Pemo, a UAE financial technology start-up, raised $12 million in a seed funding round after which it unveiled an all-in-one spending platform to support small and medium enterprises in the Middle East, North Africa and Pakistan region.
The financing was co-led by Abu Dhabi venture capital company Shorooq Partners and Cherry Ventures in Berlin, with participation from New York-based FinTech Collective, Vienna-based Speedinvest, Beirut-based BY Venture Partners and Singapore-based Antler, plus private investment from angel investors, Pemo said on Wednesday.
Pemo's new platform, which will address transparency in business spending, features digitised invoices, automated approval flows, one-click invoice payments and real-time cash flow monitoring. It also plans to offer physical and virtual prepaid cards that can be topped up and distributed to employees, the company said.
“We’re operating in a region where more than 90 per cent of businesses are SMEs, many of which rely heavily on multiple platforms, processes and entities to manage their corporate spending, creating a number of challenges, such as irregular expense reports and high costs," said Ayham Gorani, co-founder and chief executive of Pemo.
"This is exactly the day-to-day friction we are removing by combining all spend management functions in one hub. Ultimately, this helps businesses to save money and time, while empowering team members to make purchasing decisions quickly and responsibly.”
Start-up activity continues to grow in the region, and these companies have been able to attract funding to help scale their businesses and support economies.
Fintech was the most prominent industry in the first quarter of 2021, accounting for 20 per cent of total transactions and 29 per cent of all capital deployed in the region, according to start-up data platform Magnitt.
In Mena, the UAE is the leading fintech hub both in number of deals and venture capital investment, Magnitt said. Bahrain joined the top ranks with cryptocurrency start-up Rain's $110m funding round in January.
Mena start-ups registered record VC funding worth $2.6 billion in 2021 through 590 transactions, according to Magnitt. About 35 start-ups announced exits in 2021, indicating a maturity in the region’s start-up landscape. The UAE accounted for 26 per cent of all deals closed across the region and 45 per cent of all funding raised in 2021.
Mena start-ups more than doubled their funding from a year earlier to about $864m in the first quarter of 2021 alone.
Pakistan, meanwhile, has more than 3,500 start-ups, according to tracking site Tracxn. Total funding surged 132 per cent annually in 2021, with the total number of deals rising 63 per cent to 78, Magnitt data shows.
After its launch in the UAE, Pemo plans to establish operations in Saudi Arabia by the end of 2022. The expansion will support the kingdom’s financial sector development programme, an initiative that aims to build a cashless economy as part of Vision 2030, Saudi Arabia's economic diversification agenda.
The company is also planning to expand to Egypt and Pakistan.
Pemo was co-founded in April by Mr Gorani, Valerie Konde, Alessandro Duri and Saed Ghorani, who have collectively launched or scaled more than eight ventures, including online shopping portal Zalora and business spending platform Pleo, over the past 15 years.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The bio
Date of Birth: April 25, 1993
Place of Birth: Dubai, UAE
Marital Status: Single
School: Al Sufouh in Jumeirah, Dubai
University: Emirates Airline National Cadet Programme and Hamdan University
Job Title: Pilot, First Officer
Number of hours flying in a Boeing 777: 1,200
Number of flights: Approximately 300
Hobbies: Exercising
Nicest destination: Milan, New Zealand, Seattle for shopping
Least nice destination: Kabul, but someone has to do it. It’s not scary but at least you can tick the box that you’ve been
Favourite place to visit: Dubai, there’s no place like home
