While Nigeria and Kenya have been at the forefront of African fintech innovation, activities in Egypt are beginning to shape up nicely. Right now, Egypt is home to a burgeoning fintech startup ecosystem, and today, one of its biggest players, Paymob, announced that it has completed an $18.5 million Series A round.
In July 2020, Paymob raised $3.5 million as its first tranche of Series A investment. An additional $15 million was raised from the same investors, led by Dubai-based VC firm Global Ventures. Other investors include Egyptian investment fund A15 and Dutch development bank FMO.
The total raise of $18.5 million is the largest Series A round in Egypt yet, and one of the largest equity rounds in North Africa.
“We are delighted to lead this momentous fintech fundraise in the region. Paymob has a perfect combination of high-quality technology, products customers increasingly cannot do without, and an outstanding management team,” Basil Moftah, general partner at Global Ventures, said of the investment. “Their market opportunity is also huge; Egypt’s transformation to a cashless society is being enabled by the unique products Paymob has built.”
Paymob was founded in 2015 by Alain El Hajj, Islam Shawky and Mostafa El Menessy. The platform helps online and offline merchants accept payments from their customers via several products and solutions. It offers a payment gateway that merchants can plug in to their sites or mobile application using its APIs. For offline merchants, Paymob has a POS solution where they can receive in-store card payments.
The company also has a payment links feature where merchants share links with their customers to receive payments that are received using mobile wallets. And according to the company, 85% of mobile wallets transactions carried out in Egypt are processed by its infrastructure. It also claims to be the largest payment facilitator in the country.
Aside from Egypt, Paymob is also present in Kenya, Pakistan and Palestine. CEO Shawky says the company has plans to expand into more Sub-Saharan African countries. However, that will come after focusing on the Gulf Cooperation Council (GCC) to gain a large market share.
Regional expansion (with an imminent entry into Saudi Arabia this year) is one of Paymob’s objectives following this raise. Per a statement released by the company, it also will use the investments to expand its merchant network, meet increasing demand and improve product offerings.
The pandemic presented one of the best opportunities for fintechs all over the world to achieve massive growth. For Paymob, it claims to have grown its monthly revenue over 5x last year. The company also recorded a total payment volume of more than $5 billion from over 35,000 local and international merchants like Swvl, LG, Breadfast and Tradeline.
This growth allowed the fintech company to raise the second tranche of investment after closing just $3.5 million initially. Shawky told TechCrunch that the deal materialized after the company’s investors and management witnessed an “unprecedented growth” driven by the pandemic “in addition to the new initiatives launched by regulators, which encouraged them to increase their investment to meet our increasing demand.”
As earlier iterated, fintech is on the rise in Egypt, with startups like Moneyfellows, NowPay, Raseedi and Flick providing lending, payments, wealth and personal finance management services, etc.
The Egyptian fintech ecosystem also got a major boost when incumbent fintech Fawry became a publicly traded unicorn for the first time last year. Since launching in 2007, Fawry has been the largest online payment platform in the country and offers a variety of services ranging from mobile wallet to banking services. But will its longstanding presence pose a challenge to Paymob’s quest to become a dominant fintech company as well? Shawky doesn’t think so. According to him, Paymob’s major competitor is cash. “With only a small percentage of the economy operating in digital forms, we believe the opportunity of truly transforming cash into digital is yet to be unlocked,” he added.