The game for who becomes Egypt’s next category king after Fawry is on, and in a fierce fashion. Barely a month after Flextock, a Cairo-based fintech raised $3.75 million and claimed Egypt’s largest preseed, Telda, an Egyptian digital bank aimed at Generation Z has displaced it. The startup has not only secured a $5m pre-seed round of funding, but has got the backing of some of the world’s leading investors, including that of the California-based venture capital firm, Sequoia Capital.
Although Sequoia Capital led the round, the investment also saw the participation of US venture capital firms, Global Founders Capital and Class 5 Global.
The investment is Sequoia Capital’s first in the Middle East and North Africa. It is also the first investment in any Egyptian startup for Global Founders Capital and Class 5 Global. Last year, Sequoia Capital participated in Cameroonian startup, Healthlane’s $2.4m fundraising.
The startup will use the funding to launch its new products and grow the business.
Why The Investors Invested
Investment into Telda started when Swvl’s co-founder and former CTO Ahmed Sabbah sent a cold message on LinkedIn to one of Sequoia Capital’s partners. What followed was a series of meetings with several people at the firm and the subsequent request for a term sheet a few weeks later.
The American VC had previously led a $2 million seed round in Brazil’s Nubank, a neobank with close to 40 million customers across Latin America and a market capitalization of $25 billion. David Vélez, a former Sequoia associate, founded Nubank.
“Both countries boast a huge, young, talented, and tech-savvy population with a strong appetite to innovate,” said George Robson, a Sequoia partner who led the investment in Telda. “We are delighted to partner with Telda and earmark our first investment in the area,” he said in a statement.
One remarkable attraction for the investors in this round is the team at Telda. Sabbah, the co-founder and CEO was formerly of SWVL, one of Africa’s most funded startups and whose team had particularly been praised by investors as executing quickly. This factor, apart from Telda’s mission, particularly drew in San Francisco-based VC firm Class 5 Global.
“Money has become a medium of self-expression — a form of identity — not solely a store of value. Telda has done a remarkable job of embedding their culture and values in the product, in both functionality and design. No hidden fees, no maintenance charges, no paperwork nor stress, coupled with an elegant design to enable a self-service experience,” said Youcef Oudjidane, Managing Partner of Class 5 Global.
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Similar point was re-echoed by Roel Janssen, a partner at Global Founders Capital.
“We are highly impressed by Sabbah and Sholqamy and love their vision for building the region’s leading digital banking app and we are proud to be part of their journey. It is GFC’s first investment in Egypt and we see that Egypt has the potential to become an important hub in the global tech ecosystem,” Janssen said.
But perhaps, the greatest point of attraction for the investors lies in the traction the startup has garnered so far. Barely launched last month (April), the startup already has over 30,000 sign-ups and over 17,000 people who have requested the card via the app.
Telda also said it was the first company in Egypt to obtain a license under the latest Banking Agents regulations from Egypt’s Central Bank. The license enables them to digitally issue cards and onboard customers, most similar to what South Africa’s TymeBank, which recently announced it had acquired 3 million customers in just two years, is doing. Sabbah said it is now only a matter of weeks before the cards are shipped to users on the waitlist.
A Look At What The Startup Does
Telda was founded a little over a month ago by Swvl’s co-founder and former CTO Ahmed Sabbah and Youssef Sholqamy, who was previously a senior engineer with Uber’s infrastructure team. The startup is Egypt’s first digital bank.
Users may create a Telda account entirely online, using only their phone number and national ID number. Telda’s account comes with a Mastercard-powered card that can be used for online payments, in-store transactions, which cash withdrawals (and can be requested from the app). Users may use the IBAN that they earn for their digital account on Telda to receive money from anyone in Egypt and beyond.
The startup is aiming at Gen Z in the whole of the Middle East, starting with Egypt.
The fintech space in Egypt is still largely unexplored, despite moves by startups to fill that void, with Soliman S. AlTayyar, an Egypt-based capital markets and investment expert telling Afrikan Heroes that, currently, digital payments to GDP is 3% and that the Egyptian government is aiming to increase this to 10% in 2–3 years.
Telda Digital Bank Telda Digital Bank
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer