Revenue-Based Financing Drives SaaS Growth in MENA
Traditional financing methods are experiencing headwinds as new models like revenue-based financing (RBF) gain traction across the world.
According to Ahmad Couchaco-founder and CEO of a Cairo-based company FlapKapleading FinTech capital providers like Canada’s Clearco and Dublin-based Wayflyer have popularized the RBF model, paving the way for companies like his to give companies the flexibility to repay loans only when they generate revenue .
Read more: Wayflyer valued at $1.6 billion after $150 million Series B funding round
But while a growing number of companies in developed regions are adopting the model, it remains relatively new in regions like the Middle East and North Africa (MENA), where Coucha says FlapKap is the first company in the world. kind.
With this first-mover advantage, the company aims to help e-commerce and software-as-a-service (SaaS) businesses grow faster with less risk through better credit terms, as well as optimize their ad spend with artificial intelligence (AI) insights. and data analysis.
“Our AI solution helps us understand the client’s accounting processes, spending habits and correlation with sales to determine if they have the potential to grow should their advertising spend increase – one of largest expense items for businesses,” Coucha told PYMNTS in an interview.
Today, the MENA-focused FinTech company, which recently secured a $1.2 million investment, has expanded beyond its home territory of Egypt to the Arab Emirates States (UAE), with new plans to launch in Sub-Saharan Africa and other markets across the MENA region. , starting with Saudi Arabia.
Optimizing Ad Spend Drives Growth
As the company continues to position itself as the MENA version of Clearco and Wayflyer, Coucha said the e-commerce and SaaS sectors will remain two of the most exciting spaces to focus on, with FlapKap identifying companies to invest in.
He said that with the abundance of capital and the supply of “cheap” funds in the market, the company’s plan is to differentiate itself by capitalizing on its first-mover advantage, offering other elements in addition to capital, such as insightful alternative financing as it anticipates the arrival of other players in the RBF space.
He added that while FlapKap wants to help online small and medium-sized enterprises (SMEs) — often underserved by banks in the region — grow, they “just don’t want to throw money” at those businesses, but rather working hand in hand with them to maximize their growth potential.
For merchants who are less keen on ditching their legacy infrastructure for a newer, more modern solution like FlapKap’s, Coucha said they’ll soon make the switch when they realize just how Optimizing ad spend can translate into big returns.
“A [simple] A 5% optimization in digital ad spend can lead to a 25% increase in returns,” he said. “It’s amazing.”
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