Dayra, a Cairo-based fintech, has joined Y Combinator and raised $3 million in a pre-seed round that involves a combination of equity and debt funding. The fintech is part of YC’s ongoing Winter 2021 (YC W21) batch and has secured the standard $125,000 investment from the accelerator.

“We are thrilled to be part of YC’s W21 batch and to close our pre-seed round. This is a key milestone in realizing our vision of providing the most accessible financial services solution in MENA, and delivering digital financial services to millions of financially excluded individuals, leveraging on our strategic partnership with EFG Hermes, starting with Egypt,” Omar Ekram, the founder and CEO of Dayra in a statement, said.

• Investors in this round include Tanmiya Capital Ventures, EFG EV, EFG Hermes, and a host of angel investors. Much of the investment in Dayra occurred last year, with the close of the round achieved by Y Combinator ’s latest investment.

• Y Combinator takes 7% of any venture that goes through its accelerator programme.

Why The Investors Invested

Investment in Dayra was partly influenced by founder and CEO Omar, who previously served as the Managing Partner of Tanmiya Capital Ventures, which participated in this round. However, according to him, Tanmiya’s participation is not more than 10 percent of the entire round.

“We are exceptionally proud to be the first institutional investor partnering with Dayra, in whom we see vast potential due to their disruptive and relevant business model as Egypt works to build financial inclusion and intermediation. Today, EFG Hermes has a number of key facilities on offer to empower companies with great ideas such as Dayra to come in and fill essential gaps in the market,” Walid Hassouna, the CEO of the NBFI Platform at EFG Hermes and Group Head of Debt Capital Markets, said. 

“We have funneled key investment capital in the company through EFG EV Fintech and also offered a bespoke, multi-million financing facility by way of our factoring and leasing arm EFG Hermes CorpSolutions. We are confident that Dayra has the tools in place to make the impact it hopes to see in the market, and we’re proud to be helping them get there,” he added.

The investment from Y Combinator and other investors will assist Dayra in its expansion plans.

Read also: Leading Fintech, Flutterwave Valued at Over $1B After Successful FundRaising

A Look At What The Startup Does

Dayra, created in early 2020 by Omar Ekram, a former private equity investor, allows businesses of all sizes to provide financial services to their employees through APIs and a mobile app. Omar is a self-taught programmer who has been coding since the age of five. He not only led the business, but he also wrote the MVP’s code.

“Only 30 percent of 105 million Egyptians are banked, leaving the majority of the country unbanked and reliant on cash transactions. Requirements such as proof of income by the banking sector make it hard for gig-workers and micro-business owners to open bank accounts,” noted a statement by Dayra.

Dayra began by concentrating on gig workers and micro-businesses who work as independent contractors for online platforms (think ride-hailing drivers, food delivery app couriers, and so on). Since the bulk of Egypt’s gig staff are unbanked, it’s difficult for the digital channels in which they operate to pay them for their services. To make it work, they must rely on cash or multiple third-parties, as well as a lot of manual labour. That’s where Dayra comes in handy.

These platforms may use Dayra’s APIs to incorporate financial services into their own applications or make gig employees access them via Dayra’s app. Dayra is in charge of making payments to gig staff (or micro-business owners, as the case may be). Digital bank accounts, prepaid cards, and credit access are among the services offered.

Dayra’s main business is lending, even though virtual bank accounts and payments are the first touchpoints for consumers. Traditional micro-lenders charge high rates and have lengthy processes for Egypt’s unbanked population, which includes gig workers and micro-business owners. A substantial number of them even takes out loans from loan sharks on unfavourable terms. Dayra’s lending facilities make it simple for this section to receive credit.