A big portion of Egypt’s inhabitants lacks entry to conventional banking, forcing many to depend on money transactions and casual lending. Khazna, a fintech startup based in 2019, is tackling this concern by providing monetary companies tailor-made towards low- and middle-income employees. The corporate gives options like wage advances, digital funds, and microloans to assist workers and contractors entry much-needed monetary companies.
Khazna lately secured $16 million in pre-Collection B funding, bringing its whole funding to over $63 million. The funding will assist its growth plans because it prepares to use for a digital banking license in Egypt and broaden into Saudi Arabia.
After we lined the fintech in 2022, it had just raised a $38 million Collection A with over 150,000 prospects throughout its merchandise. At the moment, Khazna has grown its person base to over 500,000 folks; that quantity is half what it was concentrating on by the top of 2022, in keeping with what CEO Omar Saleh shared on the time.
The corporate focuses on employees incomes 3 times lower than Egypt’s minimal wage, offering them with inexpensive monetary instruments. About 100,000 customers obtain their payroll by way of Khazna, permitting the corporate to combine monetary companies similar to loans and insurance coverage instantly into their payroll accounts.
For the remaining 400,000 customers, Khazna presents lending companies, serving to gig employees and pensioners entry credit score. Saleh defined that this product made the fintech break-even final month.
“What we did during the last two and half years was to give attention to our core product, which is credit score providing to payroll and pension recipients and likewise unsecured loans to gig employees,” co-founder and CEO Omar Saleh instructed TechCrunch. “That is essentially the most worthwhile and core product in our journey, and getting it proper was essential as a result of it has helped us to hit profitability.”
On the trail to turning into a digital financial institution
Khazna gives different companies like invoice funds, purchase now, pay later, medical insurance coverage, and a rent-to-own product. However by embedding itself into each payroll and lending, it’s strategically transferring towards turning into a full-fledged digital financial institution for Egypt’s underserved communities.
However one factor is lacking: not like conventional banks, Khazna doesn’t have entry to buyer deposits, making it costly to fund loans. Up to now, Khazna has relied on wholesale debt financing in {dollars} (USD) and Egyptian pound (EGP) to fund its lending operations.
To scale back borrowing prices and supply extra inexpensive loans, Khazna is now working to acquire a deposit-taking license in Egypt. This license would permit the startup to just accept buyer deposits, permitting it to decrease its price of funds.
“The most important sport changer right here is for us to get entry to person deposits. There’s an enormous alternative for us to seize a part of that market as effectively in a manner that may make our price of funding way more enticing than it’s at present, and in the end, that will put us in a really differentiated place,” he remarked.
Khazna is concentrating on mid-2026 to safe the banking license from Egypt’s Central Financial institution, which laid out its regulatory framework for digital banks in July 2024.
Because the six-year-old fintech will get began with that course of, it’s concurrently setting sights on Saudi Arabia, the place there’s a rising demand for client finance options. Not like BNPL gamers like Tabby and Tamara, which give attention to short-term BNPL credit score, Khazna hopes to distinguish itself with medium-term credit score merchandise like earned wage entry (EWA), payroll-backed lending, and pension-based credit score.
Growth plans, together with a not-so-imminent IPO
One more reason Khazna is prioritizing Saudi is its sturdy reference to Egypt, Saleh notes. With almost three million Egyptians residing in Saudi, the Egypt-Saudi remittance hall is without doubt one of the world’s largest, presenting a chance to supply cross-border monetary companies, combining credit-led choices with overseas trade (FX) options.
Past market dimension and product match, Saudi Arabia’s capital markets are additionally a driver in Khazna’s choice, in keeping with Saleh. Tadawul, the inventory trade in Saudi Arabia, is without doubt one of the area’s most liquid and retail-investor-driven inventory exchanges, launching a number of IPOs over the previous couple of years.
For that purpose, Khazna plans to have 40-50% of its enterprise coming from Saudi within the subsequent 4 years, making it eligible for a public itemizing on Tadawul. For early-stage buyers who’ve backed the corporate for 4 to 5 years, Saleh says this gives a transparent path to a high-value exit.
Certain, Khazna will fund this growth with the lately raised progress capital. Nevertheless, the macroeconomic challenges in Egypt over the previous two years had a hand in structuring this pre-Collection B spherical.
Between 2022 and 2023, Egypt confronted forex devaluations and financial instability, making fundraising harder for startups and ventures. The general slowdown in deal movement mirrored this, as buyers took a cautious strategy to Egyptian startups. However 2024 introduced a serious shift, with over $50 billion in overseas direct funding (FDI) flowing into Egypt following financial reforms and a extra versatile trade fee. Consequently, investor confidence returned, bringing renewed curiosity from international and regional buyers.
As such, Khazna welcomed participation from new and current buyers, together with international buyers like Quona and Speedinvest, in addition to regional funding corporations like Aljazira Capital (the funding arm of Financial institution Aljazira of Saudi Arabia), anb Seed Fund (managed by anb Capital), Disruptech, ICU Ventures, Khwarizmi Ventures and SANAD Fund for MSME.
