Saudi start-up Manafa raises $28 million to fund expansion

The series A round was led by STV and Aramco's venture capital arm

Manafa aims to arrange investment from a larger segment of retail and institutional investors. Photo: Wa'ed Ventures
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Saudi FinTech start-up Manafa has raised 106 million Saudi riyals ($28.2 million) to fund its plans to offer new financial products across untapped sectors in the kingdom.

The debt and investment company's series A funding round was led by Saudi venture capital firm STV and Saudi Aramco's venture capital arm, Wa’ed Ventures.

“Manafa is planning to launch a new set of products that tackles the quick access to financing and capital, and empowers small and medium enterprises to fuel their growth,” said Abdulaziz Al Adwani, founder and chief executive of Manafa Capital.

The Arab world's biggest economy is seeking to boost the contribution of SMEs to gross domestic product to 35 per cent in 2030, from 20 per cent now, as set out in the kingdom's Vision 2030 programme and National Investment Strategy.

Venture capital funding for start-ups in Mena rose by 20 per cent annually to more than $2.3 billion in the first three quarters of 2022, putting it on track to potentially surpass the total investment attracted in 2021, an October study by data start-up platform Magnitt found.

Egypt, the UAE and Saudi Arabia retained the top three positions in both funding value and the number of deals, capturing more than 75 per cent of overall investment in the Mena region, Magnitt said.

Founded in 2018, Manafa offers SMEs in various sectors debt and equity financing based on a crowdfunding model, which allows institutional investors to gain access to SME financing opportunities.

The company is licensed by the Saudi Central Bank and the Saudi Capital Market Authority.

Manafa aims to bridge SME financing gaps by arranging investment from a larger segment of local retail and institutional investors.

To date, Manafa has funded more than 180 SMEs on its platforms to the tune of 1.5 billion riyals in total, with the participation of more than 100,000 retail and institutional investors, Wa’ed Ventures said.

“We aim ― with the completion of this round — to work with our partners to increase the impact of Manafa products and solutions on the growth of private sector companies and enhance the empowerment of financial planning for individuals,” said Amr Murad, co-founder and chairman of Manafa.

Wa'ed Ventures said Manafa was not only addressing a key gap in the market but also providing a “disruptive FinTech solution and a much-needed support line for SMEs” across the kingdom.

Dhahran-based Wa’ed Ventures is a $200 million institutional venture capital firm wholly owned by Saudi Aramco to promote economic diversification and new business expansion in the kingdom by investing in high-growth tech start-ups across various sectors. Established in 2014, Wa'ed Ventures manages a portfolio of more than 40 start-ups.

STV said SMEs were facing challenges in obtaining financing from traditional banking, with SMEs' share of the total commercial financing in the kingdom amounting to 8.4 per cent and expected to increase to 20 per cent under the Vision 2030 plan.

The partnership with Manafa "will continue to fuel greater financial stimulus by broadening the concept of crowdfunding in support of advancing the regional startup ecosystem," it said.

Launched in 2018, STV is the largest technology venture capital fund in the Middle East. With more than $800 million in capital, STV focuses on growth-stage tech companies.

Updated: December 28, 2022, 8:37 AM