In June 2021, Ziina, emerging from Y Combinator’s inaugural cohort of that year and securing a $7.5 million seed round, introduced its innovative fintech app to a community of 20,000 retail customers for seamless money transfers.
Fast forward three years, and this Dubai-based startup has impressively increased its customer base to 50,000, including both retail and business clients, by diversifying its services tailored for micro, small, and medium-sized enterprises (SMEs) within the UAE. They have successfully raised $22 million in Series A funding, under the lead of Altos Ventures.
This significant influx of follow-on funding, amid a global downturn in financing, highlights investors’ strong faith in the fintech company’s potential. Ziina boasts a remarkable 34% month-over-month growth in new customers over the previous year, alongside a tenfold revenue increase.
Faisal Toukan, co-founder and CEO, shared with TechCrunch the three pivotal factors that captivated investors: the swiftly growing SME segment in the UAE, a commitment to product-led growth, and the acquisition of a central bank license.
**The Expanding SME Market**
Starting as a peer-to-peer (P2P) payment application for shared expenses like vacations or rent, Ziina quickly gained popularity among retail users in the UAE. However, many users managing businesses expressed interest in utilizing the digital wallet for their payment transactions.
In response, Ziina organically evolved its platform into two distinct divisions: Ziina Personal, aimed at bill splitting with friends, and Ziina Business, designed for efficient payment collection. This enhancement first introduced payment links that enabled users to receive payments via Apple Pay, Google Pay, MasterCard, and Visa.
With the increasing demand from business users, Ziina broadened its solutions: it now includes a payment gateway integrated with platforms like WooCommerce and Shopify, point-of-sale (POS) systems for in-person transactions via QR codes, and payment options through social media. Additionally, Ziina has incorporated CRM capabilities, enabling businesses to manage customer data and interactions efficiently.
Though the startup still offers its P2P services, its strategic focus has pivoted towards catering primarily to small businesses. The platform aims to serve the largely untapped market of 560,000 SMEs in the UAE, which represent over 94% of all enterprises and contribute approximately 60% to the nation’s GDP. By 2023, roughly 77% of SMEs in the UAE had embraced digital payment methods, intensifying the need for comprehensive financial management tools.
“We provide an all-in-one platform for businesses to receive compensation in the UAE, shifting from solely a consumer service to a fully integrated ecosystem linking consumers and businesses for payments on a single interface,” explained Toukan during the call. “Our goal is to establish a network effect where consumers can pay businesses, and vice versa, setting us apart in our product strategy. We aim to maintain an ecosystem that serves as a financially reliable partner for all users.”
**Product-Driven Growth**
From a product development perspective, Ziina addresses three essential challenges that SMEs face in the payments landscape: accessibility, cost clarity, and overall user experience.
Regarding accessibility, SMEs can establish accounts and set up payment processors in mere minutes, a drastic reduction from the weeks typically required.
When it comes to pricing, Ziina promotes transparent costs with no surprise fees: 2.6% plus 1 AED (around US$0.25) for each payment link and POS transaction, alongside 2.9% plus 1 AED for every payment gateway transaction.
Furthermore, customers benefit from a dashboard that enables them to monitor and reconcile both online and offline transactions seamlessly.
With a surge in growth over the past year, Ziina now caters to 50,000 active users, spanning across both retail and business sectors. Their clientele includes sectors such as fashion, gaming, travel, and tourism. According to Toukhan, the startup is currently processing approximately 1,050 dirhams ($280) every minute, and anticipates reaching a staggering 1.1 billion dirhams (about $300 million) in annualized transaction volume, a significant increase from 550 million dirhams (approximately $150 million) last year.
Ziina’s rapid advancement resulted mainly from product-led initiatives without relying on a dedicated sales workforce. Notably, 55% of their users have joined organically, with the remaining users coming through business-to-business referrals.
Yet, as they continue to scale and broaden their financial service offerings, propelled by their new banking license, changes are on the horizon. The company is in the process of hiring its first sales team, drawing some talent from the ranks of Revolut.
Claiming to be the first venture-backed startup with a stored value facility (SVF) license from the Central Bank of the UAE, Ziina is now poised to deliver a wider array of financial solutions — absent lending, which necessitates a different kind of license — while generating revenue from user deposits held within the platform.
Toukan believes this license, combined with their diverse financial ecosystem (including the launch of their upcoming expense management card, ZiiCard), positions Ziina favorably against rival fintechs offering overlapping services. Competitors like Paymob, Tabby, Telda, and Mamo each provide distinct offerings in the financial domain but face the challenge of standing out amid a rapidly evolving market.
Despite existing competition, the CEO, who co-founded Ziina with Sarah Toukan and Andrew Gold, envisions immense growth potential in the burgeoning payments industry for both consumers and businesses across the MENA region.
“The Middle East is experience robust growth, particularly in terms of GDP, with the UAE leading the way,” the CEO asserted. “If we execute our vision correctly at Ziina, we anticipate reaching 200,000 active business users on our platform in the next four years, due to the expanding SME market in the UAE. Looking at successful models like Nubank in Brazil, they achieved 10% to 20% market penetration, and we intend to follow in those footsteps and become the Nubank of our region.”
Ziina’s Series A funding round also saw contributions from prominent investors such as Activant Capital, Avenir Growth, Fintech Collective, FJ Labs, Jabba Internet Group, Middle East Venture Partners, and Y Combinator, bringing the total funding raised by Ziina to over $30 million since its inception in 2020.
