Egypt's Fintech Scene Gains Momentum with Paymob's $18.5 Million Series A

While Nigeria and Kenya have traditionally led the way in African fintech innovation, Egypt is rapidly emerging as a significant player. Currently, Egypt boasts a thriving startup ecosystem focused on financial technology, and Paymob, one of its leading companies, has recently secured $18.5 million in a Series A funding round.

Initial Funding and Subsequent Investment

Paymob initially received $3.5 million as the first part of its Series A investment in July 2020. A further $15 million was subsequently secured from the same group of investors, with Dubai-based venture capital firm Global Ventures taking the lead.

Additional investment came from Egyptian investment fund A15 and the Dutch development bank FMO, contributing to the overall funding total.

A Landmark Round for Egypt and North Africa

This total raise of $18.5 million represents the largest Series A round completed in Egypt to date. It also stands as one of the most substantial equity rounds recorded across North Africa.

Basil Moftah, General Partner at Global Ventures, expressed enthusiasm for the investment, stating, “Paymob demonstrates an ideal synergy of cutting-edge technology, essential products that customers are increasingly reliant upon, and a remarkably capable leadership team.” He further noted the substantial market opportunity, highlighting Paymob’s role in facilitating Egypt’s transition towards a cashless economy.

Paymob's Core Services and Foundation

Founded in 2015 by Alain El Hajj, Islam Shawky, and Mostafa El Menessy, Paymob provides a platform designed to enable both online and offline merchants to accept payments from customers.

The company offers a payment gateway that can be integrated into websites or mobile applications through its APIs. For brick-and-mortar businesses, Paymob provides a POS solution for processing in-store card payments.

Expanding Payment Options and Market Share

Paymob also features a payment links service, allowing merchants to share links with customers for payments via mobile wallets. The company reports that it processes 85% of all mobile wallet transactions in Egypt and claims to be the country’s largest payment facilitator.

Beyond Egypt, Paymob operates in Kenya, Pakistan, and Palestine. CEO Shawky indicated plans for further expansion into Sub-Saharan Africa, though prioritizing the Gulf Cooperation Council (GCC) region to establish a significant market presence is the immediate focus.

Future Plans and Investment Allocation

Regional expansion, including an anticipated launch in Saudi Arabia this year, is a key objective for Paymob following this funding round. The company intends to utilize the investment to broaden its merchant network, address growing demand, and enhance its product offerings.

Pandemic-Driven Growth and Performance

The COVID-19 pandemic created favorable conditions for fintech companies globally, enabling substantial growth. Paymob reported a more than fivefold increase in monthly revenue last year.

The company also processed over $5 billion in total payment volume from more than 35,000 merchants, including prominent names like Swvl, LG, Breadfast, and Tradeline.

Securing Further Investment

This impressive growth facilitated the securing of the second tranche of investment after an initial $3.5 million was raised. Shawky explained to TechCrunch that the deal was finalized after investors and management observed “unprecedented growth” spurred by the pandemic, coupled with supportive regulatory initiatives.

The Expanding Egyptian Fintech Landscape

The fintech sector in Egypt is experiencing rapid growth, with startups such as Moneyfellows, NowPay, Raseedi, and Flick offering services in lending, payments, wealth management, and personal finance.

Fawry's Impact and Paymob's Competitive Edge

The Egyptian fintech ecosystem also received a boost when Fawry, an established fintech company, became a publicly traded unicorn last year. Since its launch in 2007, Fawry has been the leading online payment platform in Egypt, providing a range of services from mobile wallets to banking solutions.

However, Shawky believes Fawry’s established position will not hinder Paymob’s ambition to become a dominant fintech player. He asserts that Paymob’s primary competitor remains cash, stating that with a limited percentage of the economy currently operating digitally, the potential to transform cash into digital transactions remains largely untapped.

A Positive Outlook for Egyptian Startups

This funding round coincides with the launch of two new venture capital funds – Algebra Ventures and Sawari Ventures – marking an exciting period for startups and investors in Egypt.

• Paymob: A leading fintech company in Egypt.
• Global Ventures: A Dubai-based VC firm leading the investment.
• Fawry: Egypt’s largest online payment platform.