Tag: Egypt

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MENA VC Flat6Labs’ new fund to back startups in East, West Africa

Flat6Labs is amongst the most active VCs in Africa, having invested in over a hundred startups to date, across the Middle East and North Africa (MENA) region. And now, after 11 years, the Egypt-based seed-stage accelerator is setting out on a foray into East and West Africa through a $95 million Africa Seed Fund investment vehicle that will mark its first venture outside MENA.

“We’re embarking on a new phase for the organization by expanding into sub-Saharan Africa through Africa Seed Fund,” the firm’s CEO Ramez El-Serafy told TechCrunch, adding that the expansion will be gradual, with two-thirds of its allocations still going to enterprises in North Africa. Flat6Labs is eyeing an initial close before the year ends.

“We are adding Kenya and its neighboring markets in East Africa, and the Anglophone and francophone sides of West Africa, including Nigeria, Senegal, Côte d’Ivoire, Ghana and Cameroon,” said El-Serafy.

Flat6Labs, also a seed accelerator, has previously administered country-specific funds, including a $10 million Anava Seed Fund for Tunisian startups, and it is only now that it is running a fund for startups in multiple countries.

“With markets across the region maturing a little bit, it makes sense that we start looking at cohesive regions in terms of the average purchasing power, and opportunities — the products that you see being created in these markets are very similar and easy to take from one country to the next,” said Flat6Labs CIO Dina El-Shenoufy.

Flat6Labs $95 million Africa Seed Fund is sector agnostic

The fund is sector agnostic and plans to invest in fintechs, healthtech, logistics, mobility, cleantech, agtech, retail and e-commerce startups.

Flat6Labs will invest between $150,000 and $400,000, and make follow-on investments of up to $500,000 to ensure continued support for the startups. It invested between $30,000 to $100,000 in previous funds.

“We provide the capital, but there’s a huge value in terms of how we work with the company because of how we position ourselves as an institutional co-founder of the company by helping them set up the company, register it, and provide access to our networks. We are one of the few players in North Africa that is expanding south in Africa, so this is also something that also adds a lot of value when it comes to our geographic exposure,” said El-Serafy.

The cohort, he says, will have founders from different regions, creating an opportunity for individuals from different cultures, and backgrounds to interact, share ideas, work together, and gain the opportunity to access new markets. Flat6Labs will admit 10 to 15 startups every six months in its seed program. The accelerator plans to back up to 170 startups over the next five years.

El-Shenoufy said that: “About 60 percent of the checks will probably be checks that happen alongside the [seed] program whereas the rest will be straight checks for more mature founders.”

Flat6Labs, which claims to have $100 million in assets under management, was founded in Egypt, and has over the years deployed several country-specific funds, and accelerator programs with partners in seven countries including Saudi Arabia, the UAE, and Lebanon.

Some of its partners in previous funds include the International Finance Corporation (IFC), the MSME Development Agency, Egypt Ventures and the Egyptian American Enterprise Fund.

With the new program, the accelerator hopes to be part of the support that startups across Africa need, especially in the wake of a tough fundraising environment.

“We’re very excited about Africa, it is one of the fastest growing markets in the world. It is very unique in terms of its young population, and the need for technology to resolve many of the challenges that we face on the continent. It makes a lot of sense for us also as an organization to be expanding south,” said El-Serafy.

“We also know emerging markets very well. I’ve been working in the Middle East for the last 11 years investing in founders in the middle of revolutions like the Arab Spring.It’s amazing to work with all these founders and support them during these times,” he said.

Seed-stage accelerator Flat6Labs closes $13.2M fund for startups in Egypt

MENA VC Flat6Labs’ new fund to back startups in East, West Africa by Annie Njanja originally published on TechCrunch

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Gameball raises $3.5M to scale its CRM platform for consumer brands

The uptake of customer relationship management (CRM) tools has grown immensely over the last few years such that the market size is expected to experience a 12.5% compound annual growth rate, and to be worth $145.79 billion in the next six years. This growth is largely attributable to the uptick of online merchants using CRM tools to boost sales, increase profits and beat mounting competition from other providers.

One such platform that is helping consumer brands leverage their data to grow is Gameball, a customer intelligence and marketing CRM platform, that was launched in 2020 by egyptian entrepreneurs Ahmed Khairy (CEO) Ahmed El Assy (CPO), and Omar Alfar (CTO).

Gameball says brands use its tools to build long-term relationships with customers and ensure retention through personalized loyalty programs that are informed by data.

Khairy told TechCrunch that since the startup’s launch, growth has been exponential and they have so far served over 7,000 businesses reaching 20 million customers. The startup plans to grow this further by embarking on a marketing drive and setting up hubs in regions where its platform is on demand over the next one year.

Gameball’s expansion drive is backed by a $3.5 million seed funding it has raised from 500 Global, P1 Ventures, Launch Africa, and Middle East VCs Seedra Ventures, Arzan Ventures, Propeller, Core Vision, as well as a number of regional investors.

“Moving forward we are focusing more on commercializing the product. We are also trying to focus on certain countries that will give us access to certain regions…like the U.K to give us access to Europe, and Saudi Arabia for the GCC region,” said Khairy.

“We have been seeing a lot of growth coming from those markets, and beyond being mature markets, it’s easier for them to adopt solutions and technologies like Gameball. Their economies are kind of stable, enabling us to better leverage them for growth.”

Hisham Halbouny, general partner at P1 Ventures, said: “The consumer landscape is evolving rapidly with brands competing for customer engagement, trust and retention. Gameball is solving a large multi-billion-dollar challenge that can transform digital marketing, customer loyalty and monetization around the world. We are thrilled to back the team on their journey as they grow their footprint in new markets.”

Khairy, Assy and Alfar, started building Gameball as a Shopify app, before moving on to build an API solution for businesses outside Shopify.

Khairy says clients using their platform can carry out multi-channel marketing campaigns, run loyalty programs, build customer profiles for targeted promotions and rewards for increased engagement.

“Our clients have a lot of channels and interaction points with the customers but bringing all those things together in a single dashboard, where they can actually have better visibility on their customer behavior and customer insights and then use this data to run efficient marketing campaigns is one the biggest pain for our customers. So, we started building for that problem,” said Khairy.

Gameball, a CRM platform for consumer brands, raises $3.5M seed funding

Gameball’s clientele include Sega, Xiaomi, Experience Philippines and Breadfast. Image Credit: Gameball.

Khairy added that through analyzing customer behavior, Gameball is able to give brands monetization opportunities, and help them upsell and cross-sell efficiently across their customer base.

“We empower marketers to get better insights, data, and visibility on the customer behavior. We basically give them the tools to run the retention and marketing campaigns more efficiently based on this data, and to personalize and make more money out of those relationships,” he said.

He added that the platform helps brands to tap existing customers, who are capable of bringing greater value to businesses than new customers. Besides, businesses no longer require to spend blindly on customer acquisition through paid ads as they have an opportunity to tap existing ones via targeted campaigns and loyalty programs.

Gameball’s customers cut across all sectors including ecommerce, retail, and fintech. Its clientele include Sega, Xiaomi, Experience Philippines and Breadfast.

Gameball raises $3.5M to scale its CRM platform for consumer brands by Annie Njanja originally published on TechCrunch

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Dubai-based accounting and financial compliance startup, Wafeq, raises $3M

In 2016, the Gulf Cooperation Council (GCC) member states signed the Value Added Tax (VAT) agreement paving way for the introduction of the general levy on consumption across the region. The United Arabs Emirates (UAE) and Saudi Arabia became the first member states to adopt the treaty in 2018, and its implementation meant that for the first time businesses in these territories were required to file VAT returns periodically.

Nadim Alameddine, a UAE resident, says he immediately saw an opportunity in the accounting space as businesses sought to file returns as required by the new law. This inspired him to launch Wafeq in 2019, a startup that initially offered accounting services and later, in 2021, launched a scalable accounting and e-invoicing SaaS solution focused on clients in UAE and Saudi Arabia.

Wafeq is now exploring new growth opportunities in Egypt while doubling down on its existing markets as businesses comply with evolving accounting and financial requirements. The growth plans follow a $3 million seed funding it has secured in a round led by Raed Ventures and participated by Wamda Capital.

“There are regulatory changes happening in Saudi Arabia and Egypt, and that is what we are trying to capitalize on at the moment… we are also doubling down on our existing markets, where we already have good traction,” Alameddine told TechCrunch.

Egypt and Saudi Arabia currently require businesses to be e-invoicing compliant, which he says has led to a surge in demand for accounting software, which Wafeq is tapping through its enterprise (API) product.

Wafeq is a ratified provider in Saudi Arabia, and the UAE (e-invoicing is not mandatory there yet). The startup is in the process of seeking approval from the Egyptian Tax Authority too. Alameddine said the North African country offers massive opportunities for the startup as it is home to millions of small medium businesses.

Dubai-based Wafeq, powering accounting and financial compliance for SMEs, raises $3M seed funding

Wafeq says its powering accounting and financial compliance for SMEs. Image courtesy: Wafeq

Its accounting platform, on the other hand, makes it easy for clients to generate their VAT returns, manage inventory, payrolls, bills and track expenses. It also generates actionable financial reports and insights for businesses.

“We position ourselves as a full accounting software for SMEs, and we offer three different plans serving businesses looking to send compliant invoices, manage their accounts payable, or those seeking a full accounting solution that includes inventory management and payroll services,” said Alameddine.

Currently, over 630,000 invoices are created every month through its platform, with the total monthly invoiced amounts exceeding $117 million. They anticipate this to grow enormously in the wake of its growth plans.

Commenting on the deal, Talal Alasmari, the founding partner of Raed Ventures said; “We are thrilled to back Wafeq as they solve a problem that impacts thousands of businesses in the region. The digitalization of accounting practices will truly transform how SMEs here operate, increasing operational transparency, creating efficiencies and contributing to economic growth.”

YC-backed Zywa, a neobank for Gen Z, raises $3M to expand across MENA

Qureos raises $3M to grow its learn to earn platform

Dubai-based accounting and financial compliance startup, Wafeq, raises $3M by Annie Njanja originally published on TechCrunch

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Egypt’s Suplyd raises $1.6M to digitize restaurants supply chain

Suplyd, a procurement platform for hotels, restaurants and catering (HoReCa) businesses in Egypt, has raised $1.6 million pre-seed funding from Endure Capital, Seedstars, Camel Ventures, Falak Startups, and a number of angel investors.

Founded in January this year, Suplyd’s B2B platform brings efficiency in the supply chain operations for businesses in the food service industry by allowing digital order procurement, payment, and fulfillment.

Through its platform, restaurants get access to a wide range of products on demand , saving them man hours wasted in sourcing for goods offline. It also ensures that the businesses acquire the goods at competitive prices.

Suplyd plans to use the new funding to scale its technology and expand within and beyond Cairo, and to explore other growth opportunities in Middle-East and North Africa (MENA) region in the near future.

“Restaurants’ supply chain is a global issue, where everyone right now is looking into how to cut costs and reduce waste. However, the Egyptian market is extremely big yet untapped, and that’s where we direct our efforts for the next phase before we expand to other global markets,” said Gohar Said, Suplyd CEO who co-founded the startup with Karim Selima, and Ahmed ElMahdy.

Said, a restaurateur for 12 years, Suplyd is bringing an e-commerce experience to the restaurant supply chain, by optimizing assets, reducing waste for the whole ecosystem, while saving the businesses time and effort used to communicate and follow up with suppliers.

The startup’s network of tech-enabled fulfillment centers, offers the Suplyd insights on demand patterns and trends that informs stocking, to ensure restaurants supplies needs are fulfilled on demand, and avoid waste on suppliers end too.

“In a normal scenario, restaurants have to go out to the market looking for suppliers for their SKUs, then they start validating their prices. If the right match happens, which is not always the case, the fulfillment risk takes place, whether because of tight delivery windows, order placement restrictions, or quantity issues,” said Said.

“What Suplyd is offering is a digital procurement engine, a platform where it makes it easy for restaurants to buy supplies at considerably cheaper rates than open market prices, exposes restaurants to a wide range of SKUs, guarantees fulfillment through a single platform, and simplifies the transaction and the delivery process. It also benefits suppliers with real-time analytics and actionable insights when it comes to demand patterns and trends,” he said.

Suplyd says it is currently serving 500 customers in greater Cairo, having grown by almost 50% month over month since launch. The startup, which is stepping up competition for players like OneOrder, expects greater growth over the next one year sustained by its expansion plans geared towards serving Egypt’s vast HoReCa industry, which is supported by over 400,000 restaurants.

Tarek Fahim, general partner at Endure Capital said: “Eating out is a major part of social life in the Middle East, but the supply chain that enables restaurants to serve customers is highly fragmented. We are thrilled to support the team and the platform Suplyd is building to digitize the supply chain for restaurants, improving efficiency and reducing food waste in our communities.”

With $3M new funding, Egyptian startup OneOrder sets out on growth drive

Orda raises millions to digitize African restaurants with its cloud-based operating system

Egypt’s Suplyd raises $1.6M to digitize restaurants supply chain by Annie Njanja originally published on TechCrunch

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With $3M new funding, Egyptian startup OneOrder sets out on growth drive

OneOrder, Egypt’s supply chain solutions provider for restaurants, has raised $3 million seed funding led by Nclude with participation from A15, and Delivery Hero Ventures. The latest funding brings the total funding raised by the startup to $10.5
million, including $6.5 million working capital financing from financial institutions.

Launched in March this year, OneOrder makes it possible for restaurants to order food supplies through its online platform, solving the fragmented supply chain challenges that lead to erratic prices, waste, quality issues, and storage cost.

By using its platform, restaurants no longer have to deal with tens of suppliers, and can order only what they need, for next day delivery, stemming wastage and doing away with the need for warehouses. The platform also ensures operational efficiency and helps restaurants save money by leveraging OneOrder’s economies of scale.

TopUp Mama looking to solve sourcing challenges for restaurants

The startup plans to use the funding to scale its operations in Egypt including increasing its warehouse footprint, and to explore growth opportunities within the Gulf Cooperation Council (GCC) region, and Africa.

“We are exploring Saudi Arabia and expanding south into our continent. I think Africa has a lot of markets that feel the same pain points that Egypt does,” said OneOrder co-founder and CEO, Tamer Amer, who co-founded OneOrder with Karim Maurice (CTO), also founder Cube, an online restaurant-reservation service.

“The solution that we’re providing has shown that this industry is ready for tech solutions…[and] we are working on a more substantial operating system for the restaurants not just the supply chain and inventory management system, rather the full cycle that would turn their operations automatic by using AI and machine learning capabilities to drive the supply chain,” said Amer, a restaurateur for over two decades, initially in the U.S before settling in Egypt from 2008.

Amer, told TechCrunch that the sourcing challenges he experienced operating two restaurants in Egypt — Fuego, a sushi bar, and Longhord Texas Barbeque — inspired the launch of OneOrder, to serve the country’s total addressable market of 400,000 restaurants.

“I had always taken the supply chain in the U.S for-granted; we would order and get the supplies all the time. We didn’t have to worry about shortages or price changes. I realized that Egypt is so underserved and the industry is really doing a lot of things that we shouldn’t be doing,” he said.

“… restaurants should not have a full-time job monitoring the supply chain and procuring products because it takes away focus on the core business, which is serving customers. So that’s where the idea really started,” he said.

OneOrder plans to, through its partners and backed by its extensive data, begin extending working capital financing options to restaurants as a way of helping them scale their operations.

Basil Moftah, the managing partner at Nclude, said: “The product-market fit of the OneOrder solution is very impressive, along with the positive impact it is delivering to all stakeholders in the value chain. Through the use of technology and alternative data, OneOrder’s embedded financing will help underserved clients who are unable to secure traditional financing. This aligns perfectly with our investing philosophy and we are glad to be embarking on this journey with the team.”

Vendease gets $3.2M to help hotels and restaurants buy food supplies in Africa

SaaS platform klikit saves restaurant kitchens from ‘tablet hell’

With $3M new funding, Egyptian startup OneOrder sets out on growth drive by Annie Njanja originally published on TechCrunch

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With $3M new funding, Egyptian startup OneOrder sets out on growth drive

OneOrder, Egypt’s supply chain solutions provider for restaurants, has raised $3 million seed funding led by Nclude with participation from A15, and Delivery Hero Ventures. The latest funding brings the total funding raised by the startup to $10.5
million, including $6.5 million working capital financing from financial institutions.

Launched in March this year, OneOrder makes it possible for restaurants to order food supplies through its online platform, solving the fragmented supply chain challenges that lead to erratic prices, waste, quality issues, and storage cost.

By using its platform, restaurants no longer have to deal with tens of suppliers, and can order only what they need, for next day delivery, stemming wastage and doing away with the need for warehouses. The platform also ensures operational efficiency and helps restaurants save money by leveraging OneOrder’s economies of scale.

TopUp Mama looking to solve sourcing challenges for restaurants

The startup plans to use the funding to scale its operations in Egypt including increasing its warehouse footprint, and to explore growth opportunities within the Gulf Cooperation Council (GCC) region, and Africa.

“We are exploring Saudi Arabia and expanding south into our continent. I think Africa has a lot of markets that feel the same pain points that Egypt does,” said OneOrder co-founder and CEO, Tamer Amer, who co-founded OneOrder with Karim Maurice (CTO), also founder Cube, an online restaurant-reservation service.

“The solution that we’re providing has shown that this industry is ready for tech solutions…[and] we are working on a more substantial operating system for the restaurants not just the supply chain and inventory management system, rather the full cycle that would turn their operations automatic by using AI and machine learning capabilities to drive the supply chain,” said Amer, a restaurateur for over two decades, initially in the U.S before settling in Egypt from 2008.

Amer, told TechCrunch that the sourcing challenges he experienced operating two restaurants in Egypt — Fuego, a sushi bar, and Longhord Texas Barbeque — inspired the launch of OneOrder, to serve the country’s total addressable market of 400,000 restaurants.

“I had always taken the supply chain in the U.S for-granted; we would order and get the supplies all the time. We didn’t have to worry about shortages or price changes. I realized that Egypt is so underserved and the industry is really doing a lot of things that we shouldn’t be doing,” he said.

“… restaurants should not have a full-time job monitoring the supply chain and procuring products because it takes away focus on the core business, which is serving customers. So that’s where the idea really started,” he said.

OneOrder plans to, through its partners and backed by its extensive data, begin extending working capital financing options to restaurants as a way of helping them scale their operations.

Basil Moftah, the managing partner at Nclude, said: “The product-market fit of the OneOrder solution is very impressive, along with the positive impact it is delivering to all stakeholders in the value chain. Through the use of technology and alternative data, OneOrder’s embedded financing will help underserved clients who are unable to secure traditional financing. This aligns perfectly with our investing philosophy and we are glad to be embarking on this journey with the team.”

Vendease gets $3.2M to help hotels and restaurants buy food supplies in Africa

SaaS platform klikit saves restaurant kitchens from ‘tablet hell’

With $3M new funding, Egyptian startup OneOrder sets out on growth drive by Annie Njanja originally published on TechCrunch

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Egypt’s SideUp raises $1.2M to grow its e-commerce support platform

After four years operating primarily as a logistics marketplace, Egypt’s Voo has rebranded to SideUp and transformed its strategy to offer a complete spectrum of e-commerce support services, including payment gateways, API integration for shipping, warehousing, fulfillment, and advisory.

The startup has also expanded to Saudi Arabia, where it will be headquartered henceforth, after raising $1.2 million seed funding. This latest round had the participation of Launch Africa VC, 500 Global, Riyadh Angels, Alex Angels, Al Tuwaijri Fund and Saudi angel investor Faisal AlAbdulsalam.

SideUp founder and CEO Waleed Rashed told TechCrunch he was inspired to link small merchants to e-commerce support, after realizing they were ignored by large service providers.

“There is a lot of talk about how e-commerce is scaling, but still, we are not empowering enough of those (micro, small and medium enterprises) that are selling online. Merchants need many services and a complete ecosystem to be successful,” said Rashed.

“This is why I decided to empower small and medium businesses; SideUp is for the merchants in the village, or those selling products over Instagram, Facebook or WhatsApp. They get accessibility to all the services starting from the courier company, warehousing and fulfillment, to marketing services,” he said

New report examines Africa’s growth in the digital economy and VC investment landscape

Rashed first ventured into entrepreneurship in 2012, after a career in banking, when he founded Ingez an errands company that gave him first-hand experience in running an e-commerce business.

“Through the four years I understood a lot of things about logistics, operations, and ecommerce. I saw how small businesses, because they lacked volume, were not a priority for big logistics companies,” said Rashed, who after Exiting Ingez, founded SideUp to tackle challenges faced by small businesses and to help them scale.

Growth

SideUp’s partner service providers enable merchants to sell in 45 countries, which Rashed said, has opened up new markets, which had previously been inaccessible by small enterprises.

SideUp currently serves 2,000 e-commerce businesses, which can also access cash collection service and credit to expand their businesses. Its portfolio has grown 30% month-on-month, achieving over $500,000 Gross Merchandise Volume per month.

Riyadh Angels co-founder, Dr. Khalid Al Tawil, said: “Ecommerce remains fragmented across most of the region, creating a number of challenges for business owners. SideUp’s platform is a giant leap forward giving them a single place to access partners and technology to grow their businesses exponentially. We are excited to see them come to Saudi Arabia and support businesses through their next phase of growth.”

The startup now plans to grow its clientele base by scaling in Egypt and Saudi Arabia, and expanding to at least two other countries before the end of 2023, to tap the burgeoning e-commerce sector in different regions.

The Middle-East and Africa e-commerce markets are set to grow above 11.5% in the next five years sustained by internet and smartphone penetration, urbanization and mobile shopping, and as more businesses embrace e-commerce, according to a Mordor Intelligence report.

Khazenly, an Egyptian on-demand warehousing and fulfillment platform, raises $2.5M seed funding

Egyptian venture capital firm Algebra Ventures hits first close of second fund at $100M

Egypt’s SideUp raises $1.2M to grow its e-commerce support platform by Annie Njanja originally published on TechCrunch

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Blnk, a fintech that provides instant consumer credit in Egypt, raises $32M in debt and equity

Credit card penetration in Egypt is low, with just over 4 million cards used in a population of more than 100 million people. As such, people in the country have little or no access to credit, given the other few options that exist in the market.

One of these options, consumer loans, is being explored by Blnk, a fintech launched last October. The digital lending platform partners with Egyptian merchants, allowing them to underwrite customers at the point of sale and provide them with finance to purchase items such as electronics, furniture and automotive services via 6-36 month installments.

Blnk said it has raised $32 million, money split across different stages and funding types: $12.5 million pre-seed and seed equity rounds (led by Abu Dhabi’s Emirates International Investment Company [EIIC], Sawari Ventures and other investors), $11.2 million debt financing and $8.3 million securitized bond issuance. It plans to “accelerate financial inclusion within underserved communities across the country” and support its “AI-powered” lending infrastructure. 

Customers who use Blnk at the point of sale need a National ID for starters, after which they can get financing in three minutes, according to the company. “It’s a very fast service,” said Amr Sultan, co-founder and CEO, in an interview with TechCrunch. “And by being there at the point of sale, we help increase conversion rates and provide affordability products to significantly underserved populations. We’re heavily focused on financial inclusion, especially on how to underwrite people who don’t have a credit history.”

Money Fellows, an Egyptian fintech digitizing money circles, raises $31M funding

Sultan, who started the company with Tarek Elsheikh, said Blnk does this via its proprietary credit underwriting system and risk-scoring model that assesses the customers’ riskiness and ability to service their debts. So far, Blnk claims to have disbursed over $20 million in loans via a network of more than 300 merchants (half of which are active) to over 60,000 customers who pay an average of 2.6% monthly interest.

Joseph Iskander, the head of investment at lead investor EIIC, speaking on the investment: “We are convinced that the Egyptian market and its startup ecosystem present a compelling opportunity for regional and international investors, and we are committed to identifying and investing in value accretive businesses. We are pleased to partner with Blnk to drive financial inclusion and economic development in Egypt, and we look forward to working with the team to achieve their goals.” Other fintechs that offer loans and other financial services in Egypt include MNT-Halan, MoneyFellows and Khazna. 

Egyptian fintech MNT-Halan lands $120M from Apis Partners, DisrupTech and others

Blnk, a fintech that provides instant consumer credit in Egypt, raises $32M in debt and equity by Tage Kene-Okafor originally published on TechCrunch

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Money Fellows, an Egyptian fintech digitizing money circles, raises $31M funding

Egyptian fintech Money Fellows has raised $31 million in what it describes as the first close of its Series B investment. The round, which the startup expects to top up in the coming months, was led by CommerzVentures, Middle East Venture Partners (MEVP) and Arzan Venture Capital.

Other participating investors include Partech, Sawari Ventures, Invenfin, National Investment Company (NIC), 4DX Ventures and P1Ventures. Money Fellows has raised $37 million in total funding since its inception.

Money Fellows’ premise is the digitization of money circles or what’s commonly known as the Rotating Savings and Credit Association (ROSCAs), a system where a group of people agree to contribute money for a specific period, thereby saving and borrowing together.

ROSCAs, which Money Fellows CEO Ahmed Wadi says is a $700 billion opportunity globally, are quite popular in over 90 emerging and developing markets with several names: Esusu or ajo in Nigeria, Kameti or chit fund in India and Gameya in Egypt. But it wasn’t in either of these countries that Wadi first tested Money Fellows, it was in Germany, where he lived at the time. There, Wadi found it difficult to access financial services because he lacked a credit history. He thought by replicating the gameya system in the European nation, he could provide an alternative financing system for people like him. However, adoption wasn’t significant there nor in the U.K. which was his next stop.

“Germany didn’t have this culture and at some point, it felt like it made sense to go to the U.K. where they have Asians, Africans, and Arab communities that traditionally use this model,” said Wadi. “But we found out people didn’t need it because they had an advanced financial system.”

On the other hand, Egypt has a functioning ROSCA system, and Wadi, being from the country, chose it as his third try in 2017. He launched the platform a year later.

Here’s how ROSCAs work. Let’s say 10 people come together and agree to pay $1,000 monthly for ten months. At the end of each month, a member gets $10,000 and it keeps rotating until everyone receives their payout. This system works best with a tight-knit of friends or family because it can be risky when strangers are involved. However, this limits offline ROSCAs in that participants may find it difficult to access more capital. But with Money Fellows, people have a broader pool of participants — each passing through a credit assessment process — around Egypt so that they can form and join ROSCA groups through its app. Similar players globally include Pakistani fintech Oraan and U.K.-based StepLadder.

Oraan raises $3M to increase financial inclusion among Pakistani women

Money Fellows classifies its users as borrowers, savers, or planners depending on where their position is in a ROSCA cycle and when they receive a payout. It charges a one-time service fee of about 6% to users who choose its early spots; the percentage decreases down the line and turns to incentivized interest paid to users at the end of the cycle.

“People looking to borrow can find slots on our platform. People are looking to save too. So if you are a slot number one, you’re a pure borrower, so we charge a fee. If you’re a slot number two, we charge you slightly less. It decreases the more you’re willing to wait until the end of that ROSCA, where we incentivize the users with one of the most attractive saving incentives in the country.”

Any fintech business that involves lending in one form or another has to deal with defaults. Money Fellows doesn’t have it differently. Its conscious design also factors in such cases and has made provisioning and reserve requirements to ensure that customers keep getting paid even when other participants miss their targets. According to the chief executive, Money Fellows sets aside reserves for every new ROSCA launched and, complying with a provisioning schedule, covers any defaults from those funds.

“The good thing with ROSCAs versus consumer finance is that not everyone has equal credit exposure. So if your slot number five, for instance, when you get $10,000, you only need to repay $5000 because you historically paid $500 in the past five months,” he said. “That’s why we’re more conservative. We don’t limit people to only amounts. We also restrict them to specific slots because we know which slots carry more or less risk. That’s another beauty and how we control defaults using Rosco as the financial Engine versus the typical consumer and microfinance model.”

Image Credits: Money Fellows

The fintech also includes a B2B play where it partners with various merchants in Egypt to sell their products within the app so its customers can get discounts. The fintech generates a commission from markup on these products in addition to charging fees in its ROSCAs. It plans to offer more financial services such as buy now pay later, pension, and cards, where the four-year-old fintech plan to make interchange fees.

Money Fellows has over 4.5. million registered users on its platform; however, only 7% are monthly active users. The average payout ticket per user is around 23,000 EGPU ($1,100). The company, which regards itself as “one of the favorite financial apps for Egyptians,” claims to have experienced an 8x year-over-year growth.

Wadi said Money Fellows’ plan with the funding is to accelerate growth by diversifying its portfolio of services and expanding its product offerings across the B2C & B2B segments, as well as its geographical expansion across Africa and Asia. “To be honest, this model has yet to be cracked globally. It took so much time to develop our product and technology to ensure ROSCAs were fully completed while onboarding the right mix of borrowers, savers and planners, the CEO stated. “This was our key focus over the past couple of years, so now it’s the time to grow, and so a big chunk of what we’re raising is to aggressively grow or scale a lot faster than what we have done and then hopefully try to replicate this in other markets.”

Hangwi Muambadzi, a venture partner at CommerzVentures, speaking on the investment, said: “Rotating Savings and Credit Associations have been deeply embedded in emerging markets across the world for centuries. It is brilliant to see this new digital ROSCA-driven model [Money Fellows] emerge from Africa, creating a trusted model of delivering financial solutions and setting a new standard on using localized solutions to solve for global opportunities.”

Money Fellows, an Egyptian fintech digitizing money circles, raises $31M funding by Tage Kene-Okafor originally published on TechCrunch

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Egyptian venture capital firm Algebra Ventures hits first close of second fund at $100M

Last April, Egyptian and MENA-focused venture capital firm Algebra Ventures announced the launch of its $90 million second fund. It was the sequel to its first: a $54 million fund invested in 21 startups across Egypt and the Middle East. 

While Algebra Ventures predicted it would reach its first close in Q3 2021, the firm had to wait an entire year to achieve that. However, the lag afforded Algebra Ventures enough time to exceed what it initially earmarked for the fund. The firm disclosed in a statement that it has finalized a $100 million first close and expects to reach its final close by the end of Q1 2023. 

Since its inception in 2016, Algebra Ventures has backed Egypt’s top startups in various industries. They include names such as Halan, Brimore, Trella, elmenus, Khazna, Yodawy, Mozare3 and Shift EV.

In a past interview, managing partners Tarek Assaad and Karim Hussein told TechCrunch that the firm hopes to back 31 startups from the second fund, which focuses on seed to Series B startups building in fintech, logistics, health tech, edtech and agritech sectors. The firm, whose general partners include Laila Hassan and Omar Khashaba, will also cut checks ranging from $500,000 to $2 million from this second fund. 

Sylndr, an online used-car retailer, raises $12.6M pre-seed to disrupt Egypt’s automotive market

The partners say Algebra plans to invest $15 million by the end of this year; that is, within its first year of operation. So far, it has backed four startups, including Sylndr, the online used-car retailer which raised the largest pre-seed investment in Africa this May at $12.6 million. Also, while Algebra’s second fund will explore investment opportunities in East and West Africa, its primary focus remains on Egypt.

“Our second fund will pursue opportunities in various sectors by partnering with high-potential founders to address specific market gaps in these sectors. We haven’t made any investments in sub-Saharan Africa yet, but continue to build relationships in these markets,” added Hussein via email about the company’s prospective investments in neighboring markets.

Algebra Ventures is one of the few firms that have recently reached the first or final close of large funds targeting the Middle East, including ADQ-backed Further Ventures and Endure Capital. It is also arguably the largest indigenous fund in Africa and lists alongside Partech Africa, TLcom Capital, Norrsken22 and Novastar Ventures as well-established funds investing in African growth-stage companies. These funds were pivotal to the increase in venture capital that flowed into Africa’s tech ecosystem, totaling more than $5 billion and minting soonicorns and unicorns in the process. However, their funding activities has taken a slightly different shape this year due to macroeconomic trends affecting global venture capital. Like others globally, portfolio companies in Africa-focused funds have shown signs of struggle this year. In Algebra’s case, one example is Brimore, the social commerce startup that announced a $25 million Series A, laid off hundreds of employees, saw its valuation slashed significantly (up to 40%, according to some sources) and is currently undergoing restructuring.

“We have seen ups and downs before and have been working closely with our portfolio companies to ensure that they have a solid financial position in this new environment,” commented Hussein, on how Algebra Ventures is assisting portfolio companies weather this cash and valuation crunch period. “We continue to support our companies with strategic advice, funding, operational issues and other matters as the need arises.”

Algebra Ventures reaching the first close at a size larger than its intended second fund is a tremendous feat. It spotlights a decisive vote of confidence from the firm’s first fund investors, who have invested larger tickets in the second fund and commitments from new investors who share its vision for the potential of VC in Egypt and the region. 

Large institutional investors, including DFIs such as FMO, BII and IFC, are backing Algebra’s second fund — the IFC and FMO made $15 million and $10 million commitments into the fund, respectively. Other limited partners include existing participants EBRD and EAEF, new investors MSMEDA, DGGF and a few regional family offices. 

“This is a testament to the potential of tech entrepreneurship in Egypt. Even in these uncertain times, there will be funding to back founders who are building transformative companies. The upside is still very significant and successful, well-funded companies will be in a position to become market leaders, even in challenging economic times,” Hussein said on the firm’s efforts to raise its second fund. “It also highlights the importance of local funds, working closely with entrepreneurs on the ground. We’re four partners, all Egyptians, all living in Cairo; we’ve been investing for a long time, and we understand the local environment. We’ve seen startups succeed and others fail, and many regional and global investors think of us as their local partner in Egypt.”

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Egyptian venture capital firm Algebra Ventures hits first close of second fund at $100M by Tage Kene-Okafor originally published on TechCrunch