Saudi Arabia-based crowdfunding platform Funding Souq has closed a $2.5m seed round with contributions from various angel investors.
Investors include Amal Dokhan (Partner at 500 Global), Omar Aljeraisi, Christian Kunz (Head of Strategy at a leading Global Financial Centre). Existing investors include Mazin Alzaidi (STV), Musaab Hakami, and IslamicFinanceGuru.
It is known that Funding Souq(founded in 2020) is a based crowdfunding platform that connects lenders with creditworthy businesses and gives you the necessary tools to make an informed investment decision.
The FinTech sector was the most prominent industry in 2021, accounting for more than 20% of all deals and 30% of all capital deployed across Emerging Venture Markets in Africa. All 6 of last year’s MEGA Deals were closed by FinTech startups, including Wave Mobile Money, JUMO, and Flutterwave.
Funding in the FinTech industry grew by more than 1,200 % YoY, observing a 286% YoY increase in the number of transactions to record the highest number of deals for any sector in KSA over 2021 as recorded in our 2021 Saudi Arabia Venture Capital Report sponsored by SVC.
Multiple FinTech themes captured investor interest in Saudi Arabia over the past year, including crediting solutions, payment gateways, SME financing, and open banking with star startups like Rasan Information Technology, Lendo, Hala, and Tamara, raising significant investments in 2021.
Once joined, retail and institutional investors can choose to invest in individual businesses or a portfolio of companies to diversify their exposure and maximize their risk-adjusted return.
Funding Souq financed a portfolio of 25 businesses in Dec 2021, which is on track to generate an IRR of 22% for the investors that participated. More than 60% of those investors are repeat investors.
SMEs in the GCC usually don’t qualify for the financing they deserve as traditional lenders are overly conservative and highly underserved by financial institutions. According to the IMF, only 2% of GCC lending goes to SMEs instead of 22% in other high-income countries, which strains the regional economy.
Martin Jaouni, Funding Souq’s CEO, commented, “This lack of financing limits economic growth and is one of the main reasons why we started Funding Souq; we are incredibly proud to have financed 47 SMEs across Saudi Arabia and UAE in the first 12 months of operations and are looking forward to growing our portfolio exponentially”.
The company is developing new products that will further serve its mission to empower SMEs in the Middle East and beyond and explore entering new markets.