Tamara, the innovative buy now pay later platform for consumers, has recently secured an impressive $340 million in a Series C financing round. The company, which serves customers in Saudi Arabia and the wider GCC region, now boasts a valuation of $1 billion, cementing its position as a successful fintech.
SNB Capital, a Saudi asset manager, and Sanabil Investments, a company owned by Saudi’s sovereign wealth fund, Public Investment Fund (PIF), led the round. Other investors include Shorooq Partners, Pinnacle Capital, Impulse, and more, joining previous investors like Checkout.com. This funding round, which includes both primary capital and a transaction of secondary shares, is one of the largest investments in a fintech in the region.
- Saudi asset manager SNB Capital and Sanabil Investments lead the Series C funding round
- The round includes primary capital and a transaction of secondary shares
- This is one of the largest investments in a fintech in the region
This milestone comes just ten months after Tamara received debt financing from Goldman Sachs and Shorooq Partners to expand its warehouse facility to $400 million. In total, Tamara has raised an impressive $500 million in equity funding, including secondaries, and over $400 million in debt financing since its launch in late 2020 by founders Abdulmajeed Alsukhan, Turki Bin Zarah, and Abdulmohsen Al Babtain.
With over 10 million users in its primary markets of Saudi Arabia, the UAE, and Kuwait, Tamara partners with 30,000 merchants, both regional and global, including well-known brands such as SHEIN, IKEA, Jarir, Noon, eXtra, and Farfetch. This is comparable to the numbers reported by UAE-based but Riyadh-based BNPL competitor Tabby, which announced $200 million in funding in October 2021, valuing it at $1.5 billion.
Both Tamara and Tabby have around 10 million users in Saudi Arabia and the GCC, with the majority in Saudi Arabia
These two startups, despite being competitors, showcase the rapid growth of BNPL usage, particularly in Saudi Arabia, which makes up over 80% of Tamara and Tabby’s customer base. According to a fintech report by the Saudi Central Bank (SAMA) in 2021, registered customers with BNPL services have skyrocketed from 76,000 in 2020 to 3 million in 2021 and a projected10 million in 2022. This surge, which now accounts for nearly 30% of Saudi Arabia’s population, can be attributed to the growing popularity of e-commerce and a projected 20% compound annual growth rate (CAGR) for digital payments until 2025. With a projected 13 billion transactions and a total value of $170 billion, it is no wonder that these numbers and projections have attracted interest from both local and foreign investors.
- BNPL usage has surged in Saudi Arabia over the past few years
- The country now boasts over 10 million registered BNPL customers, with a projected 10 million more in 2022
- This surge is driven by the rise in e-commerce and projected growth in digital payments
Despite a global slump in venture capital activity, numbers and projections like those mentioned above are bound to draw attention from both local and foreign investors. And as we have seen in the past year, the Gulf region has no shortage of funds to make significant investments in startups and venture capital. This has been highlighted by the increasing number of venture firms in Western and other regions, like Africa, seeking backing from sovereign wealth funds and large institutional investors like PIF and Mubadala Capital. Interestingly, Tamara is a prime example of how the Gulf region does not always require foreign capital to achieve unicorn status.
Tamara is an example of how the Gulf region can create a unicorn without relying on foreign capital
Notably, the significant financial backing from funds like SNB Capital and evident top-down support from regulators indicate a positive shift in the region’s ability to produce billion-dollar companies. Tamara proudly states that it is Saudi Arabia’s first homegrown unicorn, while Tabby claims to be the first fintech startup unicorn in the Gulf.
CEO Abdulmajeed Alsukhan commented, “Saudi Arabia and the GCC deserve recognition on the world stage for financial technology. Tamara was founded by local entrepreneurs who were supported by a thriving local ecosystem and the market regulator. We are humbled and excited to be a part of this leapfrog moment. This achievement is a testament to the ecosystem, our incredible team, investors, and the collaborative spirit that makes this region a fertile ground for talent and innovation.”
Building a Customer-Centric BNPL Service
Alsukhan co-founded Tamara after identifying a gap in the market while working as the chief financial officer at Nana, a digital grocery shopping platform. He noticed that small neighborhood shops often offer credit services to their customers, as traditional financial institutions and low credit card usage have failed to provide these services. In response, Tamara was born with the mission to provide a credit payment solution that puts the customer first, unlike traditional cash loan services that can lead to debt traps.
Supplementary features like late payment fees have been commonplace in most BNPL services to ensure timely payments. However, Tamara has learned from customer feedback and data that this may not be the most optimal approach. As a result, the company has decided to remove late payment fees and focus on providing risk management tools to help customers make payments on time. This aligns with Tamara’s goal to differentiate itself from the competition by prioritizing customer experience and being Sharia-compliant.
Sharia-Compliant and Customer-Centric
Alsukhan emphasizes that Sharia compliance has been a top priority for Tamara since day one. The company strives to provide a customer-centric service that does not take advantage of its users, which aligns with the core Sharia principle of not exploiting people. Moving forward, Tamara will continue to invest in this principle and ensure that its business model benefits shareholders without putting customers in debt traps, unlike traditional banks.
Tamara CEO Abdulmajeed Alsukhan: “We live by our Sharia compliance principles and will continue to invest in that to provide a customer-centric service.”
The average outstanding amount for a Tamara customer is less than $100, indicating that the company is not profiting from customers’ late payments. Instead, Tamara’s main source of revenue comes from merchant discount rates. This approach, which is commonly used by BNPL providers, has been crucial in improving conversion rates and increasing the average order value for merchants. While Tamara is open to exploring other revenue streams, including expanding their merchant discount rates, it will also be doubling down on its customer-centric initiatives. This includes the recent introduction of their Buyer Protection Program, which addresses a critical need for online shoppers in a region where online protection is scarce. Tamara is also focusing on enhancing its integration into the shopping journey, with plans to expand its card feature for offline merchants.
In Conclusion, Tamara’s recent funding round is yet another example of the growing capability of the Gulf region to produce billion-dollar companies. With significant financial backing from reputable funds like SNB Capital and top-down support from regulators, Tamara has achieved the coveted unicorn status and is well-positioned to continue its rapid growth in the region’s flourishing fintech market.
