Revenue-Based Financing Drives eCommerce, SaaS Growth Across MENA

Traditional funding methods are seeing headwinds as new models like revenue-based financing (RBF) gain traction across the world.

According to Ahmad Coucha, co-founder and CEO of Cairo-based firm FlapKap, leading FinTech capital providers like Canada’s Clearco and Dublin-based Wayflyer have popularized the RBF model, paving the way for companies like his to provide businesses with the flexibility needed to pay back loans only when they generate revenue.

Read more: Wayflyer Valued at $1.6B After $150M Series B Funding Round

But while an increasing number of businesses in developed regions are adopting the model, it remains relatively new in regions like the Middle East and North Africa (MENA), where Coucha claims that FlapKap is the first company of its kind.

With that first mover advantage, the company aims to help eCommerce and Software-as-a-Service (SaaS) firms grow faster with less risk through better credit terms, as well as optimize their advertising spend with artificial intelligence (AI)-backed insights and data analytics.

“Our AI solution helps us to understand the client’s accounting processes, spending patterns and the correlation with the sales to determine if they have the potential to grow if there is an increase in their ad spend — one of the bulkiest expense items for firms,” Coucha told PYMNTS in an interview.

Today, the MENA-focused FinTech firm, which recently secured a $1.2 million investment, has expanded beyond its home turf of Egypt to the United Arab Emirates (UAE), with further plans to launch in sub-Saharan Africa and in other markets across MENA, starting in Saudi Arabia.

Optimized Ad Spend Drives Growth

As the company continues to position itself as the MENA version of Clearco and Wayflyer, Coucha said the eCommerce and SaaS sectors will remain two of the most exciting spaces to focus on as FlapKap identifies companies to invest in.

He said with the abundance of capital and the “cheap” supply of funds on the market, the company’s plan is to differentiate itself by capitalizing on its first mover advantage, offering other elements on top of capital such as insightful alternative financing as it anticipates the arrival of other players in the RBF space.

He added that as much as FlapKap wants to help online small- to medium-sized businesses (SMBs) — often underserved by banks in the region — grow, they “just don’t want to throw money” at these businesses, but rather work hand in hand with them to maximize their growth potential.

For merchants who are less enthusiastic about abandoning their legacy infrastructures to embrace a newer, more modern solution like FlapKap’s, Coucha said they are soon to make the shift when they realize how optimizing ad spend can translate into significant returns.

“A [simple] 5% optimization in digital advertising spend can lead to a 25% increase in returns,” he said. “That is amazing.”

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