Egyptian Fintech Startup, Telda, Raises $5 Million In Pre-seed Round
Egyptian fintech startup, Telda, raises $5 million in pre-seed round
Telda, an Egyptian fintech startup, has raised $5 million in a pre-seed round to digitize Egyptians' savings, spending, and money transfer processes. The round was led by Sequoia Capital in the United States; Global Founders Capital (GFC) in Berlin; and Class 5 Global.
Sequoia Capital led this pre-seed round, which is the largest in Africa, the Middle East, and North Africa (MENA). Additionally, this is Sequoia Capital's first investment in MENA, and Telda is Egypt's first digital bank.
The fintech, which aims to revolutionize how Gen Z in the Middle East spends their money, allows users to sign up for a digital account that includes a complimentary Mastercard-branded card that can be used for online payments, in-store purchases, and cash withdrawals.
Telda CEO Ahmed Sabbah stated that over 30,000 people had signed up, with half requesting cards. Telda intends to use the new funding to accelerate card production and distribution.
Sabbah co-founded and served as Chief Technology Officer (CTO) of Egyptian transportation startup Swvl prior to the launch of the money app. Simultaneously, Telda's chief technology officer, Youssef Sholqamy, was a former senior engineer on Uber's infrastructure team.
Sabbah first became aware of the possibilities of digital banking in Egypt in 2015 while visiting Berlin and using N26, a mobile bank. And from that point on, he and Sholqamy continued to research the fintech space while at their respective jobs.
Despite their admiration for the market, they were unable to enter. Sabbah and Sholqamy reportedly studied space since the launch of N26 in 2015, imagining they could do the same in Egypt. Telda will be launched in April 2021.
Telda intends to use the funds raised to expand in Egypt and supply cards to early adopters, with the team aiming to supply close to a million cards in its first year. While it aspires to become a world-class team willing to take advantage of opportunities, hiring is critical.
Telda has grown significantly in a month. It is reported to be the first company to receive a license from Egypt's Central Bank (CBE) to issue cards and digitally onboard customers under the CBE's new regulations.
Slight difficulty
Obtaining the license, however, was difficult because they had to convince regulators to trust and regulate their banking business, as well as to provide payment financial services to their consumers, while convincing their partner bank to provide Telda's service.
They were able to accomplish this by informing the partner bank that their services would not overlap due to the fact that their mobile money app complements the bank.
Within the last year, early-stage Egyptian startups have begun to raise significant sums of money. Koinz raised $4.8 million in seed funding in March 2021 to hire additional staff and expand into the Middle East, while Flextock raised $3.25 million in pre-seed funding to capture a large portion of the MENA region's $25 billion eCommerce logistics market.
Regardless of their motivations, none of these startups appear to have adequately addressed the issue of card payment methods.
According to Statista, 27% of Egyptian online retail payments will be made with a card in 2020, compared to 55% with cash. With more payment startups attracting investor interest, online card distribution and thus card transactions may increase.
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