We Got Funded: Egypt-Based Fintech Startup Moneyfellows Raises Seed FundsThe startup claims to be gaining traction steadily since the time it participated in the Barclays Egypt and Flat6labs-powered 1864 fintech startup accelerator, and it had also won first place in the startups track at the 10th MIT Enterprise Forum Arab Startup Competition held in Bahrain.

Egypt-basedMoneyfellows,科技创业,数字化非正规贷款选择ween friends and family networks, has raised US$600,000 in an investment round led by Dubai Angel Investors and 500 Startups. The web and mobile-based platform enables individuals to access interest-free credit under a method of financing wherein a community contributes money to a common fund, and then takes turns in withdrawing the amount. The fintech startup had earlier raised capital in a pre-seed round from Startup Bootcamp Fintech London, Flat6labs, and others.

Founded in 2015, the idea for Moneyfellows hit the startup's founder and CEO Ahmed Wadi in Germany, where as a fresh graduate with a modest pay, he was looking to fund his own wedding and honeymoon. "Doing an offline money circle with friends and family back home was my only resort," Wadi recalls. "It was extremely painful to find a suitable one, manage it, and keep track of it. If there existed a digitized version of this, I would've been a frequent user myself. There wasn't; so, I decided to do something about it, and do it myself."

Speaking about thebusiness modeldriving the enterprise, the Egyptian entrepreneur says that while Moneyfellows currently charges users a variable fee depending on a user's selected slot in a money circle, the team is also working to launch "product-based circles, where users would get products they're looking for, rather than cash." At the same time, the company is also in the process of "validating a third business model that, if it works, [they] wouldn't need to charge our users a cent, while still being able to make a margin for ourselves."

Without going into the specifics of the new offerings, Wadi says that are aiming to utilize the funds raised to finance their expansion plans. "We plan to acquire more than 45,000 paying users, build and expand our star team (we are currently hiring), as well as some initial country expansion plans like obtaining regulatory approvals, beta launches and testing those markets," he says. The startup claims to be gaining traction steadily since the time it participated in the Barclays Egypt and Flat6labs-powered1864 fintech startup accelerator,and it had also won first place in the startups track at the 10th MIT Enterprise Forum Arab Startup Competition held in Bahrain.

Moneyfellows' fundraising story is certain to strike a chord with other entrepreneurs in the region working towards financing the growth of their startup. "We've probably reached out to every single investor out there in the region," notes Wadi. "Some never answered back, others never gave us a "no' (which kept us hanging out there around them for a while), some of which we've signed term sheets with but were never really able to eventually close, and finally some that offered us funding that we were stupid enough to reject," Wadi remembers. Not surprisingly, Wadi admits that keeping the core team focused on customer acquisition and product building during this period was a tough challenge as well.

However, luckily for Moneyfellows, this challenging phase ended by raising what Wadi refers to as "smart capitalfrom some of the bravest and smartest angel investors out there, while being able to maintain close relations with some other potential Series A, B and C investors." And, as for the team's expectations from aligning with their current investor group, Wadi is excited about the amount of confidence and trust the investors had in them, the additional support they can expect to get out of their networks, as well as the ability for them to continue funding the startup in successive rounds.

Hasan Haider, Partner, 500 Startups,notes that Monyefellows' innovative model, which helps provide finance for the unbanked, attracted them to the startup. "[By] leveraging traditional forms of lending and savings, that of Rotating Savings and Credit Associations (ROSCAs), and bringing them online, Moneyfellows is going after a very large potential market worldwide," he says. "We love investing in locally developed innovations and teams with an executionfocused mindset like this. We expect to see them take traditional offline ROSCAs into the online world, and disrupt banking services (or the lack thereof) for people worldwide."

Moneyfellows' core business itself is not alien to the region. For a large population that has no credit history, and hence can't access conventional financing from banks and other institutions, the ROSCA model of finance (popularly known asgameyain Egypt) is a crucial leveler. By digitizing this process, Moneyfellows is enabling Egypt (and subsequently the entire MENA region) achieve financial inclusion quicker, and at a larger scale. And with the region's policymakers and regulators keen to support fintech in every way they can, startups like Moneyfellows may soon be able to bring those excluded from the region's financial networks into it.

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