RIYADH: Two competing Saudi business-to-business online marketplaces have announced fundraising, a further sign of the growing interest in the region’s startups.
Sary raised $30.5 million in a Series B round led by VentureSouq and joined by new investors US-based Rocketship.vc and STV, Sary said in a press release. Existing shareholders Ra’ed Ventures, MSA Capital and Derayah also contributed to the funding round.
Riyadh-based Retailo raised $6.7 million in a seed round led by existing investor Shorooq Partners and UK private equity shop Abercross Holdings, Retailo said a separate press release. Retailo, founded by former Careem executives, has now raised $9 million after being in operation for just nine months.
While Sary is the more mature business having being founded in 2018, both companies offer a platform to connect small businesses with wholesalers and fast-moving consumer goods (FMCG) companies.
Sary plans to use the funds to grow geographically and expands the services it offers including credit provision.
“Core to VentureSouq’s overall fintech thesis is the emerging trend of embedded financial services,” VentureSouq Co-Founder and General Partner Suneel Gokhale said in the press release. “In Sary’s case, we see this move into credit as directly contributing to top-line growth, diversifying revenue streams, and improving unit economics for a strong, proven vertical-specific technology company.”
A rush to fund digital startups in the Middle East risks creating a valuation bubble, Fadi Ghandour, CEO of venture-capital investor Wamda, said last month.
“Since the pandemic the whole digital ecosystem which we were predicting to happen within ten years actually happened within a couple of months, so everything digital is growing exponentially,” he told Bloomberg Television. “Everything that is digital is exploding. So, lots of new money and lots of new startups.”
“There is so much new money coming into the market,” he said. “Sovereign wealth funds are starting to invest, and they are seeding a lot of VCs and so I think yes there is a little bit of a valuation bubble.”
Last month, 44 startups across the Middle East and North Africa raised more than $175 million, up $5 million from March, according to data from Wamda.
The biggest deal was by Riyadh-headquartered buy now pay later platform Tamara, which raised $110 million in a Series A round led by leading global payment processor Checkout.com. Helped by that transaction, Saudi Arabia topped the list in terms of number and value of startup investments for the first time.