Egyptian startups rev up

Dubai - In the first half of 2021, VC investment in Egypt grew by 29 per cent year-on-year, accounting for 91 per cent of total capital deployed in 2020, according to Magnitt.

Egyptian startups are grabbing the spotlight globally and within the region. The top three ecosystems — the UAE, Saudi Arabia and Egypt — have complemented the regional growth as a lot of funding is being routed to Egypt by regional and global venture capitalists (VCs).

A number of startups have made global headlines like e-commerce shipping platform ShipBlu being accepted into Y-Combinator’s Summer 2021 Batch and raising an undisclosed amount in a pre-seed funding round led by Nama Ventures, with participation from Y-Combinator and other prominent angel investors from San Francisco and Saudi Arabia. Similarly, Swvl last month announced a merger with US-based Queen’s Gambit Growth Capital that will allow the company to list on the Nasdaq in New York.

Egyptian food discovery startup Elmenus, meanwhile, was launched in 2018 and now has over 1.5 million monthly users, having built the most comprehensive platform. Elmenus raised $1.5 million in Series A investment and $8 million in a Series B round in 2020, used to take on the underserved online ordering market in Egypt.

Amir Allam, CEO of Elmenus, said: “2011 was a time when the startup ecosystem wasn’t very mature in Egypt, so we got to witness all the different maturity stages of the ecosystem throughout the years to what is now considered one of the top rising countries in the region in terms of a number of startups and funding. Digital enablement and consumer awareness of online services due to Covid is really accelerating the investment boom. There were a lot of tailwinds in Egypt as well behind this boom including increased interest from investors in Egypt and a lot of industries ripe for disruption.”

Allam expects much more funding from international investors who already have Egypt on their radar, and more innovative business models that aren’t necessarily revolving around fintech, which seems to be understandably the current trend.

“I see there is a rising demand for quality talent. This will see Egyptian startups attract more Egyptians living abroad back to Egypt and as well as international talent. This is due to the opportunities here for fast-growing companies is a very attractive proposition to top talent around the world.”

Freight marketplace Trella recently completed a $42 million funding round, comprising $30 million new equity and $12 million debt facilities. The equity element was led by Maersk Growth — the corporate venture arm of shipping giant A.P. Moller – Maersk — and Raed Ventures, a Saudi VC firm. Other participating investors include Algebra Ventures, Vision Ventures, Next Billion Ventures, Venture Souq, Foundation Ventures and Flexport. The debt facilities are being provided by Lendable.

Omar Hagrass, chief executive officer of Trella, said: “It’s never been cheaper to build a company and younger people now understand that writing code is not rocket science and making an impact is not too far away. The government and businesses also understand the value of technology and are supporting it through different means. We believe the Egyptian ecosystem will continue to grow; there are just so many businesses to digitise and technology offers a quick solution to the problem. The number of startups to fund are increasing and ticket sizes are seeing an ever-growing trend.”

In the first half of 2021, VC investment in Egypt grew by 29 per cent year-on-year, accounting for 91 per cent of total capital deployed in 2020, according to Magnitt. Every fourth transaction in Mena was closed by an Egyptian startup, accounting for 13 per cent of total capital raised.

Amongst the top three Mena countries — the UAE, Egypt and Saudi Arabia — Egypt was the only one to see an increase in deal count year-on-year. In the first half, every fourth dollar was invested in delivery and logistics startups, marking a tenfold increase in funding year-on-year growth. Early-stage funding in Egypt grew, where rounds sized below $500,000 increased by 10 per cent between 2020 and the first half this year. Interestingly, 30 per cent of investors backing Egypt-based startups were from the UAE and Saudi Arabia combined.

Digital payments provider Paymob plans to accelerate regional expansion, extending its products to more markets in Africa and the GCC.

Its co-founder, Islam Shawky, said: “Paymob is continuously paving the way for digitising the Egyptian payment ecosystem by empowering thousands of merchants, which serve millions of users. Now, Paymob is considered a pacemaker in the digital payment field based on leading the mobile wallets’ infrastructure market share. As a result, Paymob aims to contribute to the financial inclusion movement in Egypt, while targeting economic growth by providing multiple digital payment methods such as online payments, mobile wallets, installments and more services.”

— sandhya@khaleejtimes.com