- FlapKap, a UAE-based fintech platform, raised $34 million through debt and equity in pre-series A funding round, increasing its total funding to $37.6 million.
- The round was led by BECO Capital, with participation from Pact VC, A15, Nclude, QED Investors, and Channel Capital for debt financing.
- The funds will be used to expand FlapKap’s capabilities in the UAE and GCC, supporting SMEs and enhancing its technology for B2B trade finance products.
- The MENA region faces a $210-240 billion MSME financing gap, impacting business growth.
FlapKap, a fintech platform based in the UAE, has successfully raised $34 million through a combination of debt and equity funding, bringing its total funding to $37.6 million. This significant investment marks a major step forward in the company’s mission to provide revenue-based financing solutions for small and medium enterprises (SMEs) across the region.
Key Investors and Funding Breakdown
The latest funding round was led by BECO Capital, with additional investments from Pact VC. FlapKap, originally founded in Egypt, also received continued support from existing investors such as A15, Nclude, and QED Investors. The round further benefited from debt financing, which was provided by Channel Capital.
With this new influx of capital, FlapKap plans to expand its operations across the UAE and the broader Gulf Cooperation Council (GCC) region. The funds will be directed toward deploying additional resources to SMEs, allowing them to maximize their growth potential through better access to financial support.
Expansion and New Product Development
FlapKap intends to use this funding not only to expand geographically but also to enhance its technology infrastructure.
One of the company’s primary goals is to develop new trade finance products tailored specifically for business-to-business (B2B) enterprises. This strategic move aims to cater to a broader range of businesses in the region, further supporting their financial needs and helping them scale effectively.
In addition to improving its core offerings, FlapKap will focus on creating innovative solutions that enable SMEs to better manage their inventory and advertising budgets. By offering flexible repayment terms, the company is positioned to support businesses that may otherwise struggle to secure traditional financing.
Supporting SMEs: A Core Mission
Founded in 2022 by Ahmad Coucha, Khaled Nassef, Sherif Bichara, and Kunal Harisinghani, FlapKap has quickly established itself as a vital player in the fintech space. The company’s primary mission is to empower e-commerce businesses, retail, and restaurants by offering quick access to financing and easy repayment terms.
FlapKap’s model is particularly attractive to businesses that face difficulties in securing bank loans or venture capital funding. The company streamlines the underwriting process, making it easier for businesses to get the financial support they need to grow. Initially focusing on e-commerce businesses, FlapKap has since broadened its reach to serve a variety of SMEs, both online and offline.
Innovative Data-Driven Approach
FlapKap’s success can be attributed to its innovative use of data and technology. By assessing businesses through multiple platforms including e-commerce sites, advertising channels, payment gateways, and bank accounts, the company gains a comprehensive understanding of each business’s financial health.
It also integrates data from point-of-sale (PoS) systems, online reviews, and Enterprise Resource Planning (ERP) platforms, providing a thorough risk assessment.
This approach allows FlapKap to lower underwriting costs while accurately assessing risk, giving SMEs more opportunities to access financing. “By leveraging data and technology, we’re breaking down the barriers that SMEs face in accessing financial services,” said CEO and co-founder Ahmad Coucha.
He further explained that the company’s ability to reduce underwriting costs and assess risk more accurately addresses the two main obstacles traditionally faced by financial institutions when dealing with SMEs.
Addressing the MSME Financing Gap
FlapKap’s expansion comes at a crucial time, as access to finance remains a significant challenge for micro, small, and medium-sized enterprises (MSMEs) in the Middle East and North Africa (MENA) region. According to the International Finance Corporation (IFC), MSMEs account for 80-90% of businesses in many MENA countries, both in formal and informal sectors.
However, a staggering 63% of these enterprises lack access to adequate financing. The IFC estimates the financing gap for MSMEs in the region to be between $210 billion and $240 billion, with the formal sector alone accounting for a $160-180 billion shortfall.
FlapKap’s revenue-based financing model offers a much-needed alternative for these businesses, helping them overcome traditional barriers to securing funds and enabling them to grow and thrive in a competitive market.
Recent Funding Success in the Region
FlapKap’s recent funding success is part of a broader trend in the region, where fintech startups are gaining increased attention and investment.
For instance, in September 2024, Saudi-based automation startup Reachware secured $3 million in seed funding, led by Sadu Capital. In the same month, UAE-based payment solutions provider Ziina raised $22 million in Series A funding, spearheaded by Altos Ventures from the U.S.
Similarly, Cercli, a UAE-based payroll and employee data platform, recently raised $4 million in seed funding, with backing from Silicon Valley’s Afore Capital. These recent developments highlight the growing interest in fintech innovations across the MENA region.
FlapKap’s Vision for the Future
With the additional $34 million in funding, FlapKap is poised to strengthen its position as a leading provider of financial solutions for SMEs in the UAE and GCC. By continuously innovating and developing new products, the company aims to bridge the financing gap that continues to challenge many businesses in the region.
As FlapKap continues to grow and expand its offerings, its focus remains on empowering SMEs with the tools and financial resources they need to succeed. With a clear vision and strong backing from investors, FlapKap is set to play a pivotal role in the future of SME financing in the MENA region.
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Last Updated on September 10, 2024 by Safiya K
