Tabby raises $58 million at a $660 million valuation as PayPal Ventures makes initial investment in GCC

Tabby, a MENA-based purchase now pay later firm, has secured $58 million in funding headed by Sequoia Capital India and STV, for a total valuation of $660 million. Last June, the investors co-led the fintech’s Series B renewal round.

PayPal Ventures, PayPal’s worldwide corporate venturing arm, is one of the investors (this is its first investment in the GCC, but its second in the MENA area after Egyptian fintech Paymob). Mubadala Investment Capital, Arbor Ventures, and Endeavor Catalyst are among the other investors in Tabby’s fresh round of investment.

The cash will be used to extend Tabby’s product range into a variety of consumer financial services, as well as to support the firm’s expanding activities, which now include Egypt, according to a statement from the Dubai-based company. Since its inception in 2019, the fintech has raised more than $410 million in stock and debt.

Tabby was operational in Saudi Arabia, the United Arab Emirates, and Kuwait until last September, allowing customers to purchase online and in shops with flexible payments from worldwide brands such as H&M, Adidas, IKEA, Noon, and Bloomingdale’s. In a June interview with TechCrunch, co-founder and CEO Hosam Arab described Egypt as an appealing market with underbanked customers searching for alternatives to spend money online other than cash.

“The Egyptian customer is presently pretty acclimated to buying on installments, which frequently implies additional expenditures in the form of interest or other taxes. So coming up with a fully free product for the client was definitely a distinction, and we’ve seen significant demand there,” Arab added, offering an update on the health of the expansion. “However, the Egyptian market and the economy as a whole is now in a very bad condition with ongoing devaluation of their currency. As a result, there are evident hurdles for this industry in the short to medium term that go beyond simple consumer requirements.”

Consumer demand differs from place to country, and paying attention to the peculiarities underlying each market is necessary to thrive as a fintech. BNPL might be regarded a nice-to-have in developed nations where credit is generally available through credit cards, owing to the installment feature. However, BNPL provides a more strong use case in developing economies where credit penetration is limited or a credit history is required. As a result, Arab feels his business is somewhat isolated by the problems of Affirm, Afterpay, and Klarna, worldwide private and public BNPL companies who are losing money and have seen their valuations decrease as a result.

“I would say there have been setbacks in terms of demand. “And just as significant is the oncoming credit crisis in some of these more established economies, which will bring increased credit risk that will ultimately harm the bottom line of these firms,” said the CEO, arguing for Tabby’s expansion in a cooling BNPL climate Area.

“Now the structure of the economy is changed for some of the markets in which we operate [Tabby] are there today. Credit penetration in the Middle East and North Africa area is much lower than in other developed economies. Consumers are not overburdened in terms of credit risk since they do not have two or three credit cards. So, in terms of demand, there is a real gap and opportunity that we are addressing.”

While the worldwide valuation crunch and low demand for growing firms, Tabby has managed to more than double its valuation from 18 months ago, despite receiving less cash in a later round; as a result, it is now one of the most valuable startups in the MENA area. Arab stated that mastering this current examination indicates Tabby’s product relevancy and capacity to develop a sustainable business in a competitive climate that includes Saudi Arabia-based Tamara and Egyptian enterprises Sympl and Khazna.

Tabby’s fresh stats illustrate Arab’s point regarding relevancy. For example, as of late March, the newcomer Buy Now, Pay Later had just over 1 million active members who purchased from over 3,000 companies annually. According to Tabby, over 3 million users currently shop from over 10,000 companies, including nine of the top ten retail groups in the Middle East and North Africa.

In addition, only six months after establishing its card program, the firm has issued over 150,000 tabby cards, with in-store sales already representing for more than 10% of the company’s volume. According to the corporation, revenue has surged fivefold in the last year.

According to GC Ravishankar, Managing Director of Sequoia Capital India, Tabby has the chance “to offer its users several creative solutions and better access while enabling higher affordability” as a result of the investment. Furthermore, CEO Arab stated that Tabby just introduced a product for common purchases such as groceries and groceries, allowing clients without credit cards to make purchases and pay at the end of the month.

“There are significant gaps in the industry when it comes to delivering consumers better financial services and solutions. “We see a lot of possibilities in allowing our clients to utilize us for their everyday transactions,” said the CEO. “We feel this is an excellent chance to further engage our clients as they continue to conduct more business with us.”

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