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Egypt’s rise as an African startup powerhouse is documented in a new study

The Egyptian startup ecosystem has established itself as one of Africa’s “big four” in a very short amount of time, thanks to increased startup activity and a significant inflow of cash, with the sector’s development supported by proactive government and a robust local startup support system.

According to Disrupt Africa’s recently issued Egyptian Startup Ecosystem Report 2021, which examines the local ecosystem by looking at active companies, local support networks, investment, and exit activity over the previous seven years.

Since launching its research arm in 2016, Disrupt Africa has amassed a sizable library of publications, including the African Tech Startups Funding Report and Finnovating for Africa, both of which were previously available for purchase but are now freely available thanks to open-source initiatives with various partners across the continent’s tech ecosystem.

The Egyptian Startup Ecosystem Report 2021 is the company’s first regionally targeted publication, thanks to major partners the Information Technology Industry Development Agency (ITIDA) and Global Ventures. AUC Venture Lab (V-Lab) and Quona Capital are two other backers of the report.

According to the report, Egypt has at least 562 tech businesses as of September 2021, making it the continent’s fourth-largest startup ecosystem after South Africa, Nigeria, and Kenya. Between them, these companies employ about 13,000 people.

The most populous industry is e-commerce, which employs one-fifth of all IT firms in the country. E-commerce and retail-tech businesses are nearly twice as numerous as financial startups, which came in second. E-health, ed-tech, logistics, recruiting, and AI/IoT are among the most active areas for startups.

Almost 40% of Egyptian digital companies have gone through some type of acceleration or incubation, which is an amazing figure that speaks well of a local support network that includes government, corporations, and institutions.

A solid funding environment is increasingly supporting these firms. According to the research, at least 318 Egyptian companies have received about US $800 million since 2015, with capital inflow increasing year after year.

The US $156,248,000 raised in 2020 indicates a 1,716% increase over the US $8.6 million raised in 2015, and 2021 appears to be on track to break all previous records. This year, over 80 Egyptian businesses have raised more than $400 million in funding.

“Egypt has truly emerged as a tech powerhouse for Africa, and now rivals – and even surpasses – more established startup ecosystems such as South Africa, Nigeria, and Kenya for levels of entrepreneurial innovation and investment. Disrupt Africa is delighted to release its first country-focused report with Egypt as its subject, and thanks to its partners for making it free to all,” said Tom Jackson, co-founder of Disrupt Africa.

“In the interest of building bridges between Egypt and the wider continent, the report also looks at a new trend, whereby Egyptian startups are expanding their businesses into Sub-Saharan Africa. Whereas historically Middle Eastern markets would have been more obvious destinations for expansion, more and more Egyptian companies are seeing opportunities in the rest of Africa, and more Africa-focused investors are putting money into Egypt. These are very positive developments,” said Gabriella Mulligan, co-founder of Disrupt Africa.

“As capital allocators, our investment decision-making process is guided by data and market insight. Yet, in the nascent ecosystem of emerging markets, information is not always readily available. Disrupt Africa is stepping in to fill in this gap, and we are thrilled to partner with them for this report on a market we are continuously and exceedingly excited about,” said Basil Moftah, general partner at Global Ventures.

“For the past five years, AUC Venture Lab’s Fintech Accelerator has been committed to enabling fintech entrepreneurs and empowering them with the knowledge and networking opportunities they really need. We are gladly supporting the fintech section of Disrupt Africa’s Egyptian Startup Ecosystem Report as it offers insights for anyone looking for information about the space and its key players and the growing ecosystem at large,” said Dr Ayman Ismail, AUC’s Abdul Latif Jameel Endowed Chair of Entrepreneurship and AUC V-Lab Director.

“Advanced technology, a rapidly growing economy, and smart regulation have attracted Quona to Egypt as an investor, but access to information is critical for innovation,” says Monica Brand Engel, co-founder and managing partner at Quona Capital, who focuses on the firm’s Africa and MENA investments in fintech and embedded finance. “We are proud to be a partner of this inaugural report from Disrupt Africa, in the hopes that it will spur even more fintech and embedded finance growth in Egypt.”

 

 

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