Dubai-based "buy now, pay later" (BNPL) platform Tabby raised $50 million in a new funding round that values it at $300 million.
The series B financing comes one month after the company raised $50m in debt financing, bringing its total funding to more than $130m in less than two years, the company said on Wednesday.
The equity injection was led by San Francisco venture capital company Global Founders Capital and Riyadh's Saudi Technology Ventures, the investment arm of Saudi Telecom Company.
German food delivery company Delivery Hero, CCVA and existing investors such as Arbor Ventures, Mubadala Investment Capital and Raed Ventures also participated in the funding round.
The proceeds will be used to expand the FinTech company’s product portfolio and enter new markets.
“With global players consolidating the Mena BNPL space, we at Tabby are proud to continue building a local business and work with investors who understand its value,” said Hosam Arab, chief executive and co-founder.
The BNPL business model, which allows consumers to make online purchases and spread their payments out over interest-free instalments, has boomed since the onset of the Covid-19 pandemic as consumers switched to shopping online.
By 2025, the industry is expected to grow to 10 to 15 times its current volume, topping $1 trillion in annual gross merchandise volume by some estimates, according to a report by New York data research consultancy CB Insights.
Co-founded in 2019 by Mr Arab, former chief executive of online retail site Namshi, Tabby raised $23m in December last year in an initial venture capital funding round led by Arbor Ventures and Mubadala Capital.
Tabby’s platform went live in February 2020 and it has agreements with more than 2,000 large and small retailers, including Adidas, Ikea, Marks & Spencer, Home Centre and Toys R Us. The app has more than 400,000 active shoppers, with 3,000 daily downloads, the company said.
The investment is Delivery Hero’s first FinTech investment in the Mena region. Delivery Hero owns and operates regional food and grocery delivery companies such as Talabat, InstaShop and Hunger Station.
“At Delivery Hero, we believe in the power of entrepreneurship,” said Mark Venema, senior vice president of strategy at Delivery Hero. “We see great potential in Tabby to drive the industry forward.”
Tabby introduced a loyalty programme in June that rewards customers with physical cash that they can either use to fund new purchases, settle future payments or transfer to their bank accounts.
Customers can earn up to 20 per cent cashback after purchasing items from the platform's retail partners.
“As the global BNPL market is expected to grow at about 30 per cent compound annual growth rate over the next five years, we estimate that the Mena region will grow at least twice as fast, further accelerated by a rapid switch to contactless payments, e-commerce growth and access to credit,” said Ahmad Alshammari, a partner at STV.
In addition to Tabby, there are a number of players also jostling for a share of the Middle East's BNPL market, including Postpay, Cashew, Spotii and Tamara.
The sector is also ripe for deal-making, with many local companies bagging sizeable investment this year.
Saudi BNPL platform Tamara recently raised $110m in debt and equity financing from Checkout.com in one of the region’s largest start-up investments to date. In May, Australia’s Zip paid about $16m to purchase the remaining shares it didn’t already own in Dubai’s Spotii.