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 problem by providing monetary providers tailor-made for low- and middle-income staff. The corporate offers options like wage advances, digital funds, and microloans to assist workers and contractors entry much-needed monetary providers.
Khazna just lately secured $16 million in pre-Collection B funding, bringing its whole funding to over $63 million. The funding will help its growth plans because it prepares to use for a digital banking license in Egypt and increase into Saudi Arabia.
After we lined the fintech in 2022, it had simply raised $38 million pre-Collection A with over 150,000 prospects throughout its merchandise. Right now, Khazna has grown its person base to over 500,000 folks; that quantity is half what it was focusing on twice by the top of 2022, based on what Saleh shared on the time.
The corporate focuses on staff incomes thrice lower than Egypt’s minimal wage, offering them with inexpensive monetary instruments. About 100,000 customers obtain their payroll via Khazna, permitting the corporate to combine monetary providers similar to loans and insurance coverage instantly into their payroll accounts.
For the remaining 400,000 customers, Khazna presents lending providers, serving to gig staff and pensioners entry credit score. CEO Omar Saleh defined that the corporate initially centered on payroll-backed credit score and pension lending, contributing to its break-even final month.
“What we did over the past two and half years was to give attention to our core product, which is credit score providing to payroll and pension recipients and in addition unsecured loans to gig staff,” co-founder and CEO Omar Saleh advised TechCrunch on a name. “That is probably 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 changing into a digital financial institution
Khazna offers different providers 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 changing into a full-fledged digital financial institution for Egypt’s underserved communities.
However one factor is lacking: in contrast to conventional banks, Khazna, like many fintechs in Egypt, 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 the 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 enable the startup to just accept buyer deposits, permitting it to decrease its value of funds.
“The largest recreation 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 means that can make our value of funding way more engaging than it’s at this time, and in the end, that may put us in a really differentiated place,” he remarked.
Khazna is focusing 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.
However 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 shopper 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.
Enlargement plans, together with a not-so-imminent IPO
Another excuse Khazna is prioritizing Saudi is its sturdy reference to Egypt, Saleh notes. With practically 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 providers, combining credit-led choices with overseas alternate (FX) options.
Past market measurement and product match, Saudi Arabia’s capital markets are additionally a driver in Khazna’s resolution, based on Saleh. Tadawul 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 offers a transparent path to a high-value exit.
Positive, Khazna will fund this growth with the just 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 tougher for startups and ventures. The general slowdown in deal stream mirrored this, as buyers took a cautious method to Egyptian startups. However 2024 introduced a significant shift, with over $50 billion in overseas direct funding (FDI) flowing into Egypt following financial reforms and a extra versatile alternate price. 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 monetary establishments and funding corporations like SANAD Fund for MSME, anb Seed Fund (managed by anb Capital), Aljazira Capital (the funding arm of Financial institution Aljazira of Saudi Arabia), Tibas Ventures (the enterprise capital arm of İşbank of Turkey), Khwarizmi Ventures, Nclude (the fintech fund arrange by Egypt’s largest nationwide banks) and ICU Ventures.
