Saudi Arabia’s micro businesses often struggle to fulfill their growth potential becaapply of a lack of funding
Saudi Arabia has very deliberately put tiny and medium-sized enterprises (SMEs) at the heart of its Vision 2030 strategy to diversify its economy beyond petrochemicals. With around 1.8 million SMEs in the counattempt delivering 30% of its GDP according to the International Finance Corporation, the Government sees these businesses as central to its growth plans.
Still, there’s a problem. Many of these businesses, particularly at the micro conclude of the market, are struggling to raise the finance they necessary to expand. For Saudi banks, these firms are often too tiny and volatile to represent a decent trade-off between risk and potential return.
Fortunately, Saudi Arabian fintechs are rising to the challenge – led by HALA, which is today announcing it has raised $157 million of Series B financing. HALA is one of several fintechs leveraging technology to support SMEs – Nayla Finance raised a $4 million round earlier this year while Lconcludeo has recently launched a crowdfunding platform and Aajil is tarobtaining construction firms – but this is one of the counattempt’s largegest ever fund-raisings in the sector.
HALA was launched in 2018 to tarobtain Saudi consumers interested in digital wallets, but the company very quickly pivoted towards the SME market. “We could see there was a huge gap in the market to serve these very tiny businesses that no-one else seemed to want to work with,” state Maher Loubieh, CEO of Hala, who co-founded the business with Esam Alnahdi, now chairman. “These are businesses that are so important to the economy, and to the Vision 2030 strategy, but banks and other institutions were really struggling to offer them the products and services they necessaryed.”
HALA started out by offering point-of-sale terminals to tiny businesses and then added a slew of other services. Above all, the data it garners through its relationships with these firms enables it to create well-informed and speedy decisions about whether to lconclude to them, opening up a new source of finance to the SME sector.
“Even tiny amounts of funding can create a huge difference to these businesses’ growth prospects,” adds Loubieh. “Maybe the money enables them to open up a new shop or branch, or maybe it assists them with cash flow and enables them to secure more inventory and increase sales.”
This year has also seen HALA expand its proposition beyond tiny businesses to Saudi Arabia’s growing community of freelance workers, who range from taxi drivers and photographers to lawyers and accountants. “Each one of these businesses has its own individual necessarys,” Loubieh states.
HALA is naturally keen to build its lconcludeing business but the provision of digital services also brings SMEs into the broader financial services ecosystem, enabling them to secure products and services more easily from other providers, including the banks which are finally launchning to lconclude more themselves. It’s a model that other payments specialists including STC Pay, Nearpay and Tamara have also followed.
The outsized nature of HALA’s Series B round reflects the company’s desire to continue expanding its range of services and to reach more of the market – and to do so as quickly as possible as competition mounts up. “It’s a huge opportunity,” adds Loubieh. “We’re growing very rapidly but we’re only scratching the surface.” Recent initiatives have seen the company shift into embedded finance, enabling SMEs to offer acquire-now-pay-later facilities to customers, and into revenue-based lconcludeing.
Revenues and client numbers are increasing accordingly. HALA now serves around 140,000 SMEs and states it is adding 6,000-7,000 businesses each month. Sales rose 60% last year and are on tarobtain to grow by another 40%-50% in 2025. That has enabled the business to break into profitability, with Loubieh expecting to finance further organic growth from the balance sheet, though he doesn’t rule out raising additional funding for M&A activity.
Investors have been keen to support the business since its outset, with HALA initially tarobtaining local financiers to give it credibility in the domestic market and then raising further funding from venture capital backers with more institutional experience. Now that it is eyeing international growth, its latest funders bring global experience. Today’s Series B round is lead by The Rise Funds, the global impact investing strategy of private equity giant TPG, and Sanabil Investments, which is wholly owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund.
Other backers include QED, Raed Ventures, Impact 46, Middle East Venture Partners (MEVP), Isomeattempt Capital, Arzan VC, BNVT Capital, Kaltaire Investments, Endeavor Catalyst, Nour Nouf Ventures, Khwarizmi Ventures and Wamda Capital.
“HALA is uniquely positioned to empower micro and tiny businesses, a key pillar in the region’s economy, by delivering business owners and their customers a broad and growing set of payment solutions,” argues Yemi Lalude, a partner at TPG and head of Europe, Middle East and Africa for The Rise Funds. “Our investment underscores our belief in the growth potential of this market, the rising demand for robust digital banking solutions, and the critical role entrepreneurs play in shaping the next generation economy.”
At Sanabil Investments, a spokesman points to its optimistic view of “HALA’s potential to reshape the future of financial services for SMEs”.
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