Saudi Arabia-based crowdfunding platform Funding Souq, has raised a $2.5 million Seed round with participation from angel investors including Amal Dokhan, partner at 500 Global, Omar Aljeraisi, and ChristianKunz, head of Strategy at a Global Financial Centre. Existing investors including Mazin Alzaidi, Partner at ST, Musaab Hakami, and IslamicFinanceGuru also participated in this round.
Founded in 2020 by Martin Jaouni, Funding Souq connects investors with SMEs looking to raise funding with ticket sizes ranging between $20,00-150,000, enabling investors to get more exposure to SME lending and realise an internal rate of return (IRR) of 20 per cent.
The funding will go towards developing more synergies between the company's network of debt investors and family offices and banks to launch new Shariah-compliant fintech products, with plans to expand its regional presence.
Saudi Arabia-based crowdfunding platform Funding Souq has closed a $2.5m seed round with contributions from an arsenal of angel investors including Amal Dokhan (Partner at 500 Global), Omar Aljeraisi, Christian Kunz (Head of Strategy at a leading Global Financial Centre). Existing investors include Mazin Alzaidi (Partner at STV ), Musaab Hakami and IslamicFinanceGuru.
Founded in 2020, Funding Souq is a platform that connects investors with established SMEs who are looking to borrow between $20k-150k. Investors get exposure to SME lending and realize an Internal Rate of Return (IRR) of c.20% whilst supporting their local businesses and making an impact. "SMEs in the GCC are highly underserved by financial institutions and often don’t qualify for the financing they deserve as traditional lenders are overly conservative.
According to the IMF, only 2% of GCC lending goes to SMEs as opposed to 22% in other high income countries which in turn strains the regional economy. This lack of financing limits economic growth and is one of the main reasons why we started Funding Souq. We are incredibly proud to have financed 47 SMEs across Saudi Arabia and UAE in the first 12 months of operations and are looking forward to growing our portfolio exponentially”, says Martin Jaouni, Funding Souq’s CEO.
Once onboarded, retail and institutional investors can choose to invest in individual businesses or a portfolio of businesses to diversify their exposure and maximize their risk adjusted return. In December 2021, Funding Souq financed a portfolio of 25 businesses which is on track to generate an IRR of 22% for the investors that participated. More than 60% of those investors are repeat investors.
Funding Souq uses a robust credit scoring process that analyzes tens of variables before shortlisting a business for an enhanced due diligence.Less than 9% of the businesses that apply get approved on Funding Souq.
This disciplined approach to credit risk has helped us maintain defaults impressively at less than 1%. With this round of investment, Funding Souq will scale its operations and aim to grow its debt investor partnerships with family offices and banks to focus on Sharia-compliant financing. The company is also exploring entering new markets and developing new products that will further serve its mission to empower SMEs in the Middle East and beyond.