By Claire Davenport
Are you interested in breaking into Egypt’s growing market for entrepreneurship but not sure where to start? Want to know where the current market is headed?
According to knowledge platform Wamda, startups in the Middle East and North Africa attracted $3.94 billion in funding in 2022, with Egypt emerging as one of the top three markets for investment. Yet, there are many barriers to entry, from lack of capital to risk of failure, which can make a career as an entrepreneur seem like a daunting prospect to many.
To demystify the current startup ecosystem in Egypt and what it takes to break into it, we sat down with Ayman Ismail ’95, ’97, Abdul Latif Jameel chair in entrepreneurship, associate professor in the Department of Management and founding director of the AUC Venture Lab, Egypt’s first university-based accelerator program.
Below are Ismail’s insights into the current startup climate in Egypt and his tips for getting started, pitching your venture to potential investors and more!
What has the startup climate historically looked like in Egypt?
The tech-enabled startup movement in Egypt is around 15 to 20 years old. Linkdotnet — one of the very first ventures to exit in 2011 — was founded by a team of AUCians. It was a fantastic deal that created a lot of energy, and since then, there’s been so much growth in terms of startups, investments and enablers.
Where is the Egyptian startup scene headed?
Five years ago, venture capital investments in Egypt were around 20 million to 50 million dollars. Starting 2020 and 2021, it jumped to 400-450 million each year. That’s a huge growth in investments in that sector. In the next few years, I would expect a lot of growth in the quality of startups and number of investments.
Where does AUC and the Venture Lab fit into this picture?
In 2013, we launched the AUC Venture Lab, our startup accelerator. Now, it’s the top university-run accelerator in the Middle East and Africa.
Our objective has always been to support the entrepreneurial ecosystem and put AUC in the heart of that space. We’ve supported more than 300 startups since the activation of our flagship accelerator program and more than 100 others through different programs under the lab.
What are these other programs?
AUC Angels, our investment network; a capacity-building program to transfer our knowledge to program managers running similar initiatives at other universities or companies in Egypt; and a launchpad that funds early-stage tech startups.
What does the AUC Venture Lab look for when assessing startups?
We see if the problem is worth solving and if it’s operating in a fast-growing, innovative space. We also evaluate whether the team can bring this kind of idea to life. Do they have the right mindset? Are they competent, visionary and ethical?
Do you have any advice on pitching a startup to a potential investor?
A lot of people think of pitching as a serious job. I think a better way to understand it is as a matching opportunity. If I’m just trying to convince someone to invest, I am only telling them what they want to hear so I can sell. But if my objective is to understand what the people on the other side have in mind — what they’ve done before and whether our goals match — then the conversation takes a very different tone.
Do you have any suggestions for fundraising outside of traditional capital?
If you can bootstrap with investments from your savings or family and friends, that’s amazing because investments come with a lot of constraints. And there’s a big movement for bootstrapping right now.
Are there any risks with sustaining a startup once it’s gotten off the ground and been active for a few years?
There are several points where companies can fail. People usually think about the new idea stage, where the startup is not yet defined and you have very little money. But there is another high-risk stage, which is when you move from being a fast-growing startup to a mature company and are building sustainable revenue streams and looking for stability to grow the business organically at a rate that fits the market. This is one of the biggest failing points; people reach a ceiling and they don’t know how to transition into a profitable business.
Is there any sector you see taking off in the next few years to look out for?
The most obvious is anything related to artificial intelligence, which is a global trend. The second is sustainability, green economy and climate resilience. That space is evolving quite rapidly, and I’m expecting it to grow gradually in Egypt. The third, which I think is very relevant to Egypt but more difficult to get into, is healthcare. It’s a big opportunity with a very interesting market.
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