Understanding Egypt’s startup ecosystem
s the bridge between Africa and the Middle East, Egypt is a very attractive market for both investors and entrepreneurs. In 2019, Egyptian startups sealed 142 deals worth $95 million, meaning that the country ranked first by number of deals in the MENA region, surpassing the United Arab Emirates for the first time. With nearly two-thirds of these deals closed by foreign investors, the country is only becoming more exciting as a place to do business.
Egypt has gone through some unsettling times since the revolution erupted here in 2011, but while the political and economic situation continues to frustrate many, it has amplified hope in others, encouraging them to build new ventures to push their country’s economy and society toward the better. With the energy of one of the biggest youth populations in the world, Egypt is well equipped to make a name for itself as a hub of innovation and entrepreneurship.
As the bridge between Africa and the Middle East, Egypt is a very attractive market for both investors and entrepreneurs.
A region of potential
Many Egyptian startups are tied to a social mission, especially after the 2011 uprisings. There has been a recent influx of companies with a focus on recycling, clean energy, transportation, healthtech, education and fintech. The Egyptian government has also prioritized the promotion of entrepreneurship in the past few years, with entities such as Technology Innovation and Entrepreneurship Center (TIEC) and Egypt Ventures providing technical and financial support, especially in otherwise underserved parts of the country.
Egypt’s talent force has the potential to be one of the main drivers to advance the country’s startup ecosystem. However, the private sector has struggled to create enough jobs to match the growing supply of highly educated and skilled youth entering the labor force. Another challenge is capitalizing on the growing share of educated women.The nonprofit organization enpact scores formal female participation in the Egyptian labor market at 16.88 out of 100, and female business ownership generally averages at much less.
More cash than ever before is available for young tech companies in Egypt, following years of accelerators and venture capital firms coming to market. Valuations have skyrocketed for some startups, altering the investment process and driving up the total funding of startups. Angel investment is still not as accessible as traditional funding sources like loans and public financing, but investment by business angels has boomed in recent years.
Because Egypt’s startup ecosystem is still in its infancy, accelerator programs have been favored at the expense of incubators for reasons including limited bootstrapping abilities and education in entrepreneurial subjects. Coworking spaces are the most popular type of support hubs across the country.
Egypt’s startup hubs
The third most populous city in Africa and the sixth most populous in the world, bustling Cairo is home to over twenty million people and is Egypt’s main startup hub. Home to a large international population, increasing number of investors and a quickly growing entrepreneurial support system, the vibrant ecosystem allows Cairo-based founders to more easily network and scale up than in other Egyptian cities.
There’s also a strong entrepreneurial community in Alexandria. Lower Egypt’s main startup hub and Egypt’s second most mature startup ecosystem, it has the potential to be as competitive as Cairo given its relatively large population. The surrounding Delta region is a hybrid of cosmopolitan and countryside, with a quickly growing number of programs and investors focused on supporting aspiring entrepreneurs.
Aspiring entrepreneurs in Upper Egypt will find Assiut well-equipped with affordable coworking spaces and supported by a young and educated workforce. The city boasts the highest proportion of university students per capita in Egypt and is poised to become the hub for Upper Egypt’s startup scene.
There’s increasing opportunity for aspiring entrepreneurs outside of the major hubs, in part thanks to the support of DROSOS FOUNDATION. The Swiss private not-for-profit organization is committed to enabling youth to live with dignity through promoting creativity and economic independence.
In Egypt, it is focused on enabling young people to become active engaged citizens and supporting them in attaining decent sustainable livelihoods within an overall enabling environment. This vision is realized through five interlinked programs: rural development and green businesses, economic inclusion of marginalized youth, innovation and entrepreneurship, creative economies and creative skills for children and youth.
Egypt’s talent force has the potential to be one of the main drivers to advance the country’s startup ecosystem.
Starting a business in Egypt
Despite governmental and institutional efforts to change, Egypt is still a very bureaucratic country. Many startups use incubators and accelerators to speed up the business registration process, and hiring an experienced lawyer and legal accountant can make life a lot easier. You will need an office address to register as a business, which is something startups often use accelerators and incubators for.
From the heart of downtown Cairo, Startup Haus Cairo by enpact, supported by DROSOS FOUNDATION, acts as a one-stop shop for entrepreneurs, providing them with the resources to take their businesses further. This includes access to work space, international support networks and entrepreneurial support programs.
The first thing you should do to set up a business in Egypt is open a business bank account with a minimum of EGP 250,000 ($16,000). Most foreign companies operating in Egypt are joint stock (requiring at least three shareholders) or limited liability companies. Sole proprietorship can be more difficult to establish due to the staggering number of permits and amount of paperwork required, especially for foreigners.
You need to register your company at the General Authority for Investment (GAFI), and can find information about what is required to do so on its website. Once GAFI has validated the company's statutes, the incorporation certificate is issued within 24 hours. You then have to request an operating certificate in person at the Chamber of Commerce and also register the company at the Registry of Commerce, again in person.
Once the company has been incorporated, it can be registered at the Tax Office at GAFI. You are also required to register your company at the Social Security office.
How to make business connections in Egypt
In cities with established startup communities such as Cairo and Alexandria, incubators, accelerators and enablers often host matchmaking events and meetups, which can be a good place to find like-minded people or potential hires. Ramadan is a great time to make connections – many startup communities host Iftar gatherings, where members of the ecosystem are invited to share a meal after sunset and network. Demo days are also a great place to meet investors and mentors.
In Cairo, the GrEEk Campus hosts a lot of ecosystem events, workshops and meetups. Home to more than 160 startups, incubators, VCs and accelerators in various industries, this hub collectively providing 1,500 jobs. It is also the birthplace of RiseUp Summit, an annual entrepreneurship and innovation event, and has hosted more than two hundred cultural activities and five hundred events.
Each year, Alexandria hosts the Techne Summit. Local entrepreneur and investor Tarek El-Kady is focused on connecting tech-enabled startup ecosystems operating along the coast of the Mediterranean Sea. He launched Techne in 2015, and the company organizes two annual summits – one in Alexandria and a second in Dubrovnik, Croatia – as well as a series of “drift” events in fourteen governorates along the Egyptian Delta. Startups of Alex also hosts events to foster connection among Alexandrian startups.
Entrepreneurs in Assiut should check out what’s happening at Assiut University, which is a hub for a large pool of enthusiastic entrepreneurs.
Want to know more about Egypt’s startup scene? Startup Guide Egypt includes valuable tips, founder stories and expert insights. Order your copy now!
Written by Leena ElDeeb, Tom Jackson and Aalaa Halaka.
Repackaged by Hazel Boydell.