GLOBAL: Three entities will jointly deploy about US$40 million into fintech start-ups in Saudi Arabia and the wider Middle East, through an Islamic vehicle to capture burgeoning digital finance opportunities in the Kingdom and MENA.
The vehicle, Fintactics Financial Technology Fund, will be managed by Saudi Islamic investment boutique firm Arbah Capital as part of a partnership with Riyadh-based venture builder Fintactics and UK’s investment firm Ethos Invest.
Targeting SAR150 million (US$39.93 million) in commitments, the fund will invest primarily in early stage fintech companies in Saudi Arabia without restricting its geographical mandate.
It has been confirmed that the team, which is in talks with start-ups in the Kingdom and abroad, has identified several opportunities. Without specifying the number of start-ups, the team revealed that the first rounds of investments will be made over the next few months before the year ends.
“By combining Fintactics’s venture-building capabilities with Ethos Invest’s global reach and Arbah Capital’s regional expertise, we are uniquely positioned to identify and nurture the next generation of financial services leaders,” shared Kevin Cunningham, a partner at Ethos Invest.
This partnership underscores and deepens the twin appeal of the Saudi market: as MENA’s top venture capital (VC) funding destination and the region’s largest Islamic finance jurisdiction. Despite a 7% year-on-year decline, Saudi managed to clock in an impressive US$412 million in funding for the first six months of 2024, according to MAGNiTT, outperforming its nearest rival, the UAE by US$187 million.
Globally, Saudi ranked third for largest Islamic fintech jurisdictions by number of start-ups, with 45, after Malaysia and Indonesia, according to the IFN Islamic Fintech Landscape as at the 4th September 2024.
To be managed in complete alignment with Shariah principles, the fund represents an opportunity to ameliorate one of the biggest and most persistent obstacles which is scaling up the lack of access to funding, particularly Shariah compliant capital.
