FlapKap, a leading fintech platform headquartered in Abu Dhabi’s Hub71, has announced the completion of a $34 million pre-Series A funding round to expand its SME financing operations across the MENA region. The round was led by BECO Capital and included significant investment from Pact VC, as well as follow-on support from A15, Nclude, and QED Investors. The round also included debt financing from Channel Capital, bringing FlapKap’s total funding to $37.6 million.
Empowering SMEs with Capital and Technology
FlapKap, co-founded by Ahmad Coucha, Khaled Nassef, Sherif Bichara, and Kunal Harisinghani, is a fintech company that provides revenue-based and embedded financing solutions for SMEs in MENA. With this latest capital injection, FlapKap aims to scale its operations in the UAE and the GCC region by offering more capital to empower small and medium-sized enterprises (SMEs), helping them unlock their full growth potential. Additionally, the company plans to enhance its technology infrastructure to introduce new trade finance products specifically designed for B2B businesses.
Originally launched to support e-commerce businesses, FlapKap has expanded its services to include other consumer-facing industries such as retail and restaurants. By offering instant funding to these businesses, which often face challenges accessing traditional bank loans or venture capital, FlapKap provides the flexibility to pay later. The platform connects to businesses’ e-commerce sites and social media accounts, allowing for streamlined underwriting processes and enabling merchants to receive offers within 48 hours of signing up.
Data-Driven and AI-Powered Credit Model
FlapKap has revolutionized SME financing in MENA by leveraging unconventional data sources and utilizing open banking and AI-powered credit models. This data-driven approach automates the lending process, reduces operational costs, and improves the accuracy of underwriting. The platform integrates third-party verified data to assess businesses’ creditworthiness across multiple touchpoints, including e-commerce, advertising, online reviews, payment gateways, bank accounts, and Enterprise Resource Planning (ERP) systems.
By expanding its reach to both online and offline businesses, FlapKap has developed a comprehensive approach that addresses the challenges faced by SMEs in accessing capital. This strategy is helping bridge the $180 billion SME financing gap in the MENA region, as estimated by the International Finance Corporation (IFC).
Transforming SME Financing Across MENA
Speaking on the new funding round, FlapKap CEO and Co-founder Ahmad Coucha expressed his optimism about the future of SME financing in the region. He highlighted how the growth of data and technology has simplified the process of supporting SMEs, stating: “The growth in data has made it easier than ever to support SMEs, and at FlapKap, we’re rising to the occasion. By leveraging data and technology, we’re breaking down the barriers that SMEs face in accessing financial services. We’re now able to assess risk more accurately and reduce underwriting costs, addressing the two biggest obstacles faced by incumbent financial institutions.”
Coucha added that the investment will support FlapKap’s continued growth in the UAE and Egypt, with plans to expand further into the GCC region. He also emphasized the importance of gaining insights from FlapKap’s high-caliber investment partners.
Investors Backing FlapKap’s Mission
The pre-Series A funding round attracted a diverse group of investors who share FlapKap’s vision of empowering SMEs across the MENA region. Walter Gontarek, CEO of Channel Capital, praised FlapKap’s operations and highlighted the leadership team’s expertise in identifying opportunities in the multi-billion-dollar SME financing market. “We’re impressed with FlapKap’s operations across the MENA region and are excited to partner with them in this round. Their experienced leadership team has identified major opportunities in this market, and their impact on SME growth is commendable,” Gontarek noted.
Karim Abadir, Principal at BECO, also expressed excitement about FlapKap’s innovative, data-driven approach to SME financing: “We’re thrilled to back the FlapKap team as they continue to bridge the SME financing gap in the MENA region with their innovative approach. Their commitment to leveraging technology to provide tailored financial solutions is transforming how underserved businesses access the support they need to grow.”
Reem Wyndham, General and Founding Partner at Pact VC, echoed these sentiments, saying: “We were impressed by Ahmad and his team’s clear vision and execution. FlapKap’s innovative model is a game-changer in SME financing, and we’re excited to support their success.”
Addressing the MENA SME Financing Gap
The MENA region is home to an estimated 19-23 million micro, small, and medium enterprises (MSMEs), which account for 80-90% of businesses in most countries. However, traditional financial institutions have often overlooked this segment due to a lack of infrastructure, limited data, and perceived risks. This oversight has left millions of viable businesses without the necessary financial support to scale their operations.
FlapKap’s entry into this underserved market has already shown impressive results. Over the past two years, the company has doubled its quarterly originations and disbursements, helping SMEs across Egypt and the UAE grow their businesses. The platform’s ability to assess and underwrite SMEs by using non-traditional data sources has proven to be a crucial solution for these businesses, particularly those that have struggled to access financing through traditional means.
Conclusion
With the new $34 million pre-Series A funding round, FlapKap is well-positioned to continue scaling its operations across the MENA region, addressing the significant SME financing gap. By combining data, technology, and innovative financial solutions, FlapKap is empowering SMEs to unlock their full growth potential and play a pivotal role in driving economic development across the region.
FlapKap’s mission to bridge the SME financing gap through data-driven solutions and innovative approaches is set to transform how businesses in the MENA region access and utilize capital, paving the way for a new era of financial inclusivity and growth.
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