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Egypt-based online payment solutions provider Fawry has led a $5M investment and acquired minority stakes in Sudan-based online classified platform Alsoug.com. This round marks the first official VC investment in a startup in Sudan and observed participation from key international investors, marking a breakthrough for the Sudan startup ecosystem. The funds were raised to to help build out alsoug’s new fintech platform, Cashi. Fawry has acquired a strategic minority stake in the alsoug.com/Cashi holding company, marking the Company’s first venture capital investment outside of its Egyptian home market.
By acquiring a minority stake in alsoug, and leading this funding round amongst a consortium of international investors, Fawry played a vital de-risking role that resulted in the success of the fundraise. In conversation with MAGNiTT alsoug co-founder and CEO Tarneem (Nina) Saeed highlighted “Having Fawry in the round was really instrumental. Sudan is a high-risk environment because it’s an unknown environment and it’s still coming out of a political transformation, but the economy is beginning to show its weight. It was crucial for investors to be comfortable with the size of the round and the ambition of the roll-out platform knowing that it had the strong backing from an operating partner that has excelled in the same venture in another country.”
CEO and Co-founder Tarneem Saeed reflects on Alsoug’s journey within the Sudan ecosystem and gives us insight on the makings of Sudan’s first VC fund:
Alsoug was founded in 2016 at a time when Co-founder and CEO Nina had settled back in her home country. Back then, as she recalls, the Sudan VC space was focused on traditional investments with little room for Tech venturing. As the team scanned the scene, they realized the many possibilities for impactful digital ventures from ride-hailing or delivery to E-commerce and online payment, however, the Sudan market seemed cut off from real capital and foreign investment that can drive that growth. On one hand, investors lacked the confidence to enter a foreign market with geopolitical instabilities, and on the other, economic sanctions and regression crippled entrepreneurs’ abilities to build ventures that can provide tangible guarantees.
Choosing to focus on the immense potential of a ripe market, alsoug identified an online classified platform as a low-risk high-impact venture by the Tech potential of the interface and the low-asset virtue of the business model. Tarneem reccounted “This is one of the things we did in the very beginning; choosing to structure alsoug in a way that can attract investment from abroad. When I came in 2016 the economy was in recession due to mismanagement. It was an economy that had huge potential but wasn’t really going anywhere. People are Tech-savvy and the scene was so ripe for that, all we had to do was try and manage risk. So we chose the Classified Platform on the basis that it’s very tech-heavy, but you can manage your risk well: you can keep the burn low, you don’t have a large offline footprint, you can grow with the economy and you can manage sitting through its peaks and dips.”
As alsoug grew in scale the team was able to start monetizing its burgeoning advertiser listings, which raised questions around optimal ways for payment. The Sudan-based team maneuvered the limited digital payment options available in the market, first integrating an online payment gateway of a large commercial bank on the platform which did not result in a huge uptick in revenue; especially when a large part of the local demographic remains unbanked. The startup quickly considered building online payment solutions, where the size and popularity of the platform gave them a footing in gaining regulators’ trust. “That was when I met Ashraf, he came out to Sudan and saw the potential of alsoug almost instantly- that was around 2020. We started looking at different payment models that we can adopt, including Fawry’s current model, and we reached a hybrid that fits the market in Sudan. It’s a Sudan-tailored version of Fawry’s model, building on the strengths of Fawry in terms of being broad-based, integrating financial inclusion metrics, and thinking long-term yet at the same being number driven.”
To this date, alsoug has aggregated more than 2M downloads for its mobile app facilitating the peer-to-peer sale of hundreds of million dollars worth of goods in 2020; these numbers are spectacular given the nascent yet rapidly growing internet adoption in the country. At the core of this growth was alsoug’s long-term approach in building relationships with regulators, gaining their trust to not only acquire the needed licenses but also be able to offer innovative solutions. Nina reflected how that aspect is shared by both entities, where she believes that building strategic and long-term relationships is key to scaling in such Emerging Venture Markets. Commenting on the transaction, Fawry CEO Eng. Ashraf Sabry stated “This is our first investment foray outside of Egypt in our thirteen years of operation, and we’re confident that our story with alsoug and Cashi will be a special one. Fawry’s investment in alsoug delivers on our plans to venture into underserved international markets by leveraging our technology and teaming up with strong local players.”
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