CAIRO: Jan 28 Wafeq, a UAE-based financial software company for small and medium enterprises, raised $3 million in a seed funding round led by Raed Ventures with participation from Wamda Capital to double down on its Saudi presence as well as expand to Egypt.
Launched in 2019, Wafeq is a fintech startup that provides easy-to-use software to empower accounting and finance operations for SMEs.
In an exclusive interview with Arab News, Nadim Alamddine, Founder and CEO at Wafeq, said that Saudi Arabia is the largest and most important market for the company.
“As such, we will double down on our growth here to continue offering our solutions to SMEs in the Kingdom. We already count some of the most successful SMEs and startups as our customers, and as we grow here, we will continue to help businesses become compliant with accounting regulations,” he stated.
Built for the finance and accounting needs of SMEs in the region, Wafeq’s software is trusted by over 5,000 business owners and professional accountants processing over $117 million in monthly invoices.
“Our platform is used by leading startups and SMEs from a diverse range of industries, including contracting, food and beverage, ecommerce, retail, and more,” Alameddine explained.
SMEs comprise over 98 percent of all companies in Saudi Arabia, 90 percent in Egypt, and 94 percent in the UAE which provides Wafeq with a large market to fuel its operations.
Moreover, digitization of accounting practices in all three markets is undergoing significant shifts with the introduction of mandatory e-invoicing and digital reporting.
“Saudi Arabia has one of the most transparent and business-friendly accounting practices in the region, put in place by the Zakat, Tax and Customs Authority, also known as ZATCA,” Alameddine stated.
In December 2021, ZATCA announced that all taxpayers will have to issue electronic invoices with a compatible government system and divided the implementation into two phases.
In the first phase, taxpayers were required to issue e-invoices as well as get familiar with the implementation of the new system. In the second phase, which is set to be implemented in July 2023, taxpayers with VATable income exceeding SR 500 million will be obliged to integrate their e-invoices systems with the governmental FATOORAH platform.
“SMEs still follow manual processes or use legacy software that are not compatible with local accounting requirements. Our strategy in Saudi Arabia will be to build more localised features, ensure the successful implementation of ZATCA phase 2, and bring our e-invoicing API solutions to more businesses here,” he added.
Wafeq initially focused on startups and acquired customers in category-leading businesses such as UAE fintech Tabby, Saudi fintech Lean Technologies, Dubai fintech DAPI, UAE mobility-tech Fenix, and Saudi fintech PiFlow among many more.
The company plans to utilize its funding to expand its current presence in Saudi Arabia and the UAE as well as fuel its entry to Egypt.
Alameddine explained that as Egypt stands with the highest percentage of SMEs, businesses have very limited access to tech solutions that can support their operations.
“From a policy standpoint, Egypt is bringing in requirements like e-invoicing and soon e-receipts for businesses and this is where Wafeq will have a positive impact. As we enter Egypt, we will not only look to acquire new customers but also create jobs locally,” he added.
Wafeq’s standalone e-invoicing API will play a huge role in its expansion to Egypt which allows startups and businesses to set up reliable third-party e-invoicing as well as stay compliant with regulations.
“Together with the backing of Raed Ventures and Wamda Capital, we are excited about our entry into Egypt while growing our presence in Saudi Arabia and the UAE,” Alameddine said.
Talal Alasmari, founding oartner at Raed Ventures, said that Wafeq is solving a problem that impacts thousands of businesses in the region.
“The digitalisation of accounting practices will truly transform how SMEs here operate, increasing operational transparency, creating efficiencies and contributing to economic growth,” Alasmari added.
The company operates a Software as a Service business model which complements its strategy to be easy and affordable for businesses to use its software.
“Signing up for Wafeq is free, and customers starting a business can choose to use our basic package. For customers with more complex requirements, we have a range of pricing options that considers their needs, volume of invoicing and other factors,” Alameddine explained.
Raed Ventures is a venture capital firm that was founded in 2015 in Dammam, Saudi Arabia, which focuses on early-stage startups and has invested in notable companies like SWVL, Tabby, and Trella.
Founded in the UAE in 2014, Wamda Capital is one of the leading venture capital firms in the region with a portfolio of investments in over 70 companies including Careem and Nana.