Friday, February 3, 2023
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Editor's PickManafa closes Series A round to fund Saudi growth

Manafa closes Series A round to fund Saudi growth

Hot on the heels of receiving its license from the Saudi Central Bank (SAMA), Islamic crowdfunding platform Manafa lands a SAR106 million (US$28.23 million) Series A investment round, which will help the start-up fund product development and its expansion plan in Saudi Arabia.

The investment round, closed in December, was co-led by STV and Wa’ed Venture, the venture capital arm of Saudi Aramco. This follows an earlier funding round which raised SAR4.13 million (US$1.1 million).

Operating in line with Shariah principles, the debt and equity crowdfunding platform has facilitated over SAR1.5 billion (US$399.44 million) in financing to at least 180 companies in the Kingdom since its launch in 2018. Manafa, which is regulated by both SAMA and the Capital Market Authority, initially launched equity financing instruments for Saudi SMEs, before introducing debt financing in 2020. It has since rolled out Shariah compliant investment products including long-term financing, robo-advisory services and began distributing investment funds.

“As active venture capital investors, we have witnessed firsthand the inadequacy of financing solutions for SMEs by traditional banks and other financiers. On the other side, retail and institutional investors lack the accessibility to large and critical asset classes like Sukuk, trading papers and SME equities in an efficient manner,” according to STV.

The General Authority of Small and Medium Enterprises estimates the Saudi SME funding gap to be around US$80 billion. According to STV analysis, the debt-to-revenue ratio for SMEs in the Saudi Arabia is about one-third of G20 average. This is a huge impediment to the growth of SMEs, which could impact the government’s ambitious Vision 2030 economic targets.

As at the 9th January 2023, there are at least 36 Islamic fintech start-ups operating in Saudi Arabia, according to the IFN Islamic Fintech Landscape.

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