Saudi Aramco’s Wa’ed and Raed Ventures back FinTech start-up Lamaa with $5.5m
Wa’ed, the entrepreneurial arm of oil giant Saudi Aramco, along with Raed Ventures, based in Riyadh, invested 19 million Saudi riyals ($5.5m) in Saudi start-up Lamaa, which will use the funding to strengthen its trading platform and expansion in the region.
The pre-Series A investment in the Riyadh FinTech company is one of the largest seed rounds in the kingdom. Lamaa will use the investment to become a major regional financier of SMEs and immediately expand to the UAE, Egypt and Qatar.
“Since our initial launch in March 2021, Lamaa has grown dramatically, with 100 corporate clients in the pipeline and a projection of more than $1 billion worth of invoices to be soon launched in its marketplace,” said Lamaa founder and chief executive Sumeet Khutale.
In addition to supply chain finance, Lamaa will also offer B2B buy-now-pay-later plans, which would be the first offering of its kind in the region,
Mr Khutale pointed out. Investments being attracted by Saudi start-ups continue to grow this year as the kingdom increases its commitment to SMEs’ financial inclusion as part of its Vision 2030 programme, which aims to enable and digitalise SMEs and raise their contribution to 35 per cent of GDP.
Start-ups in Saudi Arabia, the Arab world’s biggest economy, secured a record $168m worth of venture capital funding through 54 transactions in the first half of 2021. That is about 94 per cent of the money extended to the kingdom’s startups in 2020, according to data platform Magnitt.
Despite a 7 per cent drop in deals, the funding received during the six months of the year was still 65 per cent higher compared with the same period last year.
Recently, tele-health start-up Cura secured $15m from local investors in an early stage funding round as it seeks to expand its services at a time when the Covid-19 pandemic spurred demand for online healthcare options, while FoodTech company Siwar raised $7.5m to strengthen its consumer insights and distribution network. The investment Lamaa secured from Wa’ed and Raed will help it further develop its trade receivables discounting system platform to enable factoring across thousands of suppliers simultaneously. Its goal is for SME suppliers to benefit from shorter cash conversion cycles independent of credit history, collateral, promissory notes, corporate treasuries or individual investors to generate a return from early settlement.
By enabling early invoice payment for SMEs through its digital marketplace, Lamaa will offer corporate treasuries an option to use surplus funds through dynamic discounting of invoices. Alternatively, approved and unpaid invoices can be listed for banks and financial institutions to clear the reduced payments on behalf of the corporates.
“For a newly established start-up that has already acquired impressive growth and secured key partnerships across the Saudi market, Lamaa presents the type of entrepreneurial business that not only empowers its own team and start-up sector, but can also promote a stronger foundation for other emerging local SMEs who use the platform for financing solutions,” said Fahad Alidi, managing director of Wa’ed.
Phase two of the platform is undergoing licensing negotiations, which will incorporate family offices and private investors to Lamaa’s invoice factoring marketplace, providing additional investment channels to support SMEs.
“What excites us about Lamaa is that it’s a great platform to empower SMEs in Saudi Arabia and it’s managed by a well-experienced team,” said Omar Almajdouie, founding partner at Raed Ventures. “For Lamaa, creating tremendous value from already available cash will generate a win-win scenario in almost every transaction.”
According to its website, Lamaa’s platform has helped more than 23,000 small businesses and processed 800,000plus invoices and more than a million transactions.
Saudi Arabian start-ups secured a record $168m worth of venture capital funding