“A small step on a long journey” Israeli fintech company Salaryo sees first-ever UAE investment

“It took us a long time to complete the deal due to concerns over transferring funds from Dubai to Israel,” said Salaryo CEO Yair Levy

Israeli Fintech company Salaryo Inc., which provides credit and digital banking services to small businesses in the U.S. has raised $5.8 million in credit and equity. The company declined to detail how much debt it had incurred, but it is estimated to be the main element of the deal.

 

The equity component was led by UAE-based private equity and venture capital fund KEN Investments, which has invested hundreds of thousands of dollars in the deal. This is estimated to be the first time an Emirati fund has openly invested in an Israeli company and follows the announcement last month that the two countries had agreed to normalize diplomatic relations.

 

Salaryo co-founder and cEO Yair Levy. Photo: Salaryo

Other investors included British venture capitalist Michael Ullman, Variant Investments, and Techstars Ventures in whose accelerator Salaryo had participated.

 

In a conversation with Calcalist, Salaryo co-founder and CEO Yair Levy spoke about the connection to the UAE-based fund. “We made contact with the fund through one of our investors. Unfortunately, we have yet to visit the country and the negotiations were conducted entirely remotely using digital means.”

 

Levy noted that the fund had no issue with investing in an Israeli company and treated it as a purely financial investment. “The fund had no problem on the business level and the big challenge was the technical one. It took us a long time to complete due to concerns over transferring funds from Dubai to Israel. At the end of the day, it required a lot of creativity and there are still challenges in executing the deal,” Levy said.

 

According to Salaryo, the company will use the funds to propel the growth of its small business lending activity and to launch new business banking products in 2021. The current financing round brings Salaryo’s total to $12 million in equity and debt.

 

KEN Investments focuses primarily on fast-growing, digitally enabled B2B and B2C companies in Fintech, Insurtech, Pharma, E-commerce, Consumer goods. Most of its investments range between $100,000 and $1 million.

 

In addition to the current investment, Levy said he believes the funding will open doors to the financial world in the UAE. “A big factor in the field of lending is access to sources of credit and money and the financial sector. It is a small step in a long journey in the Emirates. The peace agreement that is shaping up helped us immensely. The ability to initiate the move and its implementation received a boost due to the positive environment generated by the agreement, unfortunately, the technical failure in terms of transferring the funds has yet to be solved,” Levy said.

 

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Salaryo offers loans and lines of credit to small businesses and has many competitors, including in Israel, with companies like Fundbox and BlueVine.

 

“We have been active since 2018 and have handed out $60 million in credit to hundreds of businesses,” Levy said. Salaryo was founded in 2017 and employs 10 people in Israel and the U.S. Salaryo's lending technology features a fully automated experience, featuring KYC (Know Your Client), financial and professional analysis, payment processing and e-signatures, to make a decision in minutes. Once approved, Salaryo sends funds to the business within 24 hours.

 

"This investment round propels Salaryo's evolution from a niche player into a fintech banking partner for small businesses, at a time that small business owners need us the most," said Levy. "This year we have expanded our offering with business loans, providing cash flow flexibility and relief during Covid-19. Our next big step in the materialization of our vision to be the ‘Bank of the Future of Work’ is planned for next year, when we launch a suite of digital banking products that are designed for cash flow volatility and income uncertainty."

 

Dubai's financial center. Photo: Reuters

“It took a long time to close the deal. This is our first time investing in Israeli technology. Salaryo services the large and rapidly growing U.S. Small businesses market,” said Ken Investments CEO Egbert Willam.

 

"Covid-19 has accelerated the digitization of financial services. Fintech companies such as Salaryo provide opportunities to generate alternative return streams in a dynamic environment," said Curt Fintel, Principal at Variant Investments. "Salaryo's team possesses the financial acumen and advanced technology that give Variant an edge in getting exposure to unconventional income-generating assets in the specialty finance category."