Silicon Valley venture capital firm General Catalyst has made its first investment in Saudi Arabia through financial technology startup Lean Technologies, which has just completed a Series B round worth $67.5 million.
General Catalyst manages $30 billion in assets and has backed major U.S. technology companies such as breakstripes and Airbnb. Bain Capital Ventures, Stanley Druckenmiller’s Duquesne Family Office and Arbor Ventures also participated, according to a statement from Lean Technologies on Sunday. The round brings the Riyadh-based company’s total funding to date to more than $100 million.
For three of the investors – General Catalyst, Stanley Druckenmiller and Bain Capital – this is their first investment in Saudi Arabia.
Hisham Al-Falih, CEO and co-founder of Lean Technologies, told CNBC that this means “it’s a huge vote of confidence in their view of the kingdom’s current growth trajectory and its potential over the next decade.”
Saudi Arabia is promoting Vision 2030, a plan to diversify its economy away from oil and create new jobs and industries for the largely young Saudi Arabian workforce. Now more than ever, the Kingdom wants foreign capital and direct investment to come into Saudi Arabia, not out of the country, allowing for local employment, knowledge transfer and training, and the development of various industries.
Al-Falih stressed that fintech plays an important role in this evolution.
“We are just getting started. I feel more investment is needed to deepen our technology stack, expand our payment solutions, expand our data services, deepen our partnerships and support with banks in the region and central banks in the region. Support,” Falih said. “If you look at the growth in the region over the last three to five years, it’s been phenomenal, but there’s still room for more growth.”
Riyadh, Saudi Arabia.
Xavier Lanno | Electronic+ | Getty Images
According to a report by McKinsey & Company, the revenue of the financial technology industry in the Middle East and North Africa will reach US$1.5 billion in 2022, and may grow to US$3.5 billion to US$4.5 billion by 2025. Citing the report, Al-Falih said fintech revenue in the region accounts for less than 1% of banking revenue, compared with 4% to 5% in more mature markets such as the United States and the United Kingdom.
“We’re almost an order of magnitude away from where we could possibly be in terms of fintech revenue and its participation in the economy,” the Lean Technologies executive said. “That gives us the momentum behind sales and continuing to build these tools. And the power of picks and shovels, if you will, allows those bold innovators to realize their dreams.”
Lean Technologies specializes in providing financial infrastructure to enable secure data sharing between bank accounts and applications. Lean is regulated by the Abu Dhabi Global Market in the United Arab Emirates and is dedicated to facilitating A2A (Account to Account) payments, i.e. funds transfers Directly between two bank accounts rather than through Intermediaries such as payment processors or credit card networks.
The company works with major local clients such as UAE national telecommunications company e& and ride-hailing super app company Careem, with a combined processing volume of more than $2 billion, according to a press release issued on Sunday.
In Saudi Arabia, Lean “launched data solutions under the Saudi Arabian Central Bank’s regulatory sandbox that impacted customers across industries including insurance, lending and markets, verifying nearly 1 million bank accounts,” according to the press release. .
As of September this year, fintech startups in Saudi Arabia have raised more than $1.84 billion in venture capital since 2018. According to Munshah, The Kingdom’s General Administration of Small and Medium Enterprises. KPMG reported in September that Saudi Arabian fintech companies attracted $791 million in 2023 alone – An increase of 231% over the previous year.
Monsha’a said that since the launch of the “Saudi Arabia FinTech” program in 2018, the number of active fintech startups in the country has reached 216 with more than 6,500 employees. The Kingdom of Saudi Arabia aims to establish 525 new companies in the fintech sector by 2030.
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