Saudi fintech Tameed has raised $15 million in a Series A round led by Alromaih Investments, the investment arm of a local conglomerate Alromaih Group, with interests in construction materials, hospitality, and other industries.
What it does and who’s behind it: Founded in 2019 by Mohammed Alomayyer and Mohammed Al Alshaikh, the Riyadh-headquartered startup runs a crowdlending marketplace that provides Sharia-compliant financing to SMEs for their purchase orders. For those unfamiliar, purchase order financing is a short-term solution for businesses to borrow money from a third party and cover the costs of fulfilling specific customer orders.
Some more details: Tameed claims to be the first licensed platform of its kind in Saudi. The startup obtained its operating license from the Saudi Central Bank (SAMA) in January of this year and had previously operated within its Fintech Sandbox. Crowdlending platforms, including Lendo, which recently raised $28 million Series B, and Forus, have been present in Saudi for some time, but what makes Tameed different form the rest is its focus on government-owned purchase orders.
How does it work: A business with a purchase order from a government entity or large private company (the startup doesn’t define what a large private company means) can apply for financing through Tameed’s website or mobile app and receive a financing quote in minutes. The investors on Tameed’s platform will then finance the purchase order and the supplier will receive the loan amount in 3-5 business days.
- The business does not receive the money. It is transferred to the supplier or service product of the business. When the due date arrives, the government entity pays the invoice to an escrow account. Tameed then settles the accounts with the business and the financiers.
How much does it cost: According to the website, the financing incurs a cost of a 2.5 percent administrative fee, along with a monthly profit rate ranging from 1 to 2 percent. The financing period can be between three to twelve months.
What is in it for investors: The investors who invest through Tameed’s platform can earn average net annualized returns between 15 to 20 percent, its website claims. Since the purchase orders for which financing is raised are typically from government entities, the investments are generally considered safe. An investor can automate their investments; in this case, they are notified when nominated for an investment and provided with 48 hours to cancel it if desired.
Let’s talk numbers: Tameed stated that it has provided financing exceeding $107 million (SAR 400 million) since its inception, through the web-based platform and mobile apps. Its app, launched in September, has garnered over 50,000 downloads so far.
What are they saying: Mohammed Alomayyer, the co-founder and CEO of Tameed stated, “The coming years are promising for the growth of Kingdom’s economy, and we in Tameed are keen on meeting the needs of SMEs by offering innovative funding products. We have recently added a Performance Bond financing for projects to serve a wider range of SMEs and help them participate effectively in these major projects.”
