Alaan Raises $48M Series A - AI-Powered Fintech in MENA

The Rise of Alaan: Revolutionizing Spend Management in the Middle East

Parthi Duraisamy, formerly a consultant with McKinsey in Dubai, encountered a significant challenge: the limited acceptance of American Express corporate cards throughout the Middle East. This frequently necessitated covering travel costs personally and completing extensive expense reports.

As Duraisamy recounted, this situation presented a “constant pain,” requiring substantial weekend time dedicated to receipt uploads and manual expense reconciliation.

Alaan Secures $48 Million in Series A Funding

Driven by this experience, Duraisamy co-founded Alaan with Karun Kurien, also a McKinsey alumnus. Today, Alaan is recognized as the foremost spend management platform in the Middle East.

The company recently announced a $48 million Series A funding round, spearheaded by Peak XV Partners (previously Sequoia Capital India & SEA). Additional participation came from 885 Capital founders, Y Combinator, 468 Capital, and Pioneer Fund.

Notably, founders from Alaan’s prominent client base – including Hosam Arab (Tabby), Mudassir Sheikha (Careem), and YouTuber Khalid Al Ameri – also contributed to this funding round.

This investment represents one of the largest Series A rounds for a fintech company in the region, trailing only Saudi Arabia’s buy now, pay later provider, Tamara, which secured $110 million a few years prior.

Peak XV’s Perspective on Alaan’s Success

GV Ravishankar, Managing Director at Peak XV, emphasized the platform’s strong product-market fit within the MENA region. He highlighted Alaan’s dedication to a customer-focused and product-led approach, resulting in solutions specifically designed for contemporary finance teams.

(Peak XV also recently participated in a substantial Series B round, supporting UAE-based proptech Huspy.)

Navigating Regulatory Challenges and Achieving Growth

Alaan’s journey to market leadership wasn’t without obstacles.

Despite securing a $2.5 million seed round in mid-2021, the company faced a near year-long delay in launching, primarily due to intricate regulatory requirements and the necessity of establishing banking partnerships within the UAE.

Expansion into Saudi Arabia presented similar difficulties, requiring years to obtain approvals from the country’s central bank before a launch this January.

The CEO shared that “simply going live” constituted the most significant challenge in both the UAE and Saudi Arabia.

Innovation and the Integration of AI

However, Duraisamy noted the company’s ability to rapidly innovate in other areas, such as Alaan’s pioneering integration of Apple Pay into its B2B services – a feature previously unavailable to regional finance teams.

In early 2023, Alaan also claimed to be the first in the Middle East to incorporate OpenAI into its offerings, a strategic move that has shaped the company’s current product roadmap.

Initially, a chatbot was implemented, anticipating user engagement through conversational spending interactions. However, this feature did not gain significant adoption.

Refocusing on Background AI Automation

Recognizing this, Alaan shifted its focus to leveraging AI in the background to enhance processes like receipt matching, reconciliation, and VAT extraction.

This proved particularly valuable in the region, assisting businesses in navigating complex VAT regulations and maximizing reclaimable tax benefits.

The company reports that its spend management platform has already saved finance teams over 1.5 million hours of manual labor, a figure Alaan anticipates will increase with continued investment in automation.

Alaan’s Current Impact and Financial Performance

Since its 2022 launch, Alaan has processed more than 2.5 million transactions for over 1,500 finance teams, including major regional enterprises like G42, Careem, Tabby, and Lulu Group.

Importantly, the company is profitable, with Duraisamy stating that $5 million in revenue was generated from a $5 million expenditure.

He attributes this disciplined approach to guidance received from Y Combinator and his mentors, contrasting it with the payment volume-focused strategies of many other fintechs in the market.

Expansion into Saudi Arabia and Future Plans

Alaan is now focused on replicating its success in Saudi Arabia, where it launched earlier this year and has experienced month-over-month doubling of transaction volumes for the past six months.

The Series A funding will facilitate this expansion by enabling the company to scale its hiring in sales, customer success, and compliance, while simultaneously increasing investment in AI-driven finance automation.

Fundamentals Over Valuation Comparisons

When questioned about whether Ramp’s rapid growth – with its valuation doubling this year after multiple funding rounds – influenced investor confidence in Alaan, Duraisamy emphasized the importance of fundamental business metrics.

“What truly matters to investors at our stage is capital efficiency, revenue generation, and the strength of our go-to-market strategy,” he explained.

“Unlike markets like the U.S. or Europe where scale is a significant advantage, we believe our strong fundamentals would have secured this funding regardless of Ramp’s performance.”