While most African digital lenders depend on the working capital for fuel growth, money has quietly done what a few others have: borrow billions of Egyptian pounds with almost no debt or balance exposure.
Now, after gathering $ 13 million in a Casablanca-based Casablanca-based Casablancing-based Caistere C-led C round Casablanca-based fund, Cairo-based Fintech says it is ready to switch from steady growth to regional expansion.
The round, which also withdrew participation from Africa Partech and Commerzventures, brings the company’s total funds to just over $ 60 million.
Founder and CEO Ahmed Wadi notes that, unlike fintechs burning through cash -made money, the beginning has kept lean operations while digitizing one of the oldest financial systems in the world: Savings and Credit Rotating Association (Rosca).
“We have managed to hit this model and reach the benefit,” Wadi said. “Doing this while borrowing billions without relying on working capital is quite devastating in itself.”
Roscas are informal savings groups where a certain number of participants regularly contribute to a common pool, which pays a member per cycle. Common in developing markets, they go with different names: Esusu or that in Nigeria, Kameti or Cit End in India, and Gam’eyya in Egypt.
Here’s how it works: Say ten people each contributes $ 1,000 a month. Monthdo month, a person receives a full $ 10,000. The cycle is repeated until everyone receives a payment. While these groups work better within the trusted circuits, their offline nature limits entry and escalation.
Techcrunch event
Berkeley, ca
|
June 5
Reserve now
Moneyfellows, launched in 2016, digitizes this model by opening access to a wider group of users across the country. Through its application, anyone can form or join the rosca groups or “circles”. Similar models exist globally with Pakistan’s Ora and UK Stapladder.
Instead of acting as a lender, money money matches the savings (usually the latest on the line) and the borrowers (usually the first in line) using behavioral data, credit results and income levels.
This approach allows it to escalate without borrowing from its balance; The company opens only when a Rosca group has an unfulfilled slot, according to Wadi.
“If we run circles of 10 people each and find nine members for some, we open to finance it lost,” explains Wadi, who tested the Rosca model in Germany and the United Kingdom before it began in Egypt. “Instead of canceling the group, we finance a slot, which activates and earns nine remaining.”
In a typical lending business, a company must borrow money from banks or other financial institutions to give it, most of the time causing interest costs and predetermined risk.
However, in the case of Moneyfellows, the risk and funds are spread throughout its users, keeping the proportion of unfulfilled rosca games under 10%. In comparison, buy now, pay later (BNPL) digital providers and lenders often have complete exposure to working capital to their credit books.
“Today, only 7-8% of the electronic games in active Roscas require us to enter the working capital,” Wadi notes.
Such exposure may be low in percentage terms, but as money scales, it is added. Therefore, why the company, which set up this fund as a bridge in a much larger round of series C planned for the coming year, is also in advanced discussions with local banks to ensure working capital in its effort to increase its “circles” much faster.
Functioning with profit and expanding outside of Egypt
Moneyfellow says it has reached the benefit in Egypt, placing it between a small group of African Fintech beginnings operating in black.
Since the beginning in 2018, the platform has grown to over 8.5 million users, from 4.5 million in its latest funding history. The average payment per user has doubled in nearly two and a half years, from 23,000 EGP ($ 453) to $ 45,000 EGP ($ 906), with strong adoption between higher -income segments.
“This model is of course viral,” Wadi told the beginning increase. “If you digitize the experience for two members of an offline rosa, they often bring the other eight with them. That type of organic growth is difficult to defeat.” Competitive borrowing rates, he adds, have also helped accelerate adoption.
At the beginning of this year, Moneyfelows launched a card product that allows users to receive payments, pay installments and spend through a commercial network.
Eight -year -old Fintech also plans to introduce investment products, salaries, insurance and downline deliveries, movements that set money breeze in competition with other Egyptian digital banks such as Lucky, Khazna and Telda.
His next test will repeat his success beyond Egypt, a Wadi’s ambition first expressed in 2022. He admits that the expansion lasted longer than expected due to the complexity of the model, which the company chose to refine before going regional.
Roscas digitalization is not as direct as launching a savings or credit product. According to him, the process involves building the recommendation engines to match users with the right slots, balancing thousands of circuits in real time, and minimizing predetermined risk and abandonment, all maintaining the trust of the user.
“Cracking the model lasted longer than we thought,” Wadi noted. “But it was time for it. Most of the efforts to scale Roscas digitally, even from banks and Telco globally, have failed because they underestimated how complex the basic behavior is.”
After nearly a decade by refining its model in one of Africa’s largest Fintech markets, partialing with over 350 local and regional entities and facilitating more than $ 50 million in investment, Moneyfellow plans to start in Morocco by the end of the year, providing key partnerships and regulatory approval.
Morocco offers familiar terrain: a large uncontrolled population, a strong culture of informal savings (known in the country as Daret) and a friendly regulator environment. Moneyfellows is also betting that events like the FIFA World Cup 2030 will accelerate digital adoption in the country.
The company is also looking at other African and South Asian markets with similar dynamics. However, entry into more diverse markets will test the suitability of the model in regions where informal finances are less important cultural or official banking.
“Rosca (savings and loan rotating association) are very old financial arrangements, with roots returning hundreds, if not thousands of years,” said Omar Laalej, managing director at Al Mada Ventures. “AMV was amazed at the modernized version of this business that the money fellows were able to build, positively affecting thousands of families in Egypt.”
