Sequoia makes Gulf debut with $33m investment in Saudi fintech

DUBAI, United Arab Emirates — Lean Technologies, a Saudi fintech startup, has secured a $33 million Series A round from Sequoia Capital India, marking the firm’s first foray into the Arabian Gulf region.

Sequoia Capital India’s fund belongs to the same family as US venture capital giant Sequoia, which previously backed Google and Stripe. However, its fund is independent, and its capital commitment to the Saudi fintech Series A was joined by other international investors, including New York-based Liberty City Ventures and former General Electric CEO Jeff Immelt.

Riyadh and London-based Lean Technologies launched its platform in 2019, enabling third-party financial service providers to access their customers’ banking data and initiate payments instantly.

The company’s API (or application programming interface) is essentially what lets different systems communicate with each other. The technology is key to open banking, which enables fintech companies to disrupt traditional banking and bring new services to users in areas such as e-commerce, accounting and banking.

“We ultimately see ourselves as enablers, supporters [fintech] Lean’s co-founder and CEO Hisham Al-Falih previously told CNBC’s Dan Murphy of Thursday’s new investment announcement.

$33 million in investment followed Saudi Arabia’s move to introduce legal framework for open banking last year, bringing new opportunities for fintech companies in the Gulf region.Over the past decade, Open Banking has been launched in more than 55 markets around the world, including Europe and the US

Lean’s CEO said the technology “is not just for retail accounts, but also for SME accounts. So you can imagine this being a pipeline for fintech. This will bring a whole new wave of use cases that were previously untapped and underutilized. .”

This will accelerate the creation of new businesses and platforms, Al-Falih added. “If we consider personal financial management, savings, robo-advising and investing, cryptocurrency investing, and various other use cases that have been hindered or hindered before, and hopefully with the introduction of infrastructure like lean, we will see these businesses exposed and Get to market faster.”

As Crown Prince Mohammed bin Salman’s Vision 2030 pushes the kingdom to undergo its own economic transformation, a new financial and banking framework – with developed markets already The framework established is quite — crucial. This has spurred growth in industries that pursue greater financial inclusion.

“Fintech has witnessed phenomenal growth in the MENA region over the past two years,” said Rayan Dawud, investment partner at Outliers Venture Capital, an investor in Lean Technologies. “Open banking will drive the next generation of regional fintech by reducing transaction costs and providing access to complex datasets.”

Numbers don’t lie. “We are seeing fintech investments grow from around $144 million in 2020 to nearly $400 million in 2021, which is a considerable number,” Al-Falih said, referring to the MENA region. “If anything, this justifies and justifies the level of confidence and excitement VCs have in the fintech industry, and similar trends are showing across the globe.”

Founded in September 2019 and launching its flagship data and payments API in February 2021, Lean Technologies has now brought together dozens of financial players across the region as clients and processed hundreds of millions of dollars in transactions.

In addition to Outliers, Lean’s existing VC investors include Abu Dhabi-based Shorooq Partners and angel investors from the US such as Henrique Dubugras, CEO of financial services firm Brex, and Samir, founder of artificial intelligence investment management firm Vise Vasavada.

The region’s shift towards an open banking framework could open doors for more fintech services, foster competition, and give users more options for managing their finances and businesses.

“The Saudi fintech ecosystem has seen rapid growth over the past two years, driven by the progressive involvement of regulators, increased funding needs and demand for services from a young mobile native population,” Dawud said.

With nearly 70% of Saudi Arabia’s 34 million population under the age of 30, open banking will provide a lucrative market for fintech providers, start-ups and investors alike, Dawud said, adding: There is no doubt that the future will be bright.”

Correction: This article has been updated to reflect Sequoia Capital India’s first investment in the Gulf.