UAE fintech Wafeq secures $3 million to double Saudi Arabian presence and expand into Egypt

CAIRO: Wafeq, a UAE-based SME financial software company, raised $3 million in a seed funding round led by Raed Ventures with participation from Wamda Capital to double its Saudi presence as well as expand into Egypt.

Launched in 2019, Wafeq is a fintech startup that offers user-friendly software to strengthen accounting and financial operations for small and medium-sized businesses.

In an exclusive interview with Arab News, Nadim Alamddine, founder and CEO of Wafeq, said that Saudi Arabia is the largest and most important market for the company.

“As such, we will double our growth here to continue to offer our solutions to SMEs in the Kingdom. We already count some of the most successful SMEs and start-ups as our customers and as we grow here, we will continue to help companies become compliant with accounting regulations,” he said.

Strengthening SMEs

Built for the financial and accounting needs of SMEs in the region, Wafeq’s software is trusted by over 5,000 business owners and professional accountants who process over $117 million in monthly invoices.

“Our platform is used by leading startups and SMEs from a diverse range of industries, including entrepreneurship, food and beverage, e-commerce, retail and more,” explained Alameddine.

SMEs comprise over 98 percent of all companies in Saudi Arabia, 90 percent in Egypt and 94 percent in the UAE, giving Wafeq a large market for its operations.

Furthermore, the digitization of accounting practices in all three markets is undergoing significant changes with the introduction of mandatory e-invoicing and digital reporting.

“Saudi Arabia has one of the most transparent and business-friendly accounting practices in the region, put in place by the Zakat, Taxation and Customs Authorities, also known as ZATCA,” Alameddine said.

In December 2021, ZATCA announced that all taxpayers must issue electronic invoices with a compatible government system and divided the implementation into two phases.

In the first phase, taxpayers were required to issue e-invoices and familiarize themselves with the implementation of the new system. In the second phase, to be implemented in July 2023, taxpayers with taxable income above SR 500 million will be obliged to integrate their e-invoicing systems with the government FATOORAH platform.

“SMBs still follow manual processes or use legacy software that is not compatible with local accounting requirements. Our strategy in Saudi Arabia will be to build more localized capabilities, ensure a successful implementation of ZATCA phase 2, and bring our e-invoicing API solutions to more businesses here,” he added.

Wafeq initially focused on startups and acquired clients in category-leading businesses such as UAE fintech Tabby, Saudi fintech Lean Technologies, Dubai fintech DAPI, UAE mobility-tech Fenix ​​​​and Saudi fintech PiFlow among many more.

Egyptian opportunities

The company plans to use the funding to expand its current presence in Saudi Arabia and the United Arab Emirates, as well as drive entry into Egypt.

Alameddine explained that as Egypt has the highest percentage of SMEs, businesses have very limited access to technology solutions that can support their operations.

“From a policy point of view, Egypt is bringing in requirements such as e-invoicing and soon e-receipts for businesses, and this is where Wafeq will have a positive impact. Going into Egypt, we will not only look to acquire new customers, but also create jobs locally, he added.

Wafeq’s standalone e-invoicing API will play a major role in its expansion into Egypt, allowing startups and enterprises to set up reliable third-party e-invoicing in addition to regulatory compliance.

“Together with the support of Raed Ventures and Wamda Capital, we are excited about our entry into Egypt as we increase our presence in Saudi Arabia and the United Arab Emirates,” said Alameddine.

Talal Alasmari, founding partner at Raed Ventures, said Wafeq solves a problem that affects thousands of businesses in the region.

“The digitization of accounting practices will truly transform how SMEs here operate, increasing operational transparency, creating efficiency and contributing to economic growth,” Alasmari added.

The company operates a Software as a Service business model that complements the strategy of making it easy and affordable for businesses to use the software.

“Signing up for Wafeq is free and customers starting a business can choose to use our basic package. For customers with more complex requirements, we have a range of pricing options that take into account their needs, billing volume and other factors,” explained Alameddine.

Raed Ventures is a venture capital firm founded in 2015 in Dammam, Saudi Arabia that focuses on early-stage startups and has invested in notable companies such as SWVL, Tabby and Trella.

Founded in the UAE in 2014, Wamda Capital is one of the leading venture capital firms in the region with a portfolio of investments in over 70 companies, including Careem and Nana.