We’ve recently invested in Mala, the region’s first B2B BNPL provider. We are excited to back Musaab Alhakami and wanted to share the thought process behind our investment decision.

Mala’s vision is to reshape trade finance and SME working capital in KSA and the broader GCC region by adapting the consumer-focused BNPL model to the B2B segment. The company addresses the multi-billion-dollar working capital challenge in the GCC, where payment terms are excessively extended. Their solution enables suppliers to immediately convert receivables into cash at a discount (essentially factoring), while providing buyers with a structured process to delay payments. 

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What problem is Mala solving?

·      Length ageing: The GCC faces some of the region’s longest working capital cycles, with receivables often aging 90 to 180 days, depending on the sector and the purchaser responsible for payment.

·      Lack of SME finance: SMEs represent 99% of businesses in Saudi Arabia and contribute approximately 30% to the kingdom's GDP. Despite this, they receive only 7.7% of total bank lending due to rigid banking criteria. Traditional financial institutions and lenders have been slow to offer working capital loans and other credit instruments like factoring, which could help alleviate the challenge of extended receivable cycle. As a result, SMEs face significant working capital challenges, limiting their capacity to expand and invest.

·      Rapid Shift to Online B2B Transactions: The B2B e-commerce market is growing at twice the rate of B2C, driven by increasing digital adoption. However, with this shift comes an urgent need for financing options that align with online purchasing behavior, which favors quick, flexible payment terms.

Why the problem persists?

·      Historically weak small claims/collection judicial process: Historically, the GCC has lagged with respect to judicial infrastructure relating to small claims courts. Although this has changed, the practices arising from the deficiency persist.

·      Culture: Business culture has adapted to this effect with B2B firms building an expectation for delayed payables and receivables and adapting through requiring some portion of an invoice paid upfront before a service is rendered and/or goods sold.

·      Slow moving financial institutions: financial institutions have been slow to address this pain point as they are able to generate significant revenue/scale from large corporations, government-related entities and governments.

What is Mala doing about it?

·      The Mala platform enables B2B merchants to offer flexible payment terms, allowing buyers to make installment-based purchases or defer payments, thereby boosting purchasing power and business growth. Mala leverages a tech-driven solution to improve accessibility to credit for SMEs—a segment historically underserved by traditional financial institutions.

Our rationale for investing in Mala was governed by the following key principles:

 ·      Extreme Founder Conviction: Our confidence in Musaab stems from his exceptional background and unique influence within the region’s startup ecosystem. Previously a General Partner at VentureSouq, a fintech-focused VC, he also co-founded Sary and built and exited an agricultural business. With experience as a senior executive at SAGIA/Ministry ofInvestment, he combines operational expertise with strategic insights. His track record as a prolific angel investor further reinforces our belief in his ability to drive Mala’s success. 

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·       Massive Market Potential: Mala addresses a significant market opportunity estimated between $70B and$140B within the delayed receivables/payables space for SMEs in KSA alone . This market, currently underserved, offers a chance for transformative change and substantial returns by solving a long-standing working capital challenge for businesses.

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·       Persistent problem: the issue of delayed payments and working capital inefficiency is one that has been sticky in the regional economy with little change.