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General Catalyst Invests in Saudi Fintech Startup Lean Technologies
General Catalyst, a prominent venture capital firm based in Silicon Valley, has entered the Saudi Arabian market with its inaugural investment in the fintech sector through Lean Technologies, which has successfully concluded a Series B funding round of $67.5 million.
Managing approximately $30 billion in assets, General Catalyst has a history of investing in major U.S. companies, including Snap, Stripe, and Airbnb. Lean Technologies’ latest funding round attracted contributions from other notable investors, including Bain Capital Ventures, Duquesne Family Office led by Stanley Druckenmiller, and Arbor Ventures. This infusion of capital has boosted the Riyadh-based firm’s total funding to over $100 million, according to a company statement released on Sunday.
This investment marks a significant moment for three involved investors—General Catalyst, Stanley Druckenmiller, and Bain Capital—as it represents their first venture into the Saudi market.
“This reflects a substantial vote of confidence in Saudi Arabia’s growth potential in the coming decade,” stated Hisham Al-Falih, CEO and co-founder of Lean Technologies, during an interview with CNBC.
Saudi Arabia is advancing its Vision 2030 initiative, aimed at reducing the nation’s reliance on oil and fostering the development of new industries and job opportunities for its youthful workforce. The kingdom is keen on attracting foreign investment to facilitate local job creation, knowledge exchange, and sectoral diversification.
The fintech sector is poised to play a crucial role in this transformation, according to Al-Falih.
“We are just at the beginning. There is a tremendous need for investment to enhance our technology stack, expand our payment services, and deepen our partnerships with regional banks, supported by the central banks,” he expressed. “The growth we’ve observed in the region over the last three to five years has been remarkable, yet we have plenty of room to expand further.”
According to a report by McKinsey & Company, fintech revenue in the Middle East and North Africa reached $1.5 billion in 2022 and is projected to grow between $3.5 billion and $4.5 billion by 2025. Al-Falih highlighted that fintech revenues in the region constitute less than 1% of banking revenues, contrasting sharply with more established markets like the U.S. and U.K., where fintech revenues account for 4% to 5% of banking revenues.
“We are still significantly behind potential fintech revenue growth and its contribution to the economy,” Al-Falih noted. “This reality presents us with a supportive environment to continue developing tools and solutions to empower innovative thinkers to realize their aspirations.”
Lean Technologies focuses on facilitating secure data sharing between bank accounts and applications. Regulated by Abu Dhabi Global Markets in the United Arab Emirates, the company enables account-to-account (A2A) payments, which allow for direct transfers between bank accounts, bypassing intermediaries like payment processors or credit card networks.
The firm has formed partnerships with key clients in the region, including the Emirati telecom company e& and the ride-hailing service Careem, boasting a total processed volume exceeding $2 billion, according to their recent press release.
In Saudi Arabia, Lean’s introduction of data solutions within the Saudi Central Bank’s regulatory sandbox has made a positive impact across various sectors such as insurance, lending, and online marketplaces, verifying nearly one million bank accounts.
As of September 2023, Saudi fintech firms have collectively garnered over $1.84 billion in venture capital funding since 2018, as reported by Monsha’a, the kingdom’s General Authority for Small and Medium Enterprises. Additionally, KPMG reported that Saudi fintechs attracted $791 million in just 2023—a remarkable 231% increase compared to the previous year.
Since the inception of the “Fintech Saudi” initiative in 2018, the number of active fintech startups in the kingdom has risen to 216, providing employment for over 6,500 individuals. The Saudi government is targeting the establishment of 525 new fintech companies by 2030.
Source
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