It was in 2018 when Nadim Alameddine was preparing to file his first ever tax return that the idea for an accounting software came to him. Both the UAE and Saudi Arabia had just introduced VAT and Alameddine, who was already a co-founder at Pricena, a shopping search engine, decided to leave and set up Wafeq, an accounting software that enables SMEs to conduct their e-invoicing, taxation and employee payroll online.
Despite the presence of international accounting software solutions in the regional market, Alameddine realised that in many countries, a homegrown solution for accounting software always dominated the market and held a 10x larger market share compared to the second largest player. In the US, this is true of QuickBooks, which is 10 times the size of Xero, whereas in New Zealand, where Xero was founded, it is the dominant player.
“This pattern repeats in many countries, but not in our market, we don’t have this 10x brand - where you become the default software - there is opportunity in the Middle East where it is still fragmented and that's what we’re going after,” says Alameddine. “There wasn’t a big incentive for businesses to do their accounting on a software and that really changed when VAT was introduced and once Saudi Arabia launched the e-invoicing law last year, which requires all SMEs to use accounting software. These regulatory changes are driving demand.”
In Egypt, Saudi Arabia and the UAE, SMEs comprise over 98 per cent, 90 per cent 94 per cent of all companies registered respectively. With most regional accounting still done manually or through legacy software, or global solutions that are not always compatible with country-specific requirements, Wafeq is hoping to tap into this opportunity, by offering solutions like Zakat and tax and customs requirements laid out by the respective authorities.
Once Alameddine left Pricena, he had to come to terms with becoming a solo founder, which comes with its own set of challenges and pressures.
“The biggest minus of being a solo founder is in the first phase, in trying to get something off the ground, that is the most difficult to do alone. Having co-founders [at this stage] makes things a lot easier, but past that phase, in terms of clarity over who is the decision maker, when you have a single founder, everybody knows who has the final call and that makes things a lot easier,” he says.
Alameddine began his new journey by learning how to code, transitioning to a technical founder. He built the initial software himself, something he believes was crucial given that he was a solo founder.
“I learned to appreciate how important it is, I knew technical founders are essential for a startup, but I wanted to have more control, it gave me comfort that I had the full picture of what we were building,” he says.
Today, Alameddine has a large team of engineers driving the development of Wafeq and the company now enjoys a presence in the UAE and Saudi Arabia with plans to expand to Egypt after raising a $3 million Seed round led by Raed Ventures with participation from Wamda Capital. The businesses on its platform create over 630,000 invoices every month totalling over $117 million in value.
Overall, the fintech sector has been the fastest growing in the Middle East and North Africa (Mena). Last year, $1.1 billion was invested in fintech startups, almost double the amount invested in 2021.
“The [startup ecosystem] has changed radically, there is so much more capital available, valuations are higher but the biggest change has been around the availability of capital,” he says. “Saudi Arabia has also done really interesting things, there is so much evolution and innovation from KSA, from the government itself to make its market even more attractive to go into.”
Saudi Arabia’s introduction of an open banking framework has also made the country a more compelling destination for fintechs according to Alameddine.
“The biggest thing that is holding back the full potential of accounting software is integration with the banks,” he says. “If you need to make a payment [as an SME] it is a very tedious and manual process. In the US and Europe, all of this is streamlined. We are waiting for this to happen [in the region] because it will make your product almost magical and provide such a seamless experience. We’re very much looking forward to open banking in KSA.”