Lezzoo has announced that it has raised a seven-figure seed round (at least one million dollars) – the largest funding for a Kurdish-Iraqi startup. The investment was led by New York and Baghdad-based investment firm Northern Gulf Partners and California-based Pay It Forward Venture Capital, with some individual investors from the USA and Latin America.
Lezzoo is the only Iraq-based startup that has been accepted onto the world-renowned accelerator program, Y Combinator. It previously received a pre-seed investment from the accelerator of $150,000.
The startup currently delivers food, groceries, pharmaceuticals and even on-demand dry cleaning and nursing services. They recently launched Lezzoo Pay which aims to popularise the use of digital transactions in Iraq’s cash economy.
Zaab Sethna, partner at Northern Gulf Partners, said: “Lezzoo has a forward-thinking, creative and dynamic team of founders and we are excited to back them. Iraq is a country with a young, connected and increasingly sophisticated population. Incomes are rising but the barriers to entry remain high and this gives an advantage to home-grown firms.”
According to the founders, Lezzoo will work to use the latest financing to focus on improving its operations and expanding to other markets in the region after conquering the Iraqi market.
More About Lezzoo
The company was initially established as a food delivery service in Iraqi Kurdistan, working with local businesses to sell food through the Lezzoo app. This expanded to include other sectors such as groceries, electronics, cosmetics and medicine due to the Coronavirus pandemic and government restrictions on food deliveries. This helped the business stay afloat as demand for these services increased.
The company handles around 50,000 orders per month and works with over 700 sellers, according to menabytes. Lezzoo Pay is another game-changing product – a mobile wallet which allows users to buy Lezzoo services and purchase prepaid cards in order to facilitate purchases through the platform.
This is HUGE news for startups in Iraq.
We were all waiting for that one story where an Iraqi startup would get a huge amount of investment from established firms, and finally, that day has come.
Iraqi startups are not at the top of the list of Venture Capitalists. Iraq is seen as high-risk and investors have shown little interest to put their money where their mouth is. Till date, there has only ever been investment in one Iraqi startup – Baghdad-based Miswag. From what is known, their most recent investment was six figures.
We predict that news of Lezzoo’s seed round will create more traction for Iraqi startups to obtain foreign investment. Now that there is a success story, other startups can also reflect on their business model and see what they need to do to become more attractive to investors.
We can’t ignore the fact that being a Y Combinator graduate has also propelled Lezzoo’s reputation as a solid, well-vetted and growing business. Y Combinator is known for launching companies such as GitLab, Twitch and Airbnb, so having their training and support makes startups less risky – even if they’re from Iraq. This begs the question of how incubators and accelerators in Iraq can further boost the startups they work with to ensure that they’re getting the best training they need in a highly competitive region.
What do you think entrepreneurship programs should do to further support Iraqi startups and better equip them to pitch to investors? Comment below!