Egypt becomes new frontier for start-up investment in Africa

Cairo, Egypt

Across Africa, start-up companies are attracting millions from venture capital, private equity and social impact funds, with the Egyptian start-up market becoming the new frontier for global and regional investment.

Egypt is emerging as the biggest investment market for start-ups, attracting millions of dollars annually on the back of ongoing political and economic reforms in the North African state.

Just in June 2021, Egyptian start-ups raked in more investment capital to surpass the 190 million dollars funding deployed into the start-up marketplace in the whole of 2020.

Data platform Magnitt, in its 2020 Egypt Venture Investment report shows venture capital investments in Egypt have grown at a compound annual rate of 100% over the past five years.

Investment analyst Aly-Khan Satchu told Bird that a series of policy shifts have made the North African state robust for start-ups to thrive.

“Egypt is a fascinating market opportunity. Egypt has the most joined-up, consistent and coherent policymaking apparatus of any African country. I am certain that Egypt will now lead the start-up space on the continent,” he said.

According to Quartz Africa, Egypt threatens to wrestle the market from traditional tech hubs in Africa – South Africa, Kenya and Nigeria with this new stream of investment.

“Cairo-based digital trucking marketplace start-up Trella closed a 42 million dollars funding round for expansion of its services into the Middle East, North Africa, Afghanistan, and Pakistan. The round was led by Maersk Growth and Saudi Arabian venture capital company, Raed Ventures,” the website reported.

“Edtech iSchool attracted 160,000 US dollars from Edventures. There was also the acquisition of Tareeqi, an Egyptian start-up that develops transportation-tracking software by an Omani internet of things (IoT) company, eMusharif, for an undisclosed amount.”

Quartz said all the funding deals were in addition to the National Bank of Egypt securing 100 million US dollars from the European Bank for Reconstruction and Development (EBRD) to help small and medium size companies in the country make improvements in the areas of energy efficiency, climate change mitigation, and adaptation.

Over the past decade, technology start-ups have sprung up in many parts of Africa with investors injecting millions of dollars in funding to prop them up.

Tomi Davies, president of African Business Angel Network (ABAN), told Xinhua that the continent’s tech-driven enterprises could be the next frontier of massive capital injection from local and overseas fund managers.

“I see the African technology-based entrepreneurship space as dynamic and growing. It has become increasingly innovative but we need the supportive ecosystem to sustain this momentum,” he said.

The latest report by start-up-focused news and research company, Disrupt Africa, shows the number of active fintech start-ups has jumped 17.3% to 576, with these businesses increasingly “re-bundling the bank”.

Meanwhile, it finds that since January 2015, 277 fintech ventures have banked 875 million dollars in funding, more than twice raised by any other vertical over the same period.

“Africa’s fintech sector is both growing and maturing, with more startups active in the space than ever before, platforms increasingly offering a variety of services, and investment and acquisitions taking place to an unprecedented degree,” the report further said.