Middle Eastern buy now, pay later (BNPL) fintech Tabby has secured $200 million in its Series D funding round led by Wellington Management, more than doubling its valuation to $1.5 billion. The company’s achievement marks a significant milestone as it becomes the first fintech unicorn in the Middle East and North Africa (MENA) region.
The equity funding round also saw participation from Bluepool Capital and existing investors STV, Mubadala Investment Capital, PayPal Ventures, and Arbor Ventures. Tabby, now headquartered in Saudi Arabia, is planning an initial public offering (IPO). Earlier in the year, the fintech firm raised $58 million as part of its Series C, valuing the company at $660 million.
Tabby’s co-founder and CEO, Hosam Arab, told TechCrunch that the company has seen incredible growth over the last year. He added that despite challenges with the BNPL model in other markets, investors were interested in understanding why this market is different and why Tabby has grown profitably.
A Fintech Unicorn
A fintech unicorn describes startups with valuations exceeding $1 billion. Globally, approximately 340 startups have reached this status. Tabby joins a list dominated by US-based firms but led by Chinese e-commerce giant Ant Technology.
Funding and Expansion
The recent funding brings Tabby’s total equity and debt funding to over $950 million. The capital will support the increasing demand for Tabby’s BNPL product and further develop its product offerings. Tabby manages over $6 billion in annualized transaction volume with its BNPL service.
In May, Tabby increased its debt facility to $350 million after closing a new financing round led by San Francisco-based Partners for Growth (PFG), along with Atalaya Capital Management and CoVenture. Tabby also launched Tabby Shop, a digital shopping assistant designed to simplify the shopping process.
Strategic Shift to Saudi Arabia
Tabby, initially established in the UAE, recently moved its headquarters to Saudi Arabia in line with its IPO plans. According to Tabby, 80 percent of its users were from Saudi Arabia, making the move a strategic decision.
Industry Impact
The recent acquisition of a Saudi fintech by Tabby has sparked new hopes for VCs. According to Abdulrahman Tarabzouni, founder and CEO of STV, Tabby has created a new industry and is transforming how people consume and pay across MENA. He recognizes the company as an integral part of Saudi Arabia’s fintech landscape, nurturing growth and empowering the broader economy.
Company Profile
Tabby currently has 10 million users and works with over 30,000 brands, including 10 of the largest retail groups in the MENA region. Tabby’s use as a payment method in physical stores, including the Tabby Card, continues to accelerate, now reaching over 20% of total volumes, the company said. Tabby Shop features over 500,000 items from brands, helping consumers locate and monitor prime products and deals.
Decoding Tabby’s Growth:
Several key factors have contributed to the rapid growth of Tabby:
- Market Demand: Tabby addresses a key consumer need for flexible payment options, which has enabled them to build a sizable business. Around 70% of consumers prefer payment options that offer flexibility.
- Strategic Partnerships: Collaborating with retailers, e-commerce platforms, and financial institutions has helped Tabby expand its reach and offer more value to its customers. Tabby partners with merchants to originate short-dated consumer loans. Tabby works with over 30,000 active merchants across the region.
- Customer Loyalty Programs: Tabby’s loyalty program rewards users with points for every purchase, leading to a reported 25% increase in repeat purchases. 40% of their active users engage with the loyalty program regularly.
- Positive Brand Perception: Tabby emphasizes convenience and easy-to-use features, resulting in a strong Net Promoter Score (NPS) of 70, indicating high customer satisfaction.
- Financial Backing: Tabby has raised over $70 million from investors.
- Focus on E-commerce Advantages: Tabby’s solution brings significant advantages for merchants through fewer product returns from customers.
- Adaptability: Tabby demonstrated resilience and achieved growth despite global challenges. The company is addressing a key consumer need, which has enabled it to build a sizeable business.
- Relocation to Saudi Arabia: Tabby relocated its headquarters to Saudi Arabia in 2023, which is a significant market for the company. Approximately 75 to 80 percent of Tabby’s customer base originates from Saudi Arabia.
- Regulatory Approval: The fintech achieved a crucial regulatory milestone by obtaining a permit from the Saudi Central Bank (SAMA).
- Experienced Management Team: Tabby’s management team has demonstrated experience and knowledge of the sector.
- Innovation and Technology: Investing in technology and innovation is crucial for Tabby to stay ahead of the competition and meet the changing needs of customers.
Tabby creates financial freedom in the way people shop, earn, and save by reshaping their relationship with money. The company is active in Saudi Arabia, UAE, and Kuwait.
