Ziina Raises $7.5M Seed Funding - Avenir & Class 5 Global

The Predominance of Cash and the Rise of Fintech in the Middle East

Cash remains the primary means of payment throughout the Middle East. Whether settling small debts like a coffee or larger expenses over time, cash is often the preferred method of repayment. This situation highlights a number of unresolved financial challenges within the region.

New Solutions from Emerging Startups

Fortunately, a wave of startups is emerging to address these issues. Telda, a recent Egyptian startup, secured significant pre-seed funding last month to deliver digital banking solutions. Similarly, Ziina, a Dubai-based company, has recently completed a $7.5 million seed funding round to broaden its peer-to-peer (P2P) payment service across the Middle East and North Africa.

Ziina's Funding and Key Investors

Ziina’s funding round attracted prominent global investors and fintech leaders. Avenir Growth and Class 5 Global spearheaded the financing. Additional participation came from Wamda Capital, FJ Labs, Graph Ventures, Goodwater Capital, Jabbar Internet Group, Oman Technology Fund’s Jasoor Ventures, and ANIM.

Founders and Industry Experts Back Ziina

The investor group also includes founders and executives from established companies. Checkout CEO Guillaume Pousaz, through his Zinal Growth fund, invested alongside Krishnan Menon, CEO of BukuKas. Executives from Paypal and Venmo also contributed to the round.

Furthermore, individuals with experience at Revolut, Stripe, Brex, Notion, and Deel have joined Ziina’s team.

Total Funding to Date

Since its launch last year, Ziina has raised over $8.6 million in total funding. This includes a $850,000 pre-seed round in May 2020 and $125,000 secured after completing Y Combinator’s Winter batch earlier this year.

Ziina's Founding and Vision

Ziina was founded by Faisal Toukan, Sarah Toukan, and Andrew Gold. The company is capitalizing on the increasing acceptance of fintech-friendly regulations in the Middle East. It enables users to send and receive money using only a phone number, bypassing the need for IBAN or swift codes commonly required in the UAE and other parts of the region.

Origins of the Idea

Faisal and Gold initially connected at a hackathon in the U.S., where they began exploring the creation of digital wallets. They aimed to replicate the success seen by platforms like WePay and Paytm. At that time, venture capitalists were particularly interested in the intersection of wallets and traditional banking.

The Blurring Lines Between Wallets and Banking

“The distinction between wallets and banking has become increasingly indistinct,” stated CEO Faisal Toukan in an interview with TechCrunch. “Wallets are now integral to people’s daily financial lives, and often rely on banking partnerships.”

Focus on P2P Payments

Sarah Toukan, Faisal’s sister, had been following the fintech landscape in London, attending events featuring the founders of Monzo and Revolut. Leveraging her insights and the expertise of her co-founders, they determined that addressing P2P payment challenges would have a significant impact in the Middle East.

Current Progress and Regulatory Approvals

“We’ve launched a beta version for a market that is currently restricted due to regulatory considerations,” Toukan explained. “We are actively pursuing full regulatory approval and have partnered with one of the three largest banks in the UAE. We anticipate launching a new wallet within the next month, a project we’ve been focused on during our time in YC.”

Growth of the MENA Fintech Sector

The fintech sector in the Middle East and North Africa (MENA) is experiencing rapid growth, with a compound annual growth rate (CAGR) of 30%. In the UAE, projections estimate that over 450 fintech companies will raise approximately $2 billion in 2022, a substantial increase from the $80 million raised in 2017.

Ziina's Expansion Plans

Fintechs in the region are primarily focused on improving payments, transfers, and remittances. Ziina intends to expand into these areas, as well as explore investment and cryptocurrency services.

Addressing Existing Pain Points

According to Toukan, online investment options are limited, and remittances often require physical visits to exchange houses. “Our goal is to bring all these services to life in the UAE and then expand beyond. However, our initial focus is to enable people to send and receive money with just two clicks,” the CEO emphasized.

Advantages of a P2P Approach

Starting with P2P payments offers several benefits. It fosters trust with customers through repeated interactions and provides a more cost-effective customer acquisition strategy. Toukan envisions the company’s wallet becoming universally accessible as it expands into Saudi Arabia and Jordan in 2022, and eventually Egypt and Tunisia.

“We aim for a seamless experience where users can utilize the same wallet regardless of their location, eliminating the need for multiple banking applications,” he added.

Navigating Regulatory Challenges

Maintaining regulatory compliance is crucial for fintech expansion, and Ziina has maintained ongoing communication with regulators. One challenge involved securing banking partnerships. “It’s essential to demonstrate to banks that this is a mutually beneficial collaboration. We achieved this by showcasing successful global examples, such as CashApp’s partnership with Southern Bank,” he explained.

Current User Base and Waiting List

Ziina currently has thousands of users who have transacted over $120,000 on the platform this past month. Additionally, over 20,000 users are on the waiting list to be onboarded after the official launch.

Building a Strong Team

Ziina has assembled a team with experience from leading tech companies including Apple, Uber, Stanford, Coinbase, Careem, Oracle, and Yandex. The new investment will be used to accelerate hiring, customer acquisition, and the development of commercial partnerships.