Venture capital investments in Egypt more than tripled annually in 2021 to $445 million and are expected to cross $1 billion this year, the American University in Cairo said.
“For the past five years, we’ve seen a point of inflection in investments in start-ups,” said Ayman Ismail, the Abdul Latif Jameel Endowed chair of entrepreneurship and associate professor at the AUC business school, during a webinar on Monday.
“The venture capital space has been booming substantially.”
Egyptian start-ups raised $85m in 2019 and $141m in 2020, according to The African Tech Startups Funding Report.
VC funding to Mena start-ups has surged to $2.6bn in 2021, start-up data platform Magnitt reported. The region’s most active markets - the UAE, Saudi Arabia and Egypt - all saw a mega deal (more than $100m) each.
Egyptian start-up Halan secured the largest amount recorded in the country at $125m.
The Egyptian VC ecosystem has grown at a compound annual growth rate of 109 per cent between 2015 and 2021, Magnitt said. Last year, Egypt accounted for 15 per cent of transactions and 11 per cent of deployed capital in the Mena region.
FinTech start-ups accounted for 17 per cent of deals that were closed last year in the country. Global VC company Sequoia Capital made its debut investment in the Mena region with a $5m pre-seed contribution to Egyptian digital bank Telda.
Seven Egypt-based start-ups also announced exits in 2021 - the highest in a single year.
UAE-based Global Ventures - which has invested in Egyptian start-ups such as food delivery app elmenus, B2B platform Cartona and electronic payment provider paymob - will manage a dedicated FinTech fund in Egypt that will be launched next week, said Basil Moftah, general partner of Global Ventures.
“Egypt’s a place to double-down on. There’s a lot of great opportunity,” Mr Moftah said during the webinar.
“There’s just so much happening in the FinTech space that we believe having a dedicated vehicle for that is a great opportunity for investors, but also to help Egypt make progress on the financial inclusion side of sustainability.
“The reality is that Egypt is not digitised. That’s what we think these FinTechs are solving for and that’s why we think they’ll grab a lot of market share.”
Outside of the UAE, Global Ventures currently has offices in Cairo as well as in Jeddah, Riyadh and Lagos.
Rafeh Saleh, founding partner at Cubit Ventures, an early stage venture fund backing tech start-ups in Egypt, said the opportunity is “massive”.
“We’re lucky. We have the best of both worlds - being a Middle Eastern country and an African country,” Mr Saleh said.
The Middle East provides access to capital, talent and international markets, while Africa provides a huge consumer base, he explained.
“There’s so much room for further capital and further disruption in the market,” he said.
Ahmed El Alfi, chairman and co-founder of Sawari Ventures, said he continues to be very optimistic about start-ups in Egypt.
Founded in 2010, Sawari Ventures’ portfolio includes Elves, KEngine and Swvl. Last year, the firm closed a $69m fund to invest in Egyptian start-ups.
Mr El Alfi said the next step is to look for “deeper tech companies to start coming out of the region, rather than just copy-paste”.
But the market and regulatory environment have matured tremendously, he said. While there used to be “two FinTechs in the country”, now it is possible to focus a fund on a single vertical.
“We’re paying for the future,” Mr El Alfi said. “VC investors are looking at what can go right and how far can you go, and that’s really what you value.”