Saudi Arabia-based crowdfunding platform Funding Souq has raised $2.5m in its seed round, which was backed by a host of angel investors.
Its investor list includes 500 Global partner Amal Dokhan, Christian Kunz, Omar Aljeraisi, Mazin Alzaidi, Musaab Hakami and IslamicFinanceGuru.
This capital injection will help Funding Souq to scale its operations and grow its debt investor partnerships with family offices and banks to focus on Sharia-compliant financing.
It is also looking to expand into new markets and release new products.
Founded in 2020, the FinTech company connects investors with established SMEs that need to borrow between $20,000 and $150,000. Investors can use the platform to back SMEs and get an internal rate of return of around 20%.
In December 2021, Funding Souq financed a portfolio of 25 businesses, which is on track to generate an IRR of 22% for the investors, it said.
Funding Souq CEO Martin Jaouni said, “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.”
There have been several Saudi Arabia-based FinTech companies to raise capital recently. One of these was SIFI, which helps companies of all sizes to improve their expense management.
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