Venture Capital Investments in Egypt Expected to Surpass $1 Billion in 2022

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Venture capital investment in Egypt has more than tripled annually in 2021 to $445 million and is expected to top $1 billion this year, the American University in Cairo said.

“Over the past five years, we’ve seen an inflection point in start-up investment,” said Ayman Ismail, Abdul Latif Jameel Chair of Entrepreneurship and associate professor at the business school. AUC, during a webinar on Monday.

“The venture capital space has exploded dramatically.”

Egyptian start-ups raised $85 million in 2019 and $141 million in 2020, according to AUC estimates.

Venture capital funding to Mena start-ups jumped to $2.6 billion in 2021, startup data platform Magnitt reported. The most active markets in the region – the United Arab Emirates, Saudi Arabia and Egypt – have all seen a mega deal (over $100 million) each.

Egyptian start-up Halan secured the largest amount recorded in the country at $125 million.

Egypt’s venture capital ecosystem grew at a compound annual growth rate of 109% between 2015 and 2021, Magnitt said. Last year, Egypt accounted for 15% of deals and 11% of capital deployed in the Mena region.

FinTech start-ups accounted for 17% of deals made last year in the country. Global venture capital firm Sequoia Capital made its Mena debut with a $5 million pre-seed contribution to Egyptian digital bank Telda.

Seven Egypt-based start-ups also announced releases 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 – plans to launch a dedicated FinTech fund in Egypt next week, said Basil Moftah, general partner of Global Enterprises.

“Egypt is a place to overtake. There are a lot of great opportunities,” Mr. Moftah said during the webinar.

“There is so much going on in the FinTech space that we believe having a vehicle dedicated to this is a great opportunity for investors, but also to help Egypt move forward on the financial inclusion side of sustainability. .

“The reality is that Egypt is not digitized. That’s what we think these FinTechs are solving and that’s why we think they’ll take a lot of market share.

Outside of the UAE, Global Ventures currently has offices in Cairo as well as Jeddah, Riyadh and Lagos.

Rafeh Saleh, founding partner of Cubit Ventures, an early-stage venture capital fund supporting tech start-ups in Egypt, said the opportunity was “huge”.

“We are 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 international capital, talent and markets, while Africa offers a huge consumer base, he explained.

“There is so much room for new capital and new disruptions 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 company closed a $69 million fund to invest in Egyptian start-ups.

Mr El Alfi said the next step is to seek out “deeper tech companies to start moving out of the region, rather than just copy and paste”.

But the market and the regulatory environment have matured tremendously, he said. While there were “two FinTechs in the country”, it is now possible to concentrate a fund on a single vertical.

“We are paying for the future,” Mr. El Alfi said. “Venture investors look at what can go well and how far you can go, and that’s really what you appreciate.”

Updated: March 14, 2022, 4:09 p.m.

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