Riyadh-based procurement SaaS startup Penny has raised $1.35 million in a seed round from Wamda, Class 5 Global, Outliers VC, Plug and Play, and some strategic angel investors, it announced in a statement to MENAbytes today. According to our data, it is the largest seed round raised by a SaaS startup in Saudi.
Founded earlier this year by Iyad Aldalooj, Majid Aldalooj, and Mohamad Ibrahim, Penny’s online software helps businesses of all sizes digitize their procurement and spending activities. The startup is also building a private B2B marketplace for its clients to make it easy for them to source and procure products from different vendors. When it launches, Penny’s marketplace will be the largest of its kind in Saudi with over 100,000 SKUs from 250 brands, claims the startup.
Iyad Aldalooj, the co-founder and CEO of Penny, who was previously with Careem serving the company as General Manager and Marketing Director for about three years told MENAbytes that there’s hardly anything in the market that consolidates procurement and that is what they’re trying to do, “Penny consolidates all types of spending, making it easy for businesses to track every single penny going out. It puts companies in full control of their spending and brings order to procurement. We’re starting with Saudi but what we’re building is a global product. It is about time the region produces a product that’s used across the world.”
The statement by Penny citing data by market intelligence firm International Data Corporation (IDC) notes that the global procurement software market is growing at a CAGR of 9.1 percent, and expected to reach $7.3 billion by 2022.
Majid Aldalooj, the co-founder of Penny who previously founded and ran a trading company for construction materials in Saudi experienced first-hand the fragmentation and disconnect in procurement. In a statement, he said, “After years of experience on the supply side of procurement, We have realized that digitization and data-driven procurement is the future of the industry. Nowadays, companies across all industries try to become more efficient in saving their resources.”
Penny, for now, offers its solution to enterprise clients but it is also in the process of building a freemium version for SMEs that is expected to be launched later this year. The startup is currently in conversations with multiple large enterprise clients who are considering using its solution to completely digitize all the procurement processes.
Iyad told MENAbytes that for large enterprises it is not a plug-and-play solution, “Most of the clients we have talked to don’t have a consolidated system for purchasing and that’s what we’re offering. We implement our customizable software throughout the organization. It’s a long process that could take months but our clients are still interested in it solves one of their biggest pains. Most of them see the value right from the first presentation.”
When asked about how the startup will scale if it continues to customize the product for its customers, Iyad explained, “We’re trying to find our product-market fit so we are at the stage where we want to ensure value. We’re not after scale right now. We’re after value. The clients are actually helping us complete our product.”
Penny’s engineering team is based in Saudi and India and the entire product was built in-house.
Mohamad Ibrahim, the co-founder and CTO of Penny who previously worked as a Software Engineer at Saudi Aramco, said, “We are keen on bringing the B2C simplicity and UI/UX to the B2B experience. We have developed a state of the art software that is equipped to handle complex transactions with ease and efficiency.”
Joel Ayala from Class 5 Global, said, “As consumer spending continues to drastically move online, we believe the same innovation will happen in procurement. Class 5 is proud to back Penny to simplify trade and spending in the region and beyond.”
The startup plans to use the investment to continue building its product and expand the team.
Update – Sep 21, 2020 – 7:40 AM: A previous version of the article noted that Penny’s engineering team is based in India only. It is based in Saudi and India. The article has been updated to reflect this.