Most African digital lenders rely on working capital to promote growth; Money Fellow I quietly did something that others had little to have. They lend billions of Egyptian pounds and have barely exposed to debt or balance sheets.
Now, after raising $13 million in the pre-series C-round led by Casablanca-based Armada Venture and DPI’s NCLUDE Fund, Cairo-based Fintech says it is ready to move from steady growth to regional expansion.
The round also withdraws participation from Parttech Africa and Commerzventures, bringing the company’s total funding to just over $60 million.
Founder and CEO Ahmed Wadi It should be noted that unlike Fintech burns cash and burns scale, startups are keeping operations in vain while digitizing one of the world’s oldest financial systems, the Rotating Savings and Credit Association (ROSCA).
“We were able to crack this model and reach profitability,” Wadi said. “It’s very destructive to do this while lending billions of dollars without relying on working capital at all.”
ROSCAS is an informal savings group where a certain number of participants regularly contribute to the shared pool, rewarding one member per cycle. Generally across emerging markets, they go under a variety of names, such as Esusu or Ajo in Nigeria, Kameti or Chit Fund in India, and Gam’eya in Egypt.
This is how to do it the work: Suppose 10 people each donate $1,000 a month. Each month, one person receives a full $10,000. The cycle repeats until everyone is paid. These groups work best within trusted circles, but their offline nature limits access and scalability.
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Launched in 2016, MoneyFellows will digitize this model by opening access to a wider user pool around the country. Anyone can form or participate in Rosca groups or “circles” through the app. Similar models exist worldwide for Oran and British hierarchies.
MoneyFellows matches savers (usually lined up at the end) and borrowers (usually lined up at the beginning) using behavioral data, credit scores, and income class rather than as lenders.
This approach allows for expansion without lending from the balance sheet. According to Wadi, the company only intervenes when the Rosca Group has unreclamated slots.
“We run a circle of 10 each and if only a few members are found, we will step in to fund the missing members,” explains Wadi, who tested German and British Rosca models before launching in Egypt. “Instead of cancelling the group, we’ll fund one slot that activates and monetizes the remaining nine.”
In a typical lending business, companies must borrow money from banks or other financial institutions to lend. This most often results in interest costs and default risk.
However, with MoneyFellows, the risk and funding spreads to users, keeping the percentage of unfilled Rosca slots below 10%. In comparison, buy now and pay later (BNPL) providers and digital lenders often expose full working capital in their loan books.
“Today, only 7-8% of active Roscus slots need to intervene in working capital,” Wadi points out.
Such exposures may be low in percentage conditions, but as MoneyFellows expands, it increases. Therefore, the company that raised this fund as a bridge to a much larger Series C round that planned for next year is in high-level discussions with local banks, to ensure working capital to grow the “circle” faster.
Operated profitably and expand outside of Egypt
Moneyfellows says it has reached profitability in Egypt and placed it in a small group of African fintech startups run by black people.
Since its launch in 2018, the platform has grown to over 8.5 million users, up from 4.5 million at its last funding milestone. The average payment per user has almost doubled from 23,000 EGP ($453) to 45,000 EGP ($906) over the past two and a half years, with strong adoption between the high-income segments.
“This model is naturally viral,” Wadi said of the startup’s growth. “When you digitize the experience of two Rosca offline members, they often bring eight others to them. Such organic growth is hard to beat.” Competitive borrowing rates also help accelerate adoption, he added.
Earlier this year, MoneyFellows launched a card product that allows users to receive payments, repay installments and spend across the merchant network.
The 8-year-old Fintech also plans to introduce investment, pay, insurance and remittance products, making money fellows compete with other Egyptian digital banks, including Lucky, Kazuna and Teruda.
The next test is to replicate success beyond Egypt, the ambition Wadi first spoke up in 2022. He acknowledges that the expansion took longer than expected due to the complexity of the model.
Digitalizing Roscas is not as easy as launching savings and loan products. According to him, the process will build a recommendation engine to match users to the right slots, balance thousands of circles, minimizing the risk of defaults and dropouts while maintaining user trust.
“The cracks in the model took longer than I thought,” Wadi said. “But it was worth the time. Most attempts by banks and carriers to expand digitally around the world have failed because they underestimated how complex the underlying actions are.”
After refined the model in one of Africa’s largest fintech markets, partnering with over 350 local and regional entities and fostering more than $50 million in investments, MoneyFellows plans to secure key partnerships and regulatory approvals in Morocco by the end of the year.
Morocco offers the familiar ground. It’s a large bank population, a strong informal savings culture (known locally as Dallett), and a regulatory-friendly environment. MoneyFellows is also betting that events like the 2030 FIFA World Cup will accelerate digital adoption in the country.
The company is also focusing on other African and South Asian markets with similar dynamics. However, entering more diverse markets will test the adaptability of the model in regions where informal finance is less culturally relevant or formal banking is more entrenched.
“Rosca (Rotating Savings and Credit Association) is a very old financial arrangement, with its roots going back hundreds, if not thousands of years,” says Omar Laalej, managing director of Al Mada Ventures. “AMV was impressed by the modernized version of this business that positively impacted and positively influenced thousands of families in Egypt.”
