TamaraThe “buy now, pay later” platform for consumers in Saudi Arabia and the wider GCC region has raised $340 million in a funding round that values the fintech at $1 billion.
Saudi asset management and financial institution SNB Capital and Sanabil Investments, a company wholly owned by Saudi sovereign wealth fund Public Investment Fund (PIF), led the third round. Other backers include Shorooq Partners, Pinnacle Capital, Impulse and others, who join existing investors such as Checkout.com. This round, which consists of seed capital and a deal for some secondary equity, is among the largest fintech investments in the region.
The news comes ten months after the platform, which allows consumers to shop, pay in installments and bank, secured debt financing from Goldman Sachs and Shorooq Partners to increase the size of its warehouse facilities to $400 million. Through this transaction, Tamara raised a total of US$500 million in equity financing, including secondary investments, and more than US$400 million in debt financing since then. Abdel Majeed Al-Sokhn, Turki bin Zaraa And Abdul Mohsen Al-Babtain The company started in late 2020.
Tamara claims to have over 10 million users in its main market, Saudi Arabia, UAE and Kuwait, shopping from 30,000 partner merchants such as regional and global brands SHEIN, IKEA, Jarir, Noon, eXtra and Farfetch. These numbers are strikingly similar to what Tabby, the UAE-born, Riyadh-based BNPL services company that operates in both the markets and Kuwait, announced last October after raising $200 million at a valuation of $1.5 billion.
Both startups, although competitors, highlight the growing growth in BNPL usage, especially in Saudi Arabia, a market that makes up more than 80% of Tamara and Tabby’s customer base. according to Fintech report By the Central Bank of Saudi Arabia (SAMA) last year, the number of customers registered for BNPL services increased from 76,000 in 2020 to 3 million in 2021 and 10 million in 2022. The reason for this increase, which now represents nearly 30% of Residents of the Kingdom of Saudi Arabia, to the booming popularity of e-commerce, and the compound annual growth rate is expected to reach 20% for digital payments until 2025, reaching 13 billion transactions with a total value of $170 billion.
Despite the global slump in venture capital activity, numbers and projections like those mentioned above are bound to attract the interest of domestic and foreign investors. If there’s one thing we’ve learned this year, it’s that the Gulf region is not short of money to make notable investments in venture capital firms and startups. For example, last year, venture companies In the west Other regions, including Africa, are clamoring to receive financial support from sovereign wealth funds and large institutional investors such as the Public Investment Fund and Mubadala Capital. At the same time, Tamara is a prime example that the region does not necessarily need foreign capital for unicorn rounds.
It is worth noting that the significant financial support from these funds and clear top-down support from regulators reflects a positive shift in the region’s growing ability to build multi-billion dollar companies (Tamara says it is the first home-grown unicorn in Saudi Arabia, while Tabby claims to be the first A fintech startup in the Gulf.)
“Saudi Arabia and the GCC deserve their place on the global fintech stage. Just as Tamara was created by local entrepreneurs nurtured by a supportive and regulated local market ecosystem, we stand here today, humbled, hungry, and ready for our leapfrog moment,” the CEO said. Al-Sokhn said in a statement: “This achievement is a testament to the ecosystem, our amazing team, investors, and the spirit of collaboration that make this region a great place for talent to flourish.”
Tamara, which was the first company to receive authorization to offer BNPL solutions from the Saudi Arabian Monetary Agency and graduate from the inaugural regulatory sandbox, has more than 500 employees at its headquarters in Riyadh and other cities, including Dubai, Berlin and Ho Chi Minh City. Al-Sakhn told TechCrunch in an interview.
Prior to launching Tamara, Al-Sokhn co-founded Nana, a digital grocery shopping platform where he was CFO for three years. There, he identified a gap in the grocery business where small neighborhood stores traditionally offered credit services to their customers, which, according to him, was a response to the failure of financial institutions to provide such services and the decline in credit card usage in Saudi Arabia and elsewhere. Gulf countries (15% in Saudi Arabia And 10% at the Gulf level).
“I knew there was an opportunity to build something important and give people the service they deserve, that is, the kind of credit payment that is customer-focused, first and foremost, rather than cash loans that put you in a debt trap, which has been the case historically and probably still is the case with banks.” Globally and in this part of the world. “We set out with one goal: to build a generational company in a huge financial industry that needs major change.”
Like most BNPL services, Tamara has implemented late payment fees to ensure customers pay in a timely manner. Al-Sokhn said that while the three-year-old fintech company believed fees were the right approach to take when launching, customer feedback and insights from shopping data made Tamara realize that this was not the way to move forward. Therefore, going forward, the company, which wants to differentiate itself from the competition by doubling down on customer focus and Sharia compliance, will waive late payment fees. Instead, Tamara will focus on providing its clients with risk management tools to enable them to pay on time and offer options that match their financial capabilities, avoiding offering more than they can afford and thus benefiting from late payments.
“Shariah compliance is something we have taken seriously as a company since day one. We live by it and will continue to invest in this principle, which is a sub-part of customer centricity. The fundamental principle of Shariah-compliant financing is not to exploit people, and that is what we have been trying to do.” “We will work tirelessly to build a business model that generates money for shareholders but doesn’t put people in a debt trap to make money,” the CEO said, adding that the average amount owed to a Tamara client is less than $100.
The three-year-old fintech’s primary revenue stream is derived from merchant discount rates. This approach, commonly used by local and global BNPL providers, contributes significant value by improving conversion rates and increasing average order value for merchants. Al-Sokhn stresses that Tamara is open to increasing its revenues – which have grown by 300% in the past two years – in this area while exploring other areas in lieu of the late fees it typically charges.
Tamara will also look to double down on other initiatives that embody her customer-centric ethos, including the introduction of a buyer protection program this month. In a region where the PayPal service is not widespread and where online protection is rare amid the spread of scams and scams, especially in cross-border transactions, Al-Sukhan says the program will meet a dire need and instill confidence in online shoppers.
Likewise, the CEO highlights the platform’s plans to enhance integration into the shopping journey via a card feature designed for offline merchants. At present, in-store transactions account for more than 25% of Tamara’s business, a number that is expected to exceed 30% next year (Tabby, which has an annual transaction volume exceeding $6 billion, notes that its card advantage in the UAE contributes (into more than 20% of its total volume.) Tamara also allocates part of the investment to provide new products and services beyond BNPL and take advantage of the opportunities available in the field of shopping and financial services throughout the Kingdom of Saudi Arabia and the world. GCC.
An SNB Capital spokesperson said about the investment: “Leading Tamara’s Series C raise through SNB Capital’s closed-end fintech fund is aligned with one of our goals to invest in single target companies to achieve long-term capital appreciation.” FinTech is one of the core investment sectors in SNB Capital’s strategic portfolio and is consistent with the Kingdom’s Vision 2030 goal of supporting FinTech entrepreneurs at every stage of their development. As a regional unicorn, Tamara needs significant financing options that the Swiss National Bank is ideally placed to provide, and to support the development of the fintech infrastructure that will support further growth.