In a significant development for the Middle East and North Africa (MENA) region, CredibleX has raised $55 million in Seed financing to further expand its revenue-based financing (RBF) platform for small and medium-sized enterprises (SMEs). The funding round, led by Abu Dhabi-based Further Ventures, marks a significant milestone in the growth of alternative financing options in the region.

The MENA region has seen a surge in demand for RBF, driven by the challenges SMEs face in accessing traditional banking channels. CredibleX, which started operations in March 2024, has already issued over AED 100 million (approximately $27 million) in loans to SMEs. The platform's success is attributed to its unique approach, which partners with large aggregators to target SMEs within their vertical ecosystems.

CredibleX's CEO and co-founder, Anand Nagaraj, explained that this approach enables the company to recover repayments easily, thanks to its direct relationship with debtors and payers. This sets it apart from other players in the RBF space, which typically work directly with SMEs to secure assignments of receivables or sales.

The platform's model is particularly well-suited to high-income countries like the UAE, where SMEs often struggle to access financing from development finance institutions. These institutions are primarily designed to invest in projects in less economically developed countries.

To illustrate how the platform works, consider the example of a restaurant using a platform like Talabat (acquired by Delivery Hero in 2015) to deliver its food. The restaurant can apply for a loan through the Talabat platform, integrated with CredibleX, and upload its historical sales data and ratings. CredibleX then makes the credit decision and issues the loan within 24 hours. The loan is repaid through Talabat making direct payments to CredibleX, which has similar relationships with 37 other partners.

Nagaraj, who previously worked at Citi and founded Invoice Bazaar, a supply chain finance platform, brings significant expertise to CredibleX. Alongside co-founders Ahmad Malik and Hassan Reda, he launched CredibleX to address the growing demand for alternative financing options in the MENA region.

The Seed round consists of equity from Further Ventures and debt from various providers, including Kilgour Williams Capital. Further Ventures has limited partners that include ADQ and Mastercard, underscoring the significance of this investment in the region's fintech ecosystem.

CredibleX's success is a testament to the growing appetite for RBF in the MENA region, where companies like FlapKap and Flow48 have already scaled and raised capital in 2023. The platform's expansion is expected to have a significant impact on the region's SMEs, providing them with much-needed access to working capital financing.

As the MENA region continues to grapple with the challenges of traditional banking channels, CredibleX's innovative approach is poised to play a critical role in shaping the future of alternative financing in the region. With its $55 million Seed funding, the company is well-positioned to capitalize on the growing demand for RBF and drive growth for SMEs in the region.