Target Information

Tabby, a prominent buy now, pay later (BNPL) platform in the Middle East and North Africa (MENA) region, has successfully raised a $50 million Series B funding round, resulting in a valuation of $300 million. Founded in late 2019 by Hosam Arab, the company has rapidly scaled its operations and currently serves over 400,000 active users, achieving a remarkable 20-fold increase in transaction volume since June 2020. Daily, approximately 3,000 downloads of the Tabby app are recorded, demonstrating its growing popularity among consumers.

Tabby differentiates itself by providing a flexible payment solution that addresses the predominant cash reliance in the region. Since its inception, the platform has partnered with over 2,000 retailers, including international brands like Adidas, IKEA, SHEIN, and Marks & Spencer, facilitating seamless online and in-store shopping experiences for customers through interest-free installment payments.

Industry Overview

The BNPL market has seen explosive growth globally, with increasing demand from economically conscious young adults who opt against traditional credit cards and interest payments. Within the MENA region, the BNPL sector has witnessed the emergence of over ten competing startups in just the past three years, highlighting the increasing appeal of alternative payment methods.

Despite its rising competition, Tabby stands out as a market leader in the MENA region, thanks in large part to the shift in consumer behavior prompted by the COVID-19 pandemic. As e-commerce adoption drastically increased during the pandemic, Tabby capitalized on the trend by launching its services at a time when consumers were eager for flexible payment options.

Prior to the pandemic, the e-commerce penetration in the GCC was merely in single digits, but the crisis has accelerated digital shopping, thus elevating penetration levels to double digits. This shift has allowed BNPL solutions like Tabby to take a central role in the transformation of payment practices across the region.

Furthermore, the region has experienced notable consolidation activities within the BNPL sector, as seen in the significant investments raised by competitors like Tamara, which recently secured $110 million. This context emphasizes the competitive landscape within which Tabby operates, paving the way for strategic partnerships to enhance market positioning.

Rationale Behind the Deal

The recent funding round, led by Global Founders Capital and STV, with participation from Delivery Hero and existing investors, positions Tabby for robust growth and market expansion. The additional capital will enable Tabby to diversify its product offerings and extend its footprint throughout the GCC region. Such strategic decisions are vital as the market's competitive nature necessitates continuous innovation to meet evolving consumer demands.

Arab’s strategic focus on forming partnerships with established companies like Delivery Hero, rather than solely relying on traditional BNPL competitors, suggests a clear vision for enhancing operational synergies and customer access. This approach is aimed at utilizing the partner's vast consumer base to further boost Tabby's growth trajectory.

Information About the Investor

Global Founders Capital and STV, prominent venture capital firms, led the recent Series B funding round, recognizing the potential for significant returns within the burgeoning BNPL landscape in MENA. Their participation emphasizes investor confidence in Tabby's business model and market positioning. Furthermore, Delivery Hero's involvement marks its first fintech investment in the region, underscoring the strategic alignment between a leading delivery service and a rapidly growing payment platform.

Other notable investors include Arbor Ventures, Mubadala Investment Capital, and Raed Ventures, all of whom have previously supported Tabby’s growth through earlier funding rounds. Such diverse backing illustrates a robust belief in Tabby’s mission and the long-term sustainability of its business model.

View of Dealert

From an analytical standpoint, the recent funding round for Tabby appears to be a strong investment opportunity with considerable growth potential. The BNPL sector is gaining traction, particularly in the MENA region, where traditional payment methods are being rapidly challenged by digital solutions. Tabby's established brand presence and user base provide a solid foundation for future scalability.

Additionally, the strategic partnerships being forged, especially with Delivery Hero, further enhance the company’s operational capabilities and market access. Rather than viewing the competitive environment as a threat, Tabby’s leadership sees it as an opportunity to differentiate and innovate their offerings compared to other BNPL players.

Moreover, the successful navigation of challenges presented by the pandemic and the subsequent rapid growth of e-commerce channels indicate that Tabby has positioned itself effectively within the evolving payment landscape. While competition is indeed mounting, there remains a large untapped market where Tabby could potentially thrive.

Ultimately, if Tabby continues to execute its strategic initiatives successfully and adapts to the rapidly evolving market conditions, it stands to reinforce its place as a leading player within the MENA BNPL sector, making this investment both prudent and promising for investors.

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