Riyadh-based fintech firm Lendo has successfully secured $7.2 million in a Series A funding round, as announced today. The round, conducted exclusively in equity, was led by Saudi’s Derayah Ventures and saw participation from Seedra Ventures, Shorooq Partners, 500 Startups, and Impact46.
Established in 2019 by Osama AlRaee and Mohammad Jawabri, Lendo specializes in providing immediate invoice financing solutions to small and medium-sized enterprises (SMEs) through its Shariah-compliant lending marketplace. This offering assists SMEs in addressing their immediate cash flow needs. Invoice financing is a widely used short-term borrowing tool for businesses across various global markets, enabling them to leverage their accounts receivables to secure loans from financial institutions. However, such financing options are scarce in the Middle East region.
Lendo facilitates loans ranging from SAR 100,000 (approximately $27,000) to SAR 3 million ($800,000) by connecting SMEs with investors via its crowdlending platform, also known as peer-to-peer lending. To qualify for financing through Lendo, SMEs must possess a valid Saudi business license (commercial registration), have been in operation for at least one year, and generate an annual turnover of at least SAR 2 million ($530,000).
Upon receiving all necessary details and documentation, Lendo takes up to three days to review an applicant’s profile. If approved, businesses can apply for financing of up to 80 percent of the invoice value issued to their customers. These opportunities are then presented on Lendo’s platform for collective funding by investors. Lendo claims that, on average, opportunities on its platform are funded in approximately half an hour.
Investments on the platform start from SAR 1,000 (approximately $270) and are open to any Saudi citizen or resident over the age of 18 with a valid ID and bank account. Expected annual profits range from 9 to 24 percent, depending on the SME’s risk profile. Each opportunity listed on Lendo receives a risk rating based on factors including credit history, financial standing, owners’ personal credit history and experience, and the strength of the invoice.
The startup generates revenue by charging SMEs a management fee and receiving a 20 percent share of the profits earned by investors.
Although Lendo was launched just last year, it claims to have financed over 100 invoices totaling more than SAR 60 million for SMEs and has provided investors with profits exceeding SAR 3 million. According to Osama AlRaee, the co-founder and CEO of Lendo, the platform currently boasts a default rate of zero.
AlRaee expressed his pride in the backing of prominent investors with extensive experience in the rapidly growing MENA entrepreneurial ecosystem, emphasizing their trust in Lendo’s business model and its potential to achieve both short-term and long-term goals.
Lendo’s expansion plans include serving Jeddah and the Eastern Region in Saudi Arabia before extending its services to other parts of the region. The company also intends to introduce new products aimed at assisting SMEs in securing working capital. In addition to Lendo, the Saudi SME lending landscape features competitors such as Raqamyah (which raised $2.3 million just last month with participation from Impact46, a firm that also invested in Lendo’s funding round), Forus, and Dubai-based Beehive. Lendo is among the lending startups included in the Saudi Central Bank’s regulatory sandbox.
Faris Alrashed from Derayah Ventures commended Lendo’s remarkable performance, particularly during the early months of the Covid-19 pandemic. He emphasized the importance of Lendo’s offering in the industry and its timely response to the growing demand for financing solutions in the dynamic SME lending sector.
Shane Shin, Founding Partner of Shorooq Partners, expressed excitement about joining Lendo’s journey as a new investor and their commitment to helping Lendo become the dominant regional player within Saudi Arabia.
