Egypt-based financial technology (fintech) company Fawry has played a pivotal role in providing digital payment capabilities to businesses and consumers alike in the country. Last year, the company went public on the Egyptian Exchange, a feat realised by few startups in the Middle East. Now, Fawry’s co-founder Mohamed Okasha has stepped down as the company’s managing director to launch his own fintech fund, Disruptech, with a target size of $25 million.
We spoke with Okasha about the fund and why he decided to launch it.
Can you tell us more about Disruptech?
It is an early-stage fund that focuses on Egyptian startups that have the potential to realise success in two years and are Covid-19 resilient -which means that their business was not negatively impacted by the ongoing crisis. We have already started talks with startups that we are willing to work with.
The launch itself was already planned a few months ago before the Covid-19 crisis. I believe that there is no better time to proceed with this step than now. With the changes in the e-commerce market speeding up, I was more and more confident that this is the right time to launch because I believe that after the crisis is over, fintech will be a main winning segment of the economy.
Who else is going to be leading the fund?
We have Malik Sultan on board [he] is an incumbent board member of Raya Holding and used to work as a financial investment advisor for one the Gulf family offices. Another member coming from the field of venture capital (VC) is going to join us this month.
What advice would you give to fintech startups to help them navigate the current situation?
There are two approaches to tackle the situation; firstly, most businesses should be working on doing the stress test placed on their PNL and cash flow, in order to ensure that they can survive the situation for as long as it lasts. This is called the defensive approach. Secondly, once you secure enough cash to survive, you should then embrace the offensive approach, which means to move aggressively into growth in areas that you believe are going to maintain their momentum after this crisis.
What are the major fintech trends that are likely to be seen in the near future?
Merchant-lending will be rapidly disrupted in the coming period, plus a lot of businesses will go [online], particularly the distribution business since it is very traditional. There is a lot of disruption in that space that is going to happen. The integration of open banking should be quickly embraced by banks and other financial institutions, which has already happened in different parts of the world. Also, the insurtech is growing very fast.
What has happened to Fawry since going public?
Given that Fawry has around 25 million monthly users, the brand continues to gain the trust of people. We had people investing in Fawry with their personal money after they realised the extent of the good impact that the services offered them, so some of them took the decision to invest in Fawry and then realise some of the returns. That was one good impact. Besides, as the result of being listed on the Egyptian Exchange, we had three main anchor investors, including National Bank of Egypt, Banque Misr and private equity firm Actis.
Do you think this is a good step for other fintech startups to follow?
It depends on the stage and the time. As in the case of Fawry, we had the first exit in 2015, when we had a complete acquisition from a consortium of funders, who acquired the company from the old shareholders. And then we continued our operations with them being in charge for four years until we realised that this was a good time to go to the stock exchange. We were the first financial technology company to list in Egypt.