Generation start-up: Saudi Arabia's Tamara plans to expand beyond the Mena region

Abdulmajeed Alsukhan does not shy away from challenges. The serial entrepreneur, a cancer survivor, has built one of Saudi Arabia's fastest-growing start-ups, alongside co-founders Turki bin Zarah and Abdulmohsen Albabtain.

Tamara – a buy now, pay later company – raised $110 million in early-stage venture capital funding last month and intends to establish a presence in every GCC market. The founders’ next mission is to expand across the Mena region, South-East Asia and in other emerging markets.

Mr Alsukhan’s year-long battle with cancer at the age of 26 changed his perspective on life, including how to face challenges, persevere and make the best of any given situation.

"I am doing this because of the challenge. I tell people to build a start-up is like climbing a mountain," the start-up's chief executive tells The National.

“Yes, the goal is to go to the summit, but you enjoy the journey [as well] and if it is not challenging it is not worth it.”

Tamara is one of the many start-ups that are finding success by tapping into the buy now, pay later space, which has become popular as consumers manage their disposable income amid the Covid-19 pandemic.

Tabby, another Dubai-based start-up offering the same service, secured $23m in funding from investors including Mubadala last December to fuel its regional expansion.

Tamara is not Mr Alsukhan’s first venture. After earning a master’s degree in economic policy from Boston University in the US, he joined the Saudi Central Bank’s investment department but left within six months to start his own business.

Mr Alsukhan bought a few bikes and set up his first independent venture, Habli – a last-mile delivery company, which he began by delivering goods himself.

The venture was a success, he says. However, his mother "was in shock, as this is not something you do after going to school [in the US] for eight years”.

He then embarked on a new challenge as co-founder of Nana – one of the leading online grocery start-ups in Saudi Arabia – when it bought out his delivery business.

As Nana’s chief financial officer, he focused on fundraising, strategy, business development and partnerships.

He worked closely with investors and the online grocery start-up raised record amounts in seed, early-stage and growth financing.

The company has raised about $29m from investors so far, according to Crunchbase, including $18m in a Series B round in March last year. That experience came in handy for Mr Alsukhan when he set up Tamara.

“During that time, I was exposed to what the ecosystem was missing. One of the major hurdles in buying and selling online was payments ... and the second was credit,” he says.

Inspiration for Tamara came from the ledgers of neighbourhood grocers that kept a record of goods sold to local customers and payments due at the end of the month.

“These guys [grocers] had one thing in common: they knew their customers. They did not know their financial status like a bank does, but they knew who they were, where they lived, their families and even their habits,” he says.

Local shops used that information to extend credit lines to customers in their districts. The move was convenient for customers, who did not have to settle in cash after every transaction.

“That fascinated me. I took the idea and studied it well and found that ... [with technology] I could know customers more than those guys, which means I can extend these small payment solutions ... served across the retail industry,” he says.

His target market included shopping malls, fashion chains and beauty product shops, where discretionary spending was high. Customers were offered the option to pay for their purchases in instalments over a short period to “ease pressure on their wallets”, he says.

After Nana reached a phase where it was well-capitalised, Mr Alsukhan decided to leave the venture and set up Tamara. He teamed up with Mr bin Zarah, who previously worked with companies such as LinkedIn, Strategy& and Kearney.

“I am a very pragmatic person. I know what it takes to win. I called those I knew I can partner up with and had what it takes to [succeed],” he says.

The two partners built a team of technology experts and began to develop the product and systems in February last year. The third co-founder, Mr Albabtain, joined them later and Tamara began operations in September last year, amid the pandemic and an economic slowdown.

Mr Alsukhan says Covid-19 hastened the set-up of the company as people worked more efficiently and held remote meetings with retail partners, which would have been difficult to secure under normal circumstances.

Tamara is now one of Saudi Arabia’s fastest-growing providers of buy now, pay later services, with its user base expanding by about 180 per cent each month and transaction volumes growing by about 170 per cent a month since it began operations.

Its base of more than 1,000 merchants includes Saco, Nice One, Whites and Nejree in Saudi Arabia. It has also extended its services to the UAE, the second-largest Arab economy, through online retailer Namshi and others.

The company serves merchants of all sizes – from small boutique operators to retailers selling billions of dollars’ worth of merchandise. Its current focus is on apparel, beauty, electronics and home accessories.

Tamara offers customers the option to split payments into three instalments over 60 days or to pay for items 30 days later. Customers do not have to pay additional fees on their purchases. Tamara pays merchants on behalf of customers and takes a fee from sellers.

“The seller is basically giving buyers a service by offering them [the chance to] buy now and pay later,” he says. “We pay them and take the full risk on behalf of the customer.”

A default “very rarely” occurs and most customers want to pay.

“There is no doubt about that,” says Mr Alsukhan.

Tamara rigorously goes through the know-your-customer process and has technology-driven tools based on a “secret sauce” that help it to minimise fraud and credit risk, says Mr Alsukhan.

The venture, the first buy now, pay later company to be enrolled in the Saudi Central Bank’s sandbox programme, was initially bootstrapped, with “everyone putting a good amount of money” in.

Tamara closed an initial funding round of $6m in January, five months after its official launch. Its growth funding of $110 million, led by UK payment technology company Checkout.com, was among the biggest in the Mena region.

The investment will help it to expand across all GCC markets by the end of this year. It is already setting up shop in Kuwait, says Mr Alsukhan.

“I do not expect our growth to slow down until we have most of the major [merchant] partners [on board] in the region and expanded into most geographies,” he says.

“We have a lot of geographies to cover ... we believe this business and our capabilities are built to go beyond the GCC.”

In terms of growth, “the sky is the limit”, says Mr Alsukhan. Tamara's strategic partnership with Checkout.com will help it to scale up operations.

The buy now, pay later business model is capital-intensive and new funding will help to remove any capital mismatch.

“The bigger you are, the more money you need and that is the reason why we have a strategic partner in Checkout.com,” he says.

The funding will also help it “build the best team the region ever saw, not only in talent but also in attitude and culture”.

Q&A with Abdulmajeed Alsukhan, chief executive of Tamara

What is your vision for the company?

To become a global, customer-first company that prioritises the financial wellbeing of our customers across Saudi Arabia and beyond.

What successful start-ups do you wish you could have started and why?

I have co-founded several start-ups in the past few years, including Habli in 2017, which was acquired by Nana in the same year. I then joined Nana as a co-founder until 2020, when the idea of Tamara became a clear need and passion that I had to pursue.

What new skills have you learnt in the process of setting up your company?

Perseverance. Building start-ups is hard work; you must have the grit and determination to pull through.

How do you envision a post-Covid-19 world?

The length and severity of the pandemic caused a significant adoption of online commerce and solutions. Even as the pandemic eases and people go back out into the world, online shopping will remain a significant portion of retail sales and there is need for variety in payment solutions to make that transition more resilient.

We also believe in bringing digital payment solutions to physical shops through Tamara’s consumer app. This will be a key growth pillar and we expect to build more solutions for in-store customers and merchants.

Where do you see Tamara in five years?

A regional leading financial inclusion services provider and consumer app across the Mena region.

What is your mantra for success?

Success can only be achieved through perseverance.