Egyptian fintech startup Khazna has received final approval from the Central Bank of Egypt (CBE) for its Khazna card, a Meeza prepaid card launched in partnership with the Abu Dhabi Islamic Bank (ADIB) that will provide unbanked users access to the fintech startup’s financial services, according to a press statement released by the company
CBE Governor Tarek Amer
Khazna cardholders that are unbanked will be able to make withdrawals and deposits, as well as online and in-store purchases and bill payments. It will also provide users with prior access to their income, allowing them to better manage their short-term cash flow concerns between paychecks in the meantime.
Through its salary advance app, Khazna provides online financial services to Egyptians who do not necessarily have a bank account, such as those who are self-employed. The Cairo-based firm, which was founded in April 2019, received an undisclosed amount of seed money in early 2020 from a group of investors led by Algebra Ventures. Khazna raised around USD 38 million in equity and debt in a Series A headed by Quona Capital, with participation from Nclude, the high-profile bank-backed fund managed by Global Ventures in the United Arab Emirates.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh
One of Egypt’s leading financial technology startups, Khazna, has announced that it has raised a USD38 million Series A round of equity and debt, with the equity investment led by impact investor Quona Capital and the participation of Speedinvest, newly launched fund Nclude and Khawarizmi Ventures, Algebra Ventures, AB Accelerator by Arab Bank, Disruptech, AB Accelerator, and CVentures, among others. Lendable provides the company’s debt financing, and the Arab Bank Egypt serves as the Security Agent for the transaction. When paired with a digital native solution and an innovative business model, Khazna aims to displace cash-driven alternatives across Egypt.
Omar Saleh, Khazna’s co-founder and CEO
“The unprecedented evolution of Egypt’s nascent fintech industry is a testament to the significant efforts by the Central Bank of Egypt towards financial inclusion and a less-cash society. We are aligned with CBE’s vision and Khazna at its core believes that world-class financial services should be available to all. We are combining cutting-edge technology and relentless user obsession to build the best experience for our users,” said Omar Saleh, Khazna’s co-founder and CEO. “We continue to experience exponential growth in network effects created by our 150k+ active users, our partners, and Egypt’s largest merchants.”
Khazna will be able to increase its efforts to supplant cash-based alternatives in Egypt with the next round.
Khazna represents Quona Capital’s second investment in Egypt. “In just two years, Khazna has scaled and monetised quickly and is already a market leader in the push for financial inclusion for the 35 million underbanked in Egypt,” said Monica Brand Engel, co-founder and Managing Partner at Quona. “Empowering consumers and micro-businesses with Khazna’s convenient, user-centric, and the transparent financial super app can enable millions across Egypt to gain greater control over their financial lives. Quona is incredibly excited about Khazna’s roadmap to be the category-leading digital super app for inclusive finance in Egypt.”
“We have been following the Khazna team since its launch in Egypt and have seen the business gain clear traction resulting in a fast scaling product offering,” said Suresh Samuel, Lendable’s Deputy Chief Investment Officer. “As Lendable continues to grow our presence providing scalable debt financing to fintech in Egypt, we are excited to support Khazna’s work in providing increased access to financial services for the underserved in Egypt.”
In 2020, Khazna debuted with an Earned Wage Access product, which has since expanded into the multi-product offering that is currently offered. Ex-executives from companies including World Remit, Uber, CIB and Jumia are part of Khazna’s leadership team.
Khazna’s Lendable debt facility has been secured by Arab Bank, which has been designated as the Security Agent. As a strategic investor, Arab Bank felt compelled to support Khazna in order to help it flourish, says Ahmed Ismail Hasan, Country Manager for Arab Bank — Egypt.
Half of Egypt’s population has smartphones but no access to official financial services, and Khazna’s super app fills that void. There are now three types of financing available through Khazna: General Purpose Credit, BNPL, and Bill Payment. In response to the Central Bank of Egypt’s recent drive for financial inclusion and a “less-cash” environment, the company’s objective is to digitize cash transactions throughout Egypt.
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
It appears as though startups in both Egypt and South Africa are benefiting from local VC funds more than their counterparts in other parts of Africa. Khazna, the fintech startup that seeks to provide mobile financial services to over 20 million underbanked Egyptians, has secured seed funding in a round led by leading Egyptian VC Algebra Ventures. The size of the investment is however undisclosed but the VC Algebra Ventures is known for co-leading investment of not less than a million dollars. Earlier this year, it co-led an $8 million investment in Elmenus, Egypt’s food delivery startup after its initial investment of $1.5 million made in 2017.
Tarek Assaad, Managing Partner with Algebra Ventures
Here Is The Deal
Joining Algebra Ventures in this round of investment is Accion Venture Lab, Accion’s seed-stage fund that recently closed $33 million in fresh funds.
This makes Khazna Accion Venture’s first investment in Egypt.
Khazna plans to use the investment to advance its “financial inclusion-focused products and use cases to reach the product/market fit stage by leveraging new technologies, data, and analytical tools to serve the underbanked in Egypt.’’
Why The Investors Invested
Algebra Ventures is a $50-million Cairo-based venture capital fund that invests in early-stage technology companies in Egypt and the MENA region. Its LPs include Cisco, the European Commission, EAEF, EBRD, IFC, and private family offices. Algebra has invested in 15 transformative technology companies in MENA, including HolidayMe, Trella, Elmenus, Dsquares, and Halan.
As the most known and strongest Venture Capital in Egypt, they represent the institutional money that comes into a startup. The reason why they focus on Egypt is that most of their experience is in Egypt. However, they do invest in some parts of the Middle East such as UAE and Jordan. So, mostly neighbouring countries of Egypt which represent the scope of their funding. In terms of sector, they invest basically in technology and its sub-sectors such as transport-tech, marketplaces, consumer internet, SaaS, etc.
“We’re seeing the rise of a new wave of Egyptian Fintech startups that are attracting interest from local and international investors. We’re excited to be leading this round with Khazna. Omar is an exceptional entrepreneur and we believe that he and his team will grow Khazna to be one of the most transformative startups emerging from Egypt in the next few years,” Tarek Assaad, Managing Partner with Algebra Ventures, said.
On its part, Accion’s President and CEO Michael Schlein, said:
“Egypt has made strides in recent years toward greater financial inclusion, but millions of Egyptians still struggle to access the financial services they need to build better lives. Fintech startups like Khazna are uniquely positioned to develop better, faster, safer ways to meet the needs of the underserved.”
“Accion Venture Lab is excited to expand our reach into Egypt with this latest investment in Khazna, whose holistic digital banking app and strong founding team are a valuable addition to our portfolio,” added Ashley Lewis, Senior Investment Officer for Africa at Accion Venture Lab,” he added.
A Look At What Khazna Does
Founded in 2019 by Omar Saleh, Ahmed Wagueeh, Fatimah El Shenawy, and Omar Salah, Khazna aims to provide mobile financial services to over 20 million underbanked Egyptian who it says are active smartphone users but have little access to formal financial services.
“Khazna is focused on bringing customer-centric services to over 20 million active smartphone users in Egypt who lack access to formal banking and financial services. This wouldn’t have been possible without the significant momentum created by the Central Bank of Egypt towards digitization and financial inclusion,” Khazna’s co-founder and CEO, Omar Saleh, said in a statement.
Khazna is also working with major banking and corporate partners to launch different other products that will allow users to pay, save, borrow and insure with minimal face-to-face or phone interaction. Its first product is Khazna HR, a salary cash advance app that allows employers (who partner with it) to offer cash advance to their employees as a benefit, helping them to cover for unforeseen emergencies.
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.
He could be contacted at udohrapulu@gmail.com
