Tabby Raises $50M: Dubai BNPL Platform Hits $300M Valuation

The Rise of Buy Now, Pay Later and a $300 Million Valuation for Tabby

Over the last several years, buy now, pay later (BNPL) services have experienced substantial growth globally. Leading companies in this sector have secured significant funding to cater to a growing demographic of young adults who prefer alternatives to traditional credit cards and interest payments.

A recent indication of industry consolidation occurred this week with Square’s acquisition of Australian BNPL leader Afterpay in a $29 billion transaction.

This deal foreshadows similar developments in established markets like the U.S. and Europe, as well as in emerging regions witnessing a rapid increase in these services. Specifically, the Middle East has seen the launch of over ten BNPL startups within the past three years.

Tabby Secures $50 Million Series B Funding

Tabby is a prominent example of this trend, and is widely recognized as a leading service in the region. The company announced today that it has successfully raised $50 million in a Series B funding round, resulting in a valuation of $300 million.

Global Founders Capital and STV spearheaded the funding round, with contributions from Delivery Hero and CCVA. Existing investors, including Arbor Ventures, Mubadala Investment Capital, Raed Ventures, Global Ventures, MSA Capital, VentureSouq, Outliers VC, JIMCO, and HOF, also participated in this investment.

Hosam Arab founded the company in late 2019, following his departure from Namshi, a fashion e-commerce platform where he previously served as CEO until its acquisition by a Dubai-based real estate firm.

Addressing Unique Market Needs

Arab explains that Tabby was launched as a BNPL solution to address specific economic challenges within the MENA and broader GCC regions.

While BNPL services globally address customer payment flexibility and improve merchant conversion rates, Tabby identified an additional key issue in the Middle East: a strong reliance on cash payments. During his time at Namshi, Arab observed that approximately 80% of transactions were conducted using cash, creating obstacles for scaling the e-commerce platform.

“Our vision with buy now, pay later was to provide consumers with a digital payment alternative, in addition to the established benefits of BNPL. Successfully achieving this would offer a compelling solution for retailers in this market,” Arab stated.

Growth and Expansion

Tabby partners with retailers to enable customers to make purchases online and in physical stores through interest-free installments. The platform went live in early 2020.

Despite a relatively slow initial start due to the timing of the pandemic, the company benefited from a significant shift towards online shopping by both merchants and consumers. E-commerce penetration in the GCC region, which was in the single digits before COVID-19, is estimated to have increased to double digits.

This surge in penetration has fueled a 20x increase in Tabby’s transaction volume since June 2020. The company currently serves over 400,000 active shoppers, with approximately 3,000 new installs recorded each day.

Furthermore, over 2,000 global brands and small businesses, including Adidas, IKEA, SHEIN, and Marks & Spencer, utilize the platform.

This rapid growth has enabled Tabby to secure a larger funding round than initially anticipated, according to Arab. In June, the company secured $50 million in one of the largest debt facilities for a fintech company in the MENA and GCC region. This follows earlier seed and Series A rounds of $7 million and $23 million in 2020, bringing the total funding raised to over $130 million.

Competition and Consolidation in the Region

Tabby is not alone in this rapidly expanding market. Tamara, a Saudi-based competitor, recently raised $110 million in a Series A funding round combining debt and equity financing from Checkout.

While Tamara claims Checkout acquired a minority stake, conflicting reports suggest otherwise. If the latter is accurate, this acquisition would align with the ongoing consolidation trend in the MENA and GCC regions.

In May, Australian BNPL company Zip Co announced the acquisition of Spotti, another significant player in MENA, for $26 million. Afterpay also made a substantial investment in Postpay’s recent $10 million funding round. These developments position Tabby as the sole independent local player in the market.

Looking Ahead: Competition and Differentiation

“We are observing this level of competition globally, and our market is no different. The market is large enough to accommodate several players, but the key question is how many will remain, and whether further consolidation will occur,” Arab commented.

“We’ve also seen, as exemplified by Square’s acquisition of Afterpay, that differentiation beyond basic BNPL is crucial. Remaining solely within the limited BNPL space will present significant challenges.”

This perspective may explain Tabby’s strategic partnership with Delivery Hero, rather than seeking investment from an established BNPL player.

Delivery Hero, which owns and operates regional food and grocery delivery companies such as Talabat, InstaShop, and Hunger Station, boasts one of the largest customer bases in the MENA region. This investment represents Delivery Hero’s first fintech investment in MENA.

“As we broaden our offerings, we seek strategic partners who share our vision for future services. Collaborating with Delivery Hero, with its extensive consumer platform in the region, makes far more sense than partnering with a global BNPL player lacking a presence in this market,” Arab added.

Mark Venema, Senior Vice President of Strategy at Delivery Hero, affirmed that investing in Tabby is a strategic move. He stated that the multinational company recognizes “great potential in Tabby to drive industry innovation” and is “proud to support the company’s growth.”

Ahmad Alshammari, partner at co-lead investor STV, stated, “With the global BNPL market projected to grow at a ~30% CAGR over the next five years, we anticipate MENA will grow at least twice as fast, driven by a rapid shift to contactless payments, e-commerce expansion, and increased access to credit. Our increased investment demonstrates our strong belief that Tabby is the market leader in MENA and will continue to fuel BNPL growth across the region by empowering both buyers and merchants.”

Future Plans and Potential for Further Consolidation

The new funding will enable Tabby to expand its product portfolio and enter new markets within the GCC region. This raises the question of whether further consolidation will occur.

Will companies like Klarna and Affirm, which currently lack a presence in MENA and the GCC, attempt to acquire or gain a majority stake in Tabby?

“We have a long journey ahead, and a clear vision for the future of this business,” Arab said. “Therefore, a quick exit is not our priority; otherwise, we would have likely pursued it already. The opportunity here is significantly larger.”