Dubai-based buy now, pay later (BNPL) platform Tabby raised $58 million in a Series C round from investors including PayPal Ventures, Sequoia Capital India and Saudi Arabia’s STV, which values the FinTech company at $660 million.
Existing investors Mubadala Investment Capital, Arbor Ventures and Endeavor Catalyst also participated in the funding round, the company said in a statement on Tuesday.
The round makes Tabby one of the most valuable start-ups in the Middle East and North Africa and the first in the GCC to receive funding from PayPal Ventures, the venture capital arm of PayPal.
“With rising interest rates and growing inflation, it has never been more important for people to have access to payment flexibility to stay in control of their finances,” Hosam Arab, chief executive and co-founder of Tabby, said.
“Despite downwards pressure on FinTech valuations, our business continues to sustainably scale as we lead the generational shift towards fair and transparent financial products in Mena.”
The BNPL business model, which allows consumers to make online purchases instantly and spread their payments out over interest-free instalments, has boomed since the onset of the coronavirus pandemic, driven by millennials and Generation Z.
Global BNPL transaction values are projected to grow to $576 billion by 2026, up from $120 billion in 2021, according to data analytics company GlobalData.
BNPL accounted for 2.3 per cent of the global e-commerce market in 2021, with $2 out of every $100 spent towards a BNPL transaction, the report said.
FinTech start-ups led both funding and number of deals in the Middle East, Africa, Pakistan and Turkey last year, according to a report last week by data platform Magnitt. The sector’s funding reached $2.25 billion across 351 deals in 2022.
Tabby secured $150 million in debt financing from US-based Atalaya Capital Management and Partners for Growth in August last year, in one of the largest credit lines secured by a FinTech start-up in the GCC.
The company also raised $54 million from Sequoia Capital India and STV last March.
Tabby’s platform went live in February 2020 and since then has signed agreements with more than 10,000 global brands and small businesses, including H&M, adidas, Ikea, Noon and Bloomingdale’s.
Tabby will use the new funds to expand its product line and support the company’s growing operations, the statement said.
“We are excited to see Tabby grow into a leading consumer-focused FinTech company for the region,” G V Ravishankar, managing director of Sequoia India, said.
“Over the next few years, it has the opportunity to offer several innovative products to its consumers to improve access, while creating more affordability. The team has done this with continued focus on good credit quality and strong economics.”
Tabby is active in Saudi Arabia, the UAE, Egypt and Kuwait. Last year, it attracted 3 million active shoppers, expanded its operations to Egypt and recorded five-fold growth in revenue compared with the previous year.
In addition to Tabby, there are a number of players such as Postpay, Cashew, Spotii and Tamara that are also jostling for a share of the Middle East BNPL market.