MoneyFellows, a Cairo-based group-lending and savings platform, has raised $1 million in a seed funding round.
Investors in the round include 500 Startups, Dubai Angel Investors, and Phoenician Funds along with other unnamed individual investors, according to Menabytes.
MoneyFellows is planning to expand its operations into sub-Saharan Africa and the Middle East. The Middle East expansion is expected to begin in 2020.
By 2021, the Egyptian fintech firm wants to take its service to sub-Saharan Africa, encouraged by the presence of money circle schemes in countries including Ethiopia, Nigeria, Kenya, and South Africa, according to Ventureburn.
Those countries also form part of the startup’s expansion plans due to their young, rapidly growing and tech-savvy populations, according to MoneyFellows’ senior business strategist Mohamed Effat.
North African startups often expand into the Middle East, but their plans seldom involve southward expansion into other parts of Africa.
This is beginning to change with companies like MoneyFellows and Egyptian bus ride-hailing service Swvl announcing plans to launch in sub-Saharan African markets.
Founded in 2016 by CEO Ahmed Wadi, MoneyFellows helps users manage group lending and savings circles by providing a digital platform for the informal traditional method of saving as a group of family or friends within a community.
The 2,000-year-old practice of “gam’eya” involves a group of people contributing a fixed amount of money to a pot. One member takes the entire contribution every month until all participants have had a turn to collect their share.
The pooling of the community’s financial resources helps each community member pay off larger expenses they normally would not be able to afford with their income alone.
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Founder Wadi developed the idea of digitizing the money circle system after using it himself with friends and family in Egypt to fund his wedding and honeymoon.
Paying or charging interest on loans is forbidden in Islam. MoneyFellows enables these interest-free money circles through a digital platform that allows users to acquire financing while adhering to traditional Islamic values.
The MoneyFellows platform has attracted 250,000 registered users, including 65,000 monthly active users, Menabytes reports.
New investor 500 Startups is a Silicon Valley-based early-stage venture fund and seed accelerator that was founded in 2010. Dubai Angel Investors is a micro VC firm that invests in the seed and Series A rounds of early-stage tech companies.
Phoenician Funds is a Lebanon-based investor focused on backing fintech startups in the Middle East and North Africa.
MoneyFellows is aiming to raise a $3 million Series A round by the end of 2019, having already raised $1.6 million over four rounds, according to Crunchbase.
The $1 million early-stage investment is expected to be used for marketing purposes within Egypt in order to raise awareness of the product and build its userbase, Weetracker reports.
