In June 2021, Ziinafresh out of the first YC cohort that year and secure $7.5 million seedlaunched its fintech application to 20,000 individual customers, allowing them to send and receive money.
Three years later, the Dubai-based startup, which now has 50,000 individual and business customers after expanding its offering to meet the needs of micro, small and medium-sized businesses in the UAE, has secured $22 million in Series A funding led by Altos Ventures.
Indeed, such a large additional funding round, despite the global funding slowdown, underscores investor confidence in the fintech company’s growth – the company claims 34% monthly customer growth over the past year, and says its revenue has grown tenfold over the same period.
Co-founder and CEO Faisal Toukan According to TechCrunch, three factors make Ziina particularly attractive to investors. These include the UAE’s growing SME segment, its focus on product-led growth, and its recently acquired central bank license.
Expansion of the SME segment
Ziina started out as a peer-to-peer (P2P) payment app for splitting bills, such as for group travel or rent. While the app has gained popularity among individual customers in the UAE, some business owners have also looked to use the digital wallet to send and receive payments, according to Toukan.
In response, Ziina naturally expanded its platform into two segments: Ziina Personal for sharing bills between friends and Ziina Business for collecting payments. The first business feature allowed users to send payment links and get paid via Apple Pay, Google Pay, Mastercard, and Visa.
As demand from businesses grew, Ziina developed more products for them: a payment gateway (checkout) integrated with platforms like WooCommerce and Shopify for online payments, point-of-sale (POS) solutions for in-person payments using QR codes, and payments via social media. On top of these features, Ziina added CRM functions so businesses could track customer information and interactions.
The YC-backed startup continues to offer its P2P service, but it’s clear that most of its products are now focused on small businesses. The startup is targeting an underserved market of 560,000 SMEs in the UAE, which represent more than 94% of all businesses and contribute about 60% of the country’s GDP. From 2023, approximately 77% of SMEs In the United Arab Emirates, digital payments have been adopted, fueling growing demand for financial management tools.
“We are an all-in-one platform for businesses to get paid in the UAE. We have evolved from just a consumer app to an ecosystem that connects consumers and businesses for payments on a single platform,” Toukan explained on the call. “We look at the overall experience as far as consumers can pay businesses, businesses can pay consumers, and then we create that network effect across both customer segments. And that is one of the key differentiators of our product strategy and our business. So, fundamentally, everything should be in one ecosystem where people have a trusted financial partner.”
Product-driven growth
From a product perspective, Ziina says it addresses three critical pain points for SMBs in the payments space: accessibility, cost transparency and user experience.
When it comes to accessibility, SMEs can use fintech to open accounts and set up a payment processor in minutes instead of weeks.
In terms of cost, Ziina claims to offer simple pricing with no hidden fees: 2.6% plus AED 1 (around $0.25) for each payment link and POS transaction, and 2.9% plus AED 1 for each payment gateway transaction.
Finally, customers have a dashboard to track and reconcile online and offline payments and payment links.
Thanks to its rapid growth over the past year, Ziina now has 50,000 active users, including both retail and business customers; its business customers range from fashion and gaming to travel and tourism. Toukan also told TechCrunch that the startup now processes about 1,050 dirhams ($280) every 60 seconds and is on track to handle 1.1 billion dirhams (about $300 million) in annualized transaction volume, up from 550 million dirhams (about $150 million) last year.
Ziina’s growth has been driven primarily by product-driven efforts, without a dedicated sales team. According to the CEO, 55% of its customers have come organically, while the rest have come through B2B referrals.
However, as the company continues to grow and provide more financial services through the banking license it received, this will likely change. The company is onboarding its first sales employees, some of whom are joining from Revolut.
Ziina claims to be the first venture-backed startup to obtain the Stored Value Facility (SVF) license from the Central Bank of the UAE. This allows the fintech to offer more financial solutions – excluding loans, which require a separate license – and generate revenue from the float when customers hold assets on the platform, for example.
Toukan believes that this license and financial ecosystem of products (the fintech will soon venture into expense management with the launch of its card product, ZiiCard) give Ziina an advantage over other regional fintechs that provide overlapping financial services. Paymobfor example, provides point of sale terminals; Tiger develops its financial offering outside of “buy now, pay later”; Telda offers P2P payments; and Mamo is in the expense management business.
Despite this competition, the CEO, who founded the fintech with Sarah Toukan And André Goldsees significant market potential for Ziina in the growing payments sector for consumers and businesses in the MENA region.
“The Middle East seems to be growing quite strongly, especially in terms of GDP growth. And the UAE is one of the pioneers in this,” the CEO noted. “If we at Ziina do our job properly, which we are very excited about, we should be able to have 200,000 active companies per month on the platform within four years, given the growth of SMEs in the UAE. And if you look at players like Nubank in Brazil, they are achieving these market penetration targets of between 10 and 20 percent. So we intend to do that and become the Nubank of the region.”
The Series A round was attended by Activant Capital, Avenir Growth, FinTech Collective, FJ Labs, Jabbar Internet Group, Middle East Venture Partners, and Y Combinator. This brings Ziina’s total funding raised to over $30 million since its inception in 2020.