the UK government with some £3.4 billion under management. Rocket Internet’s regional investment group, the Asia Pacific Internet Group (APACIG), also participated.
Part of the mandate of the CDC is to use UK money for international development as a humanitarian and diplomatic lever.
“Daraz is rapidly building an online trading infrastructure across a number of South Asia’s most challenging frontier markets,” David Osborne, CDC’s Investment Director. “CDC’s investment will enable the company to continue its impressive growth. We expect our investment to help Daraz create several thousand direct and indirect jobs over the next 5 years, and play an important role in the professionalization and development of local retail sectors, logistics networks and technology industries.”
The valuation is not being disclosed, and Rocket / Daraz are not releasing any figures on the size of the company’s existing business.
Rocket Internet, the e-commerce incubator that started in Berlin and is now publicly traded, continues to invest in European ventures. Indeed, HelloFresh announced an $85 million round just last week, and Rocket today is announcing a “seven figure investment” in German online moving portal Movinga.
But in the last several years Rocket Internet has also been making a big effort to capitalize on developing economies in Asia, Africa and South America where it faces less competition from incumbents (and Amazon itself), and there are growing pools of newly-moneyed consumers coming online for the first time.
Daraz, in fact, claims to be the biggest e-commerce platform in Pakistan, Bangladesh and Myanmar — some of the most underdeveloped regions in the world, where it’s hard for foreign companies to invest partly because of government restrictions, and partly because of simple cases of infrastructure.
(Myanmar, for example, is still working out mobile roaming for foreign visitors, and in more places than not, there is no Internet at all.)
“Taking the e-commerce business model into these exciting markets is a fascinating journey. Although internet penetration is still relatively low, the market is developing fast and its potential is immense,” said Bjarke Mikkelsen, CEO of Daraz, in a statement. “By making Daraz a success, we are not only building a great business, but also creating jobs and infrastructure in the countries we operate in – that’s what makes it so exciting.” Rocket says the funding will be used “to continue to grow the business in existing markets and for expansion into other frontier markets in Asia.”
The Asia Pacific Internet Group (APACIG) — first established in 2014 as part of the bigger group’s reorganization process — is Rocket’s regional operation covering 14 e-commerce companies in 15 countries.
And while some of the immediate business may not be anything like the size of operations in more mature markets, there is a lot of promise, the company believes. “The markets where Daraz is active are inspiring for entrepreneurs; though internet penetration is extremely low and online shopping is still a new trend, the growth and potential are unique,” said Hanno Stegmann, CEO of APACIG, in a statement.