By: Kholoud Hussein

An online marketplace, also referred to as a “digital platform” or “intermediary,” acts as an agent or a facilitator of transactions where the suppliers allow the electronic marketplace to market and sell their goods or services.

The online marketplace is not clearly defined and is a concept that is likely to evolve. According to the OECD, two-thirds of all cross-border e-commerce sales of goods are made through online marketplaces. With the exponential growth of e-commerce in the GCC during the pandemic, online marketplaces have become a widely used sales channel for many businesses in the GCC.

Delving deeply into this point, Sharikat Mubasher had an exclusive interview with Tarek Sakr, CEO of 4Sale, Kuwait’s leading online classifieds platform, discussing the company’s business and services to the clients, in addition to the company’s biggest achievement in 2023, and its future investments across the GCC. 

What are the services provided by 4Sale? And how many clients are served by the platform? 

4Sale is the largest online classifieds platform in Kuwait – with over one million active users buying and selling goods and services. It is a continually growing community of mutual interests; since its inception, 4Sale has helped over two million registered users list over 12 million items and services, with over six million devices having downloaded the company’s app or registered on 4Sale’s website. Currently, we have 197 categories on our platform. 

This ensures we have (i) plenty of room to grow and (ii) can fully react to customer demand for individual verticals. Being Kuwait’s most popular and trusted online classified platform comes with the responsibility of being who customers automatically turn to when needing a forum to buy or sell. 

We ‘listen’ to what the data from our long list of transactions tells us, and work to meet anticipated customer demand – even before they go online.

What are the objectives of the 4Sale platform? 

Our core goal is to satisfy our customers’ needs for an easy-to-access, easy-to-use trading platform. Every objective springs from this mission. 

Our strategy is to create more verticals, become closer to the transactions, and provide more added value. The combination of these strategic tools will take 4Sale to another level. 

The closer we are to transactions – the more we are answering customer demand. By constantly seeking to value-add, the more the customer experience improves. We simplify and improve customers’ lives - by helping them obtain or sell items they need or no longer want.

What makes the 4Sale platform unique compared to its peers in the market? 

4Sale has a unique offering to consumers - evidenced by our scale and growth in customers. No other comparable platform in Kuwait does what we do, to our scale, professionalism, liquidity of users, and ease of use.

What are the company’s achievements in 2023? And what are the company’s goals for 2024? 

2023 was a terrific year for 4Sale, and likewise our customers. Our Consumer Division – our primary business sector – saw its revenues rise 11% with increased activities across all 197 product categories. 

The stellar performance of our household sector highlighted the consumer trend of trading more online - as opposed to physically and in cash. Last year, over 90% of 4Sale’s transactions were online – up from 65% in 2019. 

An example of our extended offerings, and delivery of an immersive digital experience, was our launch of 4Sale Realty – an immersive experience listing property rentals. This was an immediate success and is registering exponential growth. We expect this vertical to be a major business division by the end of this year.

In 2024, we have been refining and enhancing our search facilities and introduced a major strategic initiative of providing hyper-personalized recommendations to customers for products and services. This strengthens our ability to optimize marketing for seasonal holidays and significant commercial events such as Black Friday, and Mother’s Day and gift-giving such as anniversaries.

We know, because we listen to the data, that today’s customers want (i) very specific, tailored interactions (ii) to be properly understood and (iii) to have simple and smooth access to purchases. By optimizing our methods via data collection, we can provide timely and relevant recommendations, delivering a more personal and enjoyable customer experience. 

As our rapid growth continues, we will upscale our entire infrastructure, inline with our 2025 objective of reaching two million monthly active users, across more verticals. This would constitute an impressive market share in a country of only five million people – but our infrastructure will be ready for it.

Being based in Kuwait, does the company plan to expand its footprint into other GCC countries? 

Currently, we are more interested in getting closer to customers and their transactions by offering more value-added services – which will give them a greater experience, build customer loyalty, and deliver greater profitability.

Within 12-18 months, 4Sale will likely to be close to two million active users in Kuwait. Then we can consider how we may replicate that success in similar markets. One thing is for certain, we have ambitions - and being online allows us to expand and grow far more easily than if we required bricks and mortar and an additional supply chain behind it. 

Expanding in the Gulf or MENA will only be considered from a position of strength and success. We must first use this year to build upon our significant achievements to date.

What is the company’s source of profits? 

Profits are a key measure of our success. They show if we are delivering what our customers want, be it buying, selling, leasing, or renting. We naturally take a commission for transactions, and that is a fair way of being rewarded for providing the infrastructure – the 4Sale platform – that brings our customers together in the virtual marketplace. 

We are proud of how we built that and are constantly improving our platform, and this success is measured in profit growth.

Does the company plan to go for a funding round to expand its business? 

Since its launch, 4Sale funded itself via two methods. Firstly, we took the deliberate decision to use bootstrap funding from our own cash flow. This proved we could be and were profitable from the start. We made this choice to avoid the unpredictability of funding rounds and be free to focus on building a sustainable stand-alone business. We successfully achieved that goal.

Secondly, a strategic majority stake in our business was acquired by the National Bank of Kuwait in 2018 – an important institutional investor in the region. This added much extra credibility, encouraging new customers to try our service, and then come back for more.

Naturally, we are very proud of our achievements. It shows our business model is sustainable and scalable. We have no plans to alter that model.

Is there a plan to expand in Saudi Arabia?

We are always looking for synergies, but as I have said - our first focus must be to be even closer to our customers in Kuwait. From there, we can consider expansion into neighboring markets.

The open nature of online sales means many people in KSA and the wider GCC will know us already and know we can be trusted to deliver.

I am sure there is hope and expectation that we grow into other markets, but initially - and for now - we want to be the best we can be.

By: Kholoud Hussein 

As professionals in the venture capital (VC) and private equity (PE) industries, understanding the differences between different investment vehicles is crucial. In this article, we look into the key differences between micro-VC funds and traditional venture capital, shedding light on their unique characteristics and exploring whether micro-VC funds can outperform their traditional counterparts.

1. Investment Size

• Micro-VC Funds: These small funds typically invest smaller amounts, ranging from a few thousand dollars to a few million dollars. Their agility allows them to support early-stage startups without overwhelming capital infusion.
• Traditional Venture Capital: In contrast, traditional venture capital funds wield larger financial firepower. Their investments often fall within the range of several million to hundreds of millions of dollars. These substantial sums fuel growth and expansion for more established companies.

2. Stage of Investment

• Micro-VC Funds: These funds primarily focus on seed-stage and early-stage companies. These startups are at the inception phase, often lacking a proven business model or significant revenues. Micro-VCs take calculated risks by backing these fledgling ventures.
• Traditional Venture Capital: Traditional VCs tend to invest in later-stage companies. These firms have already demonstrated traction, possess a validated business model, and are ready to scale. Think of them as seasoned players in the entrepreneurial game.

3. Investment Strategy

• Micro-VC Funds: Micro-VCs roll up their sleeves and get hands-on with their portfolio companies. They provide strategic guidance, mentorship, and operational support. Their collaborative approach aims to nurture startups through critical growth phases.
• Traditional Venture Capital: Traditional VCs adopt a more passive stance. While they bring capital and expertise to the table, day-to-day operations remain in the hands of the company’s management team. Their involvement tends to be less intensive than that of micro-VCs.

4. Risk Tolerance

• Micro-VC Funds: These funds embrace risk. They understand that early-stage ventures inherently carry a higher likelihood of failure. Their risk appetite allows them to explore uncharted territories and back disruptive innovations.
• Traditional Venture Capital: Traditional VCs exhibit a more risk-averse attitude. They seek companies that have already achieved some level of success and market validation. Their risk tolerance aligns with their preference for proven track records.

5. Fund Size and Structure

• Micro-VC Funds: These funds are typically smaller in size compared to their traditional counterparts. With fewer partners and a lower amount of capital under management, micro-VCs maintain agility. Their investment horizon spans around three to five years.
• Traditional Venture Capital: Traditional VCs manage larger funds, often exceeding $100 million. Their investment period extends over a longer horizon. The depth of their pockets allows them to play the long game.

By: Kholoud Hussein 

What are micro-VCs?  

Micro-VCs, or micro venture capital firms, are a type of venture capital firm that invests smaller sums of money into early-stage startups than traditional VCs. They typically invest between $25,000 and $500,000 per deal, and they have a shorter time horizon than traditional VCs (usually 3-5 years).

Micro-VCs have become increasingly popular in recent years, as they offer some advantages for both startups and investors. For startups, micro-VCs can provide the early-stage funding that they need to get off the ground. They can also offer valuable advice and mentorship, as many micro-VCs are staffed by experienced entrepreneurs and investors.

As for investors, micro-VCs offer the opportunity to get involved in early-stage startups with high growth potential. However, it is important to note that micro-VC investments are also riskier than traditional VC investments. This is because startups at this stage are more likely to fail.

The rise of Micro VCs is attributed to several key factors:

1. The Lower Capital Threshold
2. Fostering Innovation Through Risk Tolerance
3. Agility and Responsiveness in a Dynamic Market
4. Empowering Regional Development Through Localized Investment

The rise of Micro VCs also signifies a broader shift towards regional investment. With smaller funds, Micro VCs are more likely to invest locally, bolstering regional startup ecosystems and driving economic development. This localization of investments fosters community engagement, encourages local entrepreneurship, and facilitates the creation of specialized industry hubs across diverse geographical locations.

If you are considering investing in a micro-VC, there are a few things you should keep in mind. First, you need to make sure that the micro-VC has a good track record of investing in successful startups. Second, you need to be comfortable with the level of risk involved in these investments. Finally, you need to make sure that the micro-VC's investment philosophy aligns with your own investment goals.

How Can Startups Find and Approach Micro VC Funds?

The journey of finding micro-VCs and closing a deal includes: 

1. Research: Startups must identify potential micro-VC firms based on factors such as their size, sector, focus, and location. Once identified, startups should create a list of micro-VCs that align with their needs. 
2. Outreach: Startups can reach out to potential firms through email, social media, or in-person meetings. Leveraging one’s network to find potential leads also helps. 
3. Pitch: Present your startup to interested micro-VC firms, showcasing its value and potential for investment.
4. Negotiation: If a micro-VC firm expresses interest, negotiate the investment terms, including funding amount, equity, and deal specifics.
5. Close: Finalize the deal by signing the investment agreement and receiving the funds.

Exclusive – Sharikat Mubasher: The Saudi-based intuitive mobile application Kharja aspires to expand its footprint in Saudi Arabia to meet the burgeoning demands of the entertainment sector, in alignment with Vision 2030. To achieve this goal, Kharja plans to raise $500,000 to broaden its operations in the Kingdom.

Sharikat Mubasher interviewed Co-founder Khalid Yagoub to learn more about Kharja’s planned fundraising and discover the application’s advantages and offerings in the Kingdom.

What differentiates Kharja from other local and global social networking applications?

The Kharja application provides an exceptional and seamless experience for managing and simplifying hangout plans in the Kingdom. It allows users to use a shareable link with family members and friends to invite them to join the hangout.

It also suggests places that fit users’ styles based on their preferences, ensuring an excellent and more interactive experience.

What are the advantages of using Kharja in Saudi Arabia?

Kharja application plays a leading role in the Kingdom capitalizing on the increased focus on the entertainment sector within the ambitious Vision 2030. Unlike traditional social networking applications, Khaja specializes in managing and exploring entertainment activities, in addition to providing tailored suggestions and facilitating social gathering activities to enhance users’ experience. Our offerings underpin Kharja’s capabilities and leading role in Saudi Arabia as they strategically align with the national objectives. 

What are Kharja’s profit sources?

We earn profits from several sources, notably monthly and annual subscriptions for commercial businesses. These subscriptions enable businesses to manage their profiles on the application and benefit from the tailored promotional features.

Further, the application adopts a smart bidding system for targeted ads; it generates profits from active ads that reach the target audience at the right time.

What are the recent funding rounds that Kharka recently raised?

In April 2023, we raised $200,000 in a pre-seed round from Flat6Labs.

Do you plan to raise more funding rounds within the upcoming period?  

We plan to complete the pre-seed round to raise our capital. Also, we plan to secure investments of $500,000 to expand our operations, update the application, and broaden our user base by following advanced marketing strategies.

This funding will fuel Kharja’s strategic plans to grow rapidly in the Saudi market.

How does Kharja support tourism in the Kingdom?

Kharja provides tourists with an interactive platform to explore activities and discover different tourist hotspots in the Kingdom; it suggests cultural events, tourist attractions, and entertainment activities that match their interests, and provides recommendations based on users’ preferences to enhance their experience.

Moreover, Kharja contributes to promoting tourism in the Kingdom as it helps tourism agencies reach more customers through targeted ads.

Translation: Noha Gad

By: Kholoud Hussein 

Over the past few years, Saudi Arabia has managed to take the lead and take advanced steps to boost the fintech sector and develop it into a flourishing industry marked by rapid growth, diversifying services, and increasing contribution to its national economy. Yet, the kingdom is facing challenges to become a leading global fintech hub. 

Key players 

In April 2018, the Saudi Arabian Monetary Authority (SAMA), in collaboration with the Saudi Capital Markets Authority (CMA), kickstarted the nation’s fintech growth journey with the launch of Fintech Saudi, an initiative aimed at cementing KSA’s position as the leading fintech hub in the MENA (Middle East and North Africa) region. Fintech Saudi continuously strives to boost, support, and represent the fintech industry in KSA through initiatives such as its Accelerator program, Career Fair, Fintech Tour, and the Summer Sessions. Since the launch of Fintech Saudi, there has been a 20-fold increase in the number of fintechs operating in the kingdom. Over SAR 4 billion ($1 billion) has been invested into fintech companies in KSA, and over 100,000 people have engaged in fintech-related events, training courses, and internships organized by Fintech Saudi.

According to a recent report by Arthur D. Little, the development and approval of the national fintech strategy in May 2022 marked the next stage of fintech development for KSA. The strategy was based on six pillars:

1. Developing KSA as the fintech hub for the Middle East
2. Creating a regulatory environment supportive of growth and innovation
3. Funding for start-ups
4. Training and skill enhancement
5. Accelerating support infrastructure
6. Driving local and international collaboration

KSA’s Vision 2030 plan for fintech has four key objectives, constituting clear milestones toward its aspirations of being a global fintech leader: 

1. Establish at least 525 fintech companies (versus 200 in 2023)
2. Open 18,000 fintech job opportunities (versus around 5,400 in 2023)
3. Account for $13.3 billion in direct GDP (versus around $1 billion in 2023)
4. Achieve $12.2 billion in direct venture capital (VC) contributions (versus $1.4 billion in 2023)

The number of fintech companies in KSA more than doubled in one year, from 89 in 2022 to ~200 in 2023. This impressive growth has been catalyzed by a range of measures to stimulate innovation, with three in particular standing out:

1. Fintech Saudi: The establishment of Fintech Saudi was a catalyst for change, leading to such measures as the Fintech Accelerator program, the Fintech Saudi Innovation Hub, an online fintech directory, regulatory enhancements in collaboration with SAMA, and various flagship events (e.g., Fintech Tour and hackathon)
2. Fintech Regulatory Sandbox: The SAMA-established sandbox allowed controlled live testing of fintech innovations, facilitating a smooth transition to the open market
3. Start-up funding: Various financial-support mechanisms have been deployed in the Saudi fintech ecosystem, some of which are industry-agnostic. For example, the Saudi Venture Capital Company (SVC), supported by CMA and the Financial Sector Development Program (FSDP), launched a SAR 300 million fund focused on fintech start-ups and plans to invest SAR 6 billion more into start-ups and SMEs across other sectors.

So far, SVC has invested in 35 VC funds, which have facilitated over 900 deals and SAR 1.9 billion in investments. The Saudi National Technology Development Program (NTDP) has launched the Technology Development Financing initiative that supports start-ups with debt funding.

Key progress areas

The report pointed out that the three key areas illustrate the major progress already made in KSA fintech: digital payments, alternative financing, and financial product aggregation.

For digital payment, the kingdom embarked on a journey to transform society to be less dependent on cash transactions. A cornerstone was the FSDP, which played a pivotal role in introducing new players to the financial services landscape. According to the Saudi Vision 2030, there is a plan to escalate the proportion of non-cash transactions to 80% by 2030, a significant leap from its 18% baseline in 2016.

The fintech landscape has been enriched through collaborative synergies between Saudi Payments and fintech companies. Among the various developments, digital wallets, local transfers, QR code payments, and SADAD system bill payments stand out as the most prominent. According to data released by SAMA, digital wallet usage has seen an exponential rise from 315,000 in 2018 to 17 million by 2022, representing over half of KSA’s population. In 2018, bank transfers were the primary method for topping up these wallets, accounting for approximately 70% of all top-ups. However, by 2022 around 80% of top-ups were being made via debit or credit cards.

On the other hand, the alternative financing sector, particularly “buy now, pay later” (BNPL) and debt crowdfunding, has emerged as the second-largest fintech subsector in Saudi Arabia, trailing only behind Saudi Payments. This growth reflects a shift in consumer and business financing preferences, increasingly leaning toward more flexible and accessible options than traditional banking models.

Debt crowdfunding has become a vital avenue for financing, especially for small and medium-sized enterprises (SMEs) facing challenges in securing traditional bank loans. The platforms operating now in KSA offer a streamlined digital process for businesses to sell invoices and secure funding, alleviating cash flow issues and aiding growth.

As reported by SAMA, the investor base in the KSA crowdfunding market has seen significant growth, from 302 in 2019 to over 92,000 in 2022. These investors have collectively issued over 1,800 loans worth more than SAR 1.1 billion since 2019, with about SAR 770 million in loans disbursed in 2022 alone.

Challenges 

Saudi Arabia’s fintech landscape is still young and nascent. It does not have the deal flow we see in Egypt, the advantage of Bahrain’s long experience in financial markets, nor the pull of the UAE’s ecosystem, whose financial landscape is also further ahead in terms of crypto and blockchain regulations.

Talent is also a big issue. A report from Fintech Saudi shows that hiring qualified talent was the main obstacle for 40% of fintech startups, followed by regulations at 37%, then access to customers/customers testing at 28%.

In addition, there is a gap in Saudi Arabia, like most of the other countries in the region, between the education system and work requirements. Universities need to bridge this gap by preparing students for the labor market in different tech spaces. 

Further, the kingdom’s startup ecosystem is still young, and attracting talent requires hefty salaries that most startups cannot afford. It still lags behind Dubai as a hub for global companies and talent, while processes tend to be more laborious and time-consuming. Riyadh and Jeddah both lack the quality of life that has proven to be so crucial for attracting talent and that is visible in the makeup of the fintech sector in the country. According to recent data, 80% of the fintech startups operating in Saudi Arabia are headquartered in the kingdom and are founded primarily by Saudi entrepreneurs.

However, the Saudi government has made its intentions very clear – it wants a diversified economy where entrepreneurs, startups, and innovators should be able to flourish. If it continues to progress in its current trajectory, Saudi Arabia certainly has the potential and capacity to become the best market for fintech for many reasons, including the spending capabilities of the population, the advancement of the financial sector, and the progression of the regulator.