Egypt’s Dsquares Secures New Funding For Expansion Outside Egypt

Algebra Ventures’ portfolio company Dsquares, which provides businesses with unique full-service loyalty and rewards solutions aimed at keeping customers loyal, has secured fresh funds to fuel its expansion, almost two after its last funding. 

“The LCP partnership and investment will help Dsquares expedite its clients and merchants expansion plans in the Middle East, Africa and Europe and maintain its position as the loyalty & rewards solutions leader in the region,” Marwan Kenawy, the co-founder and CEO of Dsquares, said. 

Here Is What You Need To Know

  • Although the exact amount involved in this round of funding was undisclosed, the investment came from Egyptian private equity firm Lorax Capital Partners. The investment has been made as a result of Lorax Capital Partners acquiring a ‘significant minority stake’ in the company, according to a statement released by the investment firm. 
  • Also participating in this round is Algebra Ventures which had previously invested in Dsquares in 2019. 
  • Lorax Capital Partners, by this investment, has also acquired the minority stake of investor Ezdehar Management in Dsquares. Ezdehar, also an Egyptian private equity firm, had invested in the startup in 2018 and according to Enterprise owned a 22.5 percent stake. 
  • The investment will be used by Dsquares to support the scaling of the new business line and for its geographical expansion across Egypt and internationally.

Why The Investors Invested

Dsquares - Home | Facebook

Lorax Capital Partners has been actively investing in startups in Egypt. The firm’s portfolio investments include those in Fawry, Egypt’s first electronic payment network, which recently reached a unicorn status; Sawari Ventures, one of Egypt’s largest independent consumer finance providers targeting primarily the unbanked population with over EGP 1.4 billion in loans booked in 2015; among others.

Of the other part, Algebra Ventures is a $50-million Cairo-based venture capital fund that invests in early-stage technology companies in Egypt and the MENA region. Its LPs include Cisco, the European Commission, EAEF, EBRD, IFC, and private family offices. Algebra has invested in 15 transformative technology companies in MENA, including HolidayMe, Trella, Elmenus, Dsquares, and Halan.

As the most known and strongest Venture Capital in Egypt, they represent the institutional money that comes into a startup. The reason why they focus on Egypt is that most of their experience is in Egypt. However, they do invest in some parts of the Middle East such as UAE and Jordan. So, mostly neighbouring countries of Egypt which represent the scope of their funding. In terms of sector, they invest basically in technology and its sub-sectors such as transport-tech, marketplaces, consumer internet, SaaS, etc.

Generally, investment into Dsquares is a further confirmation of greater returns on investments on the startup. The startup currently claims to maintain a network of 100 million active customers, as well as 1,700 partners with over 11,000 outlets across different sectors in Egypt, Jordan, Romania, Kenya, Tanzania, Morocco, Saudi, and UAE. The implication of this is that Dsquares can offer loyalty programs to its clients in which its customers can redeem (or even earn) rewards from these brands, a huge chance for massive revenue. An example is Dsquares’ campaign for Vodafone — which allowed customers of Vodafone to earn and redeem points when they shop on (in Egypt).

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A Look At What Dsquares Does

Founded in 2012 by Marwan Kenawy, Ayman Essawy, and Momtaz Moussa, Dsquares claims to be the biggest full-service loyalty solutions provider in the Middle East & Africa. It manages all technical, operational, and commercial aspects of these solutions for its clients, helping them increase customer loyalty and retention. Its clients leading players operating in the banking, telecom, FMCG, retail, and oil & gas sectors.

Algebra Ventures – VC4A

In 2019 – around the time when it announced its investment round, Dsquares launched Lucky, a mobile app offering customers discounts from different brands. In a statement today, Dsquares said that Lucky’s app has been downloaded over 5 million times (in the last two years) with its network covering thousands of merchants in different categories. As the startup already had relationships with those merchants for its B2B solutions, getting them on Lucky would’ve been an easy task.

How Lucky works is that the users browse through different offers on the app, select the one they want to use, and then redeem it by scanning the QR code when they’re in the store.

“By becoming the leading offers platform, Lucky has been digitizing its users’ commerce transactions. We are utilizing this data to provide a more convenient purchasing experience as well as maximizing savings and payment flexibility. That level of understanding of user behavior is now helping us introduce financial products that would otherwise be inaccessible to most of our users,” Momtaz Moussa, co-founder and Managing Director of Lucky, said. 

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