In a financial landscape marked by uncertainty and valuation cuts for many startups due to rising interest rates, Tabby, a leading Buy Now, Pay Later (BNPL) platform serving customers in the Middle East, stands out as a shining success story. Recently, Tabby, which has shifted its headquarters from Dubai to Riyadh, secured an impressive $200 million in its Series D funding round, catapulting its valuation to a remarkable $1.5 billion. This achievement marks a significant milestone for Tabby, as it becomes the first fintech startup unicorn in the Gulf, underscoring its substantial growth and influence in revolutionizing how customers shop and pay in the region.
Tabby’s impressive journey to this valuation milestone is underscored by its ability to secure continued support from key investors. Notably, this Series D round saw participation from previous backers, including Sequoia Capital India, STV, Mubadala Investment Capital, PayPal Ventures, and Arbor Ventures. Joining them were new investors, including the lead investor Wellington Management, a globally renowned independent investment management firm, and growth equity investor Bluepool Capital.
Founder and CEO Hosam Arab commented on Tabby’s remarkable growth and the investor interest it has generated: “We’ve seen pretty incredible growth over the last year. And with that, we saw a lot of inbound interest from investors that I think always saw value in the BNPL model. Despite seeing the challenges with the model in other markets, there was that interest in understanding why this market is different and why we’ve grown profitably.”
One of the key highlights of Tabby’s success story is its profitability, a rarity in the global BNPL industry. While specific figures regarding Tabby’s profitability remain undisclosed, Arab disclosed that the company experienced a threefold growth in revenues. This profitability is attributed to Tabby’s ability to operate within a market where the structural dynamics align with the economics of running a BNPL model.
Tabby has established partnerships with over 30,000 brands, including renowned names like Adidas, Amazon, H&M, and SHEIN, along with collaborations with ten of the largest retail groups in the MENA region. These partnerships enable Tabby to provide BNPL services at both online and in-store checkout to over 10 million users across Saudi Arabia, the UAE, and Kuwait.
Despite entering the BNPL scene later than platforms like Afterpay and Affirm, Tabby has managed to build a substantial customer base, nearly matching Afterpay’s 16 million and Affirm’s 14 million active users. However, it remains smaller in scale compared to Klarna’s massive customer base of 150 million.
What sets Tabby apart from its counterparts in the United States and Europe is its profitability in the GCC region. This success can be attributed to several factors, including the relatively moderate e-commerce penetration in the region, particularly in Saudi Arabia and the UAE, where consumers have limited access to credit alternatives. In these markets, BNPL serves as a vital source of credit, addressing the credit needs of consumers who may not have access to traditional credit options.
Tabby appeals to two distinct customer segments in the region. The first comprises customers in markets like Saudi Arabia, where credit card penetration is low, standing at around 15%. In contrast, the UAE has a higher credit card penetration of approximately 40%. Still, the overall GCC region has a credit card penetration rate of around 10%. For both segments, Tabby often serves as their primary and sometimes only source of credit.
Tabby’s unique market positioning has contributed to strong payment performance as consumers in the Middle East value access to credit while managing concerns related to impulsive spending and unsustainable debt.
Arab emphasized the importance of market-specific factors: “Buy now, pay later doesn’t help in markets where customers are overstretched when it comes to credits. It’s an additional burden on these consumers. The regulations of those markets aren’t there yet, and affordability needs to remain a factor that buy now pay later providers check for. However, in our markets, these are the two components that help.”
Saudi Arabia remains Tabby’s largest market, representing 80% of its customer base and contributing significantly to its annualized transaction volume, exceeding $6 billion. Tabby’s growth has led to preparations for an initial public offering (IPO) on the Saudi stock exchange, with plans to enhance its presence in its largest market and transition its headquarters to Riyadh.
In the UAE, Tabby has made significant inroads by introducing Tabby Cards, enabling customers to make in-store purchases at over 4,000 stores. This move has contributed to over 20% of the platform’s total transaction volumes. Tabby has also launched Tabby Shop, featuring a wide range of products from thousands of brands, further enhancing the shopping experience for users.
Looking ahead, Tabby’s strategic focus includes expanding its product offerings to encompass a broader range of financial services, such as payments and savings. The startup aims to invest more extensively in its current markets, offering customers additional products to improve their financial well-being.
Abdulrahman Tarabzouni, founder and CEO of STV, an early investor in Tabby, commented on the fintech’s transformative impact: “Tabby created a new industry and is transforming the way people consume and pay across MENA. Hosam and team built an iconic enterprise that is a reference model in terms of both discipline and disruption; two things that are hard to crack in tandem. We are excited to see Tabby become an integral part of Saudi’s fintech landscape, nurturing growth and empowering the broader economy.”
In conclusion, Tabby’s latest funding round and impressive valuation demonstrate the growing prominence of the BNPL sector in the Middle East and highlight the fintech’s commitment to revolutionizing the way consumers shop and pay in the region. With its unique market position, profitability, and strategic expansion plans, Tabby is poised to shape the future of financial services across the MENA region. Stay tuned for more exciting developments from this trailblazing fintech unicorn.
