Tag, a one-year-old startup in Pakistan that provides banking and financial services, has raised more than $12 million in what is now the largest seed financing round in the region.
The round was funded by Liberty City Ventures, Canaan Partners, Addition, Mantis, and Banana Capital, among others, bringing the total raised by YC-backed Tag to over $17.5 million. Many of these investors, including Lee Fixel’s Addition, are making their first investment in a Pakistani startup.
Tag is valued at $100 million in the round, according to two people familiar with the matter. Tag founder and CEO Talal Gondal told a news outlet in an interview that the new funding took only two weeks to close. He refused to comment on the price tag.
Tag is attracting investor interest as it constructs one of Pakistan’s most important railroads for users. The 29-year-old founder stated, “We are trying to become both Revolut and Paytm in Pakistan.”
Tag partners with public and private companies to provide banking services to their employees, such as depositing their salaries into a Tag account and issuing Visa-powered virtual and physical cards. He claims that signing up for Tag, which includes some identity verification, takes only three minutes.
It also offers a variety of B2C services, such as the ability to pay others online and top up utility bills, to any user in Pakistan who registers on the platform.
“We eventually want to offer the complete set of banking and financial services to users in Pakistan,” he noted.
Gondal spent seven years as an investor in Europe before founding Tag. He stated that he had long planned to return to Pakistan and start a business serving the people of his homeland, but was awaiting the right opportunity.
The arrival of high-profile investors such as those backing Tag, Harry Stebbings’ 20 VC, and Josh Buckley’s Buckley Ventures has given Pakistan’s startup ecosystem a major boost this year.
In recent weeks, a number of very young startups have made big funding announcements. Last month, Airlift, a quick-commerce startup, announced a record $85 million Series B round, followed by Bazaar, a business-to-business startup, with a record $30 million Series A round.
BridgeLinx, a digital freight marketplace, announced a $10 million seed round last week, the country’s largest at the time. Tag is now one of the most valuable startups from Y Combinator’s most recent batches, according to Wednesday’s announcement.
According to Gondal, startups are finally gaining traction in the South Asian market. “Each country’s startup ecosystem goes through various waves. In India, we saw e-commerce firms like Flipkart flourish in the first wave. Firms like Ola, Zomato and Swiggy and fintech firms like PhonePe and Paytm made inroads in the waves after that,” he said, adding that he noticed a similar trend in Berlin.
“I had the conviction that a similar thing would play out in Pakistan.”
Gondal explained that the startup is now working to broaden its product offerings and hire talent in order to gain market trust.
“Liberty City Ventures is proud to support a visionary leader like Talal in his efforts to expand financial inclusion for the underserved and underbanked,” said Managing Partner at Liberty City Ventures, Murtaza Akbar, in a statement. “We expect the world class team he has assembled at TAG to build a regional Fintech powerhouse.”