Venture Capital firm and previous investor in African startups such as Kudi, Terrapay, Gebeya, etc. is proving that African startups are also entitled to benefit from its recently closed $100m Seed Fund, Partech Entrepreneur III. The investor has just co-poured $4 million into Cairo-based fintech startup MoneyFellows, helping the company to close its Series A funding round.

“Being backed by Partech and Sawari Ventures — two top investment firms, helps us reap global, as well as local know-how, best practices and support. Partech’s support from their African fund will help us expand into other countries in the continent with hands-on global expertise,” Ahmed Wadi, founder and CEO of MoneyFellows, in a statement, said.

“While Sawari Ventures have been a cornerstone of MoneyFellows’ journey for the past three years; from day one they have been with us, and bring to the table a cachet of knowledge, alongside a vast network of relationships with key corporates and financial institutions, making them our optimal local partner.”

Here Is What You Need To Know

• Apart from Partech, also participating in this round of funding is Egypt’s Sawari Ventures, notable for backing well-funded high-growth companies such as Egypt’s bus-hailing startup SWVL.
• This investment is coming barely a year after MoneyFellows raised over $1 million in a Pre-Series A round from 500 Startups and Dubai Angel Investors, both of which had previously invested in the company’s seed round last year; Beirut-based Phoenician Fund; and some individual investors including some of its previous angels.
• This present $4 million fund-raise exceeded the $3 million Series A mark the startup had earlier planned to raise by the end of last year.
• The startup will use the latest investment to expand deeper into Africa. However, the statement did not disclose further details about the expansion. 
• The investment will also be used to expand MoneyFellows’ operations across Egypt and to launch some new products in the coming months.

Why The Investors Invested

Partech’s participation in this round of investment is remarkable. Apart from Ethiopia’s edtech startup Gebeya’s $2 million raise in February this year, this is the VC’s second investment in an African startup this year, its very first since the COVID-19 outbreak in Africa. Also, as MoneyFellows’ founder Wadi had earlier stated, Sawari Ventures had been around in the startup for more than three years now, signaling that this investment may be a further evidence of the startup’s encouraging performance. 

“We are proud to have MoneyFellows join Partech’s investment portfolio to support the company to scale and expand. The team is fantastic and the product sophistication is unique, making money circles attractive for millennials and their grandparents. The impact of MoneyFellows on financial inclusion is already massive in Egypt, as the solution offers convenient secured lending and saving schemes to consumers by digitizing a traditional savings model,” Cyril Collon, a General Partner at Partech, said. 

For Hany Al Sonbaty, Managing Partner at Sawari Ventures:

“MoneyFellows is one of the most promising fintech companies to come out of the region; their fusion of technology and existing ROSCA culture solves both the problem of financial inclusion and helps people to better plan their personal finances.”

“In enabling people to save beyond their immediate circles, they are not only promoting a culture of saving, but also facilitating a gateway for the further introduction of financial services to larger numbers of people as they become more financially aware. We are thrilled to be investing in the company and joining them on this exciting journey,” he added.

Read also: Investor Partech Raises $100M For Its Third Global Seed Fund To Invest In A Post-Covid Future

A Look At MoneyFellows

Founded in late 2016 by Ahmed Wadi, MoneyFellows is digitizing concept of money circles (ROSCAs), commonly known as gam’eya in Egypt and other Arab countries.

The years-old practice that is common across many countries in the world, known as chit funds in India, committee in Pakistan and Tandas in Mexico, allows a group of people (normally friends or coworkers) contributes a fixed installment every month to a pool with one of the members taking whole pool as payout every month. The circle ends when everyone receives their payout and is usually repeated if the participants are interested.

MoneyFellows with its group pooling platform for credit and savings is digitizing the entire process of money circles with a scoring model that compliments current offline model, making it more scalable, safe and efficient.

How The Startup Works

The users set up their profile on MoneyFellows and upload documents to verify their income and personal details. The more information and verification documents they share, the better their score and limit. Depending on MoneyFellows’ credit assessment, a user is then shown different matching circles. The user then selects one of these circles, a preferred (available) slot, and mode of payment and payout.

MoneyFellows makes money by charging a small service fee on monthly installments paid by the members.

“Our business model is currently comprised of collecting service fees from our users depending on their payout position in the money circle — starting with 5% fees for users with early payouts at the beginning of the circle, incrementally decreasing to zero fees for users paid out at the end of the circle. With millions of dollars moving through our accounts MoneyFellows are able to earn a percentage of float interest on our money in circulation. We are also planning to introduce several new options to generate revenue, including allowing our users to utilize MoneyFellows for bill payments, as well as using MoneyFellows in a variety of merchant locations,” explained Ahmed in a conversation with MENAbytes, an online magazine for tech startups in MENA region. 

Originally started in the United Kingdom, MoneyFellows moved its headquarters to Egypt later and currently employs a team of over 40 employees, all of whom are based in Cairo.

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