MoneyFellows, a fintech startup based in Cairo, has made a significant impact in the African digital lending space by lending billions of Egyptian pounds with minimal debt exposure. This unique approach sets MoneyFellows apart from its competitors, as it has managed to achieve profitability without relying heavily on working capital.
Recently, MoneyFellows raised $13 million in a pre-Series C round led by Al Mada Ventures and DPI’s Nclude Fund, signaling its readiness to expand regionally. With total funding now exceeding $60 million, the company is poised for growth and aims to scale its operations beyond Egypt.
Founder and CEO Ahmed Wadi highlights the disruptive nature of MoneyFellows’ business model, which digitizes the traditional rotating savings and credit association (ROSCA) system. This system, prevalent in emerging markets, allows participants to contribute to a shared pool and receive payouts cyclically. MoneyFellows’ platform digitizes this process, enabling users to form or join ROSCA groups through an app.
Unlike traditional lenders, MoneyFellows does not lend from its balance sheet but matches savers and borrowers based on behavioral data, credit scores, and income levels. This unique approach allows the company to scale without incurring significant working capital costs. Additionally, MoneyFellows steps in to fund any unfilled slots in ROSCA groups, minimizing default risk and ensuring operational efficiency.
Operating profitably in Egypt, MoneyFellows has amassed over 8.5 million users since its inception in 2016. The platform’s average payout per user has doubled in the past two years, reflecting strong adoption among higher-income segments. With plans to introduce new financial products such as investments, payroll services, insurance, and remittances, MoneyFellows aims to compete with established digital banks in Egypt.
The company’s next challenge lies in expanding its operations beyond Egypt, with plans to launch in Morocco by the end of the year. By leveraging partnerships and regulatory approvals, MoneyFellows aims to replicate its success in other African and South Asian markets with similar financial dynamics. While the model’s complexity presented challenges, the company’s dedication to refining its approach has positioned it for success in new markets.
Overall, MoneyFellows’ innovative approach to digital lending, rooted in the age-old ROSCA system, has garnered praise from investors and industry experts. With its commitment to financial inclusion and modernizing traditional financial practices, MoneyFellows is poised to make a significant impact in the digital lending space across Africa and beyond.
