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KalPay Secures Over $1 Million in Early-Stage Funding Amid Tough Economic Climate

KalPay Secures Over $1 Million in Early-Stage Funding Amid Tough Economic Climate

Funding Milestone

KalPay, a Pakistani fintech specializing in buy-now-pay-later (BNPL) services, has raised over $1 million in early-stage funding. This marks the first funding announcement for a Pakistani startup in 2024. The round, a mix of equity and debt, was led by Orbit Startups with participation from Super Capital VC, Bansea, and others. The exact amount raised was not disclosed.

Background and Previous Funding

KalPay’s last financing round closed in January 2022, with investors including On Deck and Pinetree Partners. This latest round underscores the company’s continued growth and investor confidence despite the challenging economic environment.

Operational Verticals and Services

KalPay operates across three key verticals:

  1. BNPL for Online Shopping: Providing consumers with flexible payment options for e-commerce purchases.
  2. Rasayi: Offering financing for phones, travel, and digital assets.
  3. Taleem: Focused on educational financing, helping students fund their education.

Strategic Use of Funds

CEO Shershah Hassan explained that the new funding, particularly the debt component, will help finance consumer loans. One-third of the new capital is earmarked for this purpose. The rest will support scaling operations and enhancing KalPay’s market presence, particularly in impact-driven areas.

Market Position and Challenges

Hassan acknowledged the competitive landscape across KalPay’s verticals but highlighted the nascent stage of the industry and the substantial market potential. He noted that high interest rates have increased the cost of lending products for end users, impacting the business during the economic downturn.

Funding Strategy and Investor Sentiment

Given the challenging macroeconomic conditions, KalPay opted to raise the current round in tranches. Hassan emphasized aligning with investors who share the company’s impact-focused vision. He mentioned that skepticism about the Pakistani market persists, and it may take over a year for investor confidence to normalize.

Sustainability and Growth Plans

KalPay has achieved EBITDA-level profitability, reflecting positive unit economics. The recent investment will be used to scale operations, with a focus on impact-based initiatives. Hassan revealed that KalPay is pursuing strategic partnerships to boost growth, particularly in B2B2C sales channels.

Strategic Partnerships

KalPay has formed key partnerships with companies like Foodpanda and Careem, and educational institutions such as LUMS and UCP. Hassan credits these partnerships with significantly contributing to KalPay’s growth, especially within the B2B2C sector.

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