The Pounding Heart of Tech
A look into Egypt’s flourishing startup ecosystem
Egypt is the fastest growing tech ecosystem in MENA, making up 22% of investments made in the region in 2018 (MAGNiTT). For those of us working here, it’s no surprise the country has been buzzing with startup activity in recent years. With a population of almost 100 million people, half of whom are under the age of 25, Egypt stands out among its regional peers for the quality and quantity of its technical talent and its rapidly expanding digital economy (World Bank).
The Egyptian tech space is thriving, and a new wave of experienced and hungry entrepreneurs are taking on this diversified and fragmented market with billions of dollars in uncapitalized opportunities. Smart investors are already chasing these opportunities, and high-potential tech startups are benefiting from a rich support system of incubators, angel investors, venture funds, and corporate venture arms.
I’ve invested in exceptional entrepreneurs through my firm Algebra Ventures, and I am seeing regional and global capital follow suit. A few years back, an Egyptian tech startup would typically raise US$1 to 2 million at Series A. Today, we’re seeing rounds that range from $5 to 20 million from global investors.
Since the 1980s, international tech companies–such as Mentor Graphics, IBM, Intel, Trend Micro, and Valeo–have been establishing research and development centers in the country, having recognized the strength of its talent pool. Egypt now enjoys expertise in several core technologies, including nanotechnology, microelectromechanical systems (MEMS), integrated circuit design (both analog and digital), security and encryption, wireless technologies, natural language processing, and artificial intelligence (AI).
With this foundation, Egyptian entrepreneurs are now using disruptive technologies to address the abundance of challenges that emerging markets face. The country has become a test-bed for scaling products that are relevant to similar markets, such as Africa, Latin America, and SEA. Fintech, cleantech, and mobility solutions stand out as exciting industries to watch.
An underdeveloped retail banking sector and largely unbanked population makes Egypt an ideal location for fintech innovation. Fawry, the country’s leading payments provider, is now more active than the entire formal banking sector with 2.1 million daily transactions (Fawry).
Egypt has a highly-strained transportation infrastructure, providing a clear opportunity for entrepreneurs like Halan Founder Mounir Nakhla. Halan is a ride-hailing app for motorcycles and three-wheelers, and facilitates millions of rides every month in underserved communities all over Egypt and Sudan.
Several local and global mass transit solutions including Buseet, Uber Bus, and Careem Bus have also been introduced, enabling more efficient and higher quality alternatives to public transportation. Tech entrepreneurs are also disrupting fragmented industries like shipping and logistics, as seen with trucking marketplace Trella, which raised $600,000 in pre-Seed funding.
Egypt enjoys abundant sunshine year-round and has large and consistent coastal wind corridors that supply a rich basis for cleantech solutions. We are experiencing a solar boom as a result of the government’s removal of energy subsidies, which has allowed the private sector to get more involved. Startups like KarmSolar and Solarize Egypt are providing clean energy solutions and building public and private sector facilities; technological advancements have already reduced costs for renewable energy generation.
Egypt’s pool of entrepreneurs and tech talent is growing by the day. This trend, coupled with its geographical location, gives Egypt the potential to be the launchpad for digital transformation in MENA and beyond.
About the Author
Karim is Managing Partner of Algebra Ventures, Egypt’s leading venture fund. He is a tech industry veteran and has been an active investor and startup mentor. Previously, Karim was SVP, Products and Engineering at WebMD, Inc., Karim received his PhD in Information Systems from MIT and a dual BSc in Electrical and Computer Engineering from Carnegie Mellon University. He has over 40 publications and a patent for his work on distributed computing.