Dubai-based buy now, pay later platform raises $ 50 million at $ 300 million valuation


Recent years have seen the rise of buy now, pay later services around the world, with leading players raising stacks of cash to serve a population of insatiable young adults who don’t like credit cards or the payment of interest.

In what appears to be a consolidation of some kind, financial technology giant Square acquired Australian giant Buy Now, Pay Later Afterpay in a delicious $ 29 billion deal this week.

The deal is a sign of things to come for established markets like Europe and the US and promising markets that are seeing a proliferation of these services. For example, in the Middle East, no less than ten startups offering BNPL services have been launched in the last three years.

Tabby is one of those services and clearly the best known in the region. Today, it announces that it has raised a Series B of $ 50 million, valuing the company at $ 300 million..

Global Founders Capital and STV led the funding round, with the participation of Delivery Hero and CCVA. Existing investors also participated, including Arbor Ventures, Mubadala Investment Capital, Raed Ventures, Global Ventures, MSA Capital, VentureSouq, Outliers VC, JIMCO and HOF.

Hosam Arab founded the company in late 2019 after leaving Namshi fashion e-commerce, a company he led as CEO until a Dubai-based real estate firm acquired it.. Launching tabby as a buy now, pay later solution was specifically address the economic problems of MENA and the wider GCC region, says Arab.

Globally, BNPL services address the obvious pain points around flexible payments for customers and better conversion rates for merchants. But nevertheless, in the Middle East, there is another component that Tabby wanted to address, which was over-reliance on cash as a payment method. It’s so ingrained that while running Namshi, Arab noticed that 80% of the transactions recorded by the company were cash-based, presenting unique challenges in scaling the e-commerce platform.

“With buy now, pay later, our point of view and hypothesis was that, what’s more to the well-known benefits of buy now, pay later, we also offer an alternative for consumers to pay online digitally. And if we can do that, it becomes a very interesting solution for retailers in this market. “

The company integrates with retailers to allow its customers to shop in physical stores and online with interest-free installments. Tabby went live in early 2020. Although he had a relatively slow start because the launch coincided with the onset of the pandemic, it turned out to be the best for the company as merchants and customers started to change online significantly. While pre-COVID e-commerce penetration levels in the GCC region were in the single digits, Arab believes it could have risen to double digits due to the large number of merchants and consumers who have since embraced online commerce. .

Tabby

Image credits: Tabby

The jump in penetration is one of the reasons the tabby has climbed 20x in volume of transactions since June 2020. According to the company, more than 400,000 active buyers use its platform and approximately 3,000 installations they are recorded daily. What’s more, more than 2000 global brands and small companies, including Adidas, IKEA, SHEIN and Marks & Spencer, use the platform.

Rapid growth has allowed the tabby to secure another round of capital that originally planned, adds Arab. In June, the company raised $ 50 million in one of the largest lines of credit from a fintech in the MENA and GCC region. Investment follows Tabby and Series A seed rounds of $ 7 million and $ 23 million in 2020 by Crunchbase. This means that tabby has received more than $ 130 million despite its launch early last year.

But tabby is not the only company with such firepower in the region. His Saudi counterpart Tamara recently raised a $ 110 million Series A in debt and equity financing from Checkout. Although Tamara claims that Checkout acquired a minority stake, there are contrasting reports to the contrary.

If the last it is It is true that the purchase follows a consolidation line that is taking place in MENA and in the GCC region in general.. In May, the Australian company BNPL Zip Co said that acquiring Spotti, another major player in MENA, for $ 26 million. Afterpay also took a significant stake in Postpay recent investment of $ 10 million. This series of events makes tabby the only independent local player on the market. But how does the company see the competition?

“We are seeing this level of competition globally. I don `t believe that our market is different. believe the market is big enough to handle some players. How many players are there Really the question, and that will lead to further consolidation in the future potentially? ” he said.

believe What we’ve also seen, even with Square’s acquisition of Afterpay, is that there needs to be a broader differentiation of the single BNPL plain vanilla. believe, if you continue to play in that very limited BNPL space, the chances are going to be equitably challenging. “

Maybe that’s why tabby strategically positioned itself with Delivery Hero rather than taking investments from an established BNPL player. The company, which owns and operates various Regional food and grocery delivery companies, including Talabat, InstaShop, and Hunger Station, have one of the largest customer bases in the MENA region. And the investment marks Delivery Hero’s first fintech investment in MENA.

“As we expand our offering, we look for strategic partners where we will see ourselves offering the same services in the future.. And working with Delivery Hero, which has one of the largest consumer platforms in the region, makes a lot of sense to us.. Much more sense than working with, say, a global BNPL player with no presence in this market, ”Arab added.

Mark Venema, Senior Vice President of Strategy at Delivery Hero, recognizes that investing in brindle is strategic. He says the multinational sees “great potential in brindle to boost the industry and” is proud to support the company on its growth journey.

Ahmad Alshammari, partner of lead co-investor STV, in a statement, said: “As BNPL’s global market expected To grow at ~ 30% CAGR over the next five years, we estimate that MENA will grow at least twice as fast, further accelerated by a rapid shift to contactless payments, e-commerce growth, and access to credit. Our duplication shows our firm belief that tabby is the market leader in MENA and that they will continue to drive BNPL’s growth across the region by enabling buyers and merchants alike. “

The financing will help tabby expand its product portfolio and enter new markets in the GCC area. When that happens, will we see more consolidation? For example, will companies like Klarna and Affirm, which have no presence in MENA and GCC, try? acquire or buy a majority stake in brindle?

“We have a long journey ahead of us and where We believe we are headed and what we want to build around this business, “said Arab. “So the short answer is no, we are not looking for a quick way out; otherwise we would have probably I’ve already done it. The opportunity here for us is significantly larger.”


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