Africa Tech Startups Scene // Egypt Quickly Emerging As Powerhouse

Strong acceleration of investment capital deals is helping the Africa Tech Startups scene innovate increasingly as well as break into the unicorn mound this is evident as the African Startups raised approximately $1.2 billion in venture capital funding, with 48% of the total investment fund going into tech startups.

As home to some of the leading startups in Africa, i.e SWVL, MNT-Halan, Fawry, and other great tech startups, Egypt is fast emerging as a new powerhouse for Africa Tech startups, establishing itself as one of Africa’s “big four” within a relatively short period of time.

This is according to a report released by Disrupt Africa, a one-stop shop for all news, information, and commentary pertaining to the continent’s tech startup – and investment – ecosystem.

The report dubbed The Egyptian Startup Ecosystem Report 2021 dives into the local ecosystem by analyzing active startups, local support networks, and funding and exit activity over the last seven years.

The growth of the Egyptian Tech Startup Scene has been driven widely by the substantial increase in startup activity and a massive inflow of capital has seen the Egyptian startup ecosystem within a relatively short period of time, with the sector’s development aided by proactive government and a strong local startup support system.

Another report from Start-up Genome also shows Egypt as one of MENA’s fastest-growing startup scenes, consisting of young, affordable, and growing talent and a value of $1.5 billion. Despite the pandemic, Egyptian startups grew 30% more last year with $190 million flowing in as investments. With a sign of economic recovery starting to happen at different paces across industries.Another

The report by Disrupt Africa also finds that at least 562 tech startups were in operation across Egypt as of September 2021, making it the fourth-largest startup ecosystem on the continent, behind only South Africa, Nigeria, and Kenya providing a workforce of almost 13,000 people.

According to the report, at least US$791,072,500 has been raised by 318 Egyptian startups across 447 rounds since January 2015. These figures in terms of total investment and number of backed startups are bettered only by Nigeria, Kenya, and South Africa on the African continent, and the gap is closing.

The number of Egyptian startups securing investment each year has grown and grown, from humble beginnings to the point where it is well-established within the “big four” startup ecosystems on the continent.

Back in 2015, just US$8.6 million was invested into (just 10) Egyptian tech startups, but that figure approximately doubled every year until 2018, when total annual funding passed the US$70 million mark.

Slower growth followed, yet increases of around 50 percent still served to establish Egypt as a major player on the African continent from an investment perspective.

The US$104,934,000 raised in 2019 was bettered by only Kenya and Nigeria, and though the US$156,248,000 banked in 2020 saw the country rank fourth, its share of total African startup investment was significantly up.

Egypt has, alongside other African tech startup ecosystems, experienced an extraordinary 2021 so far, with the US$403,562,000 raised by startups from the country as of the end of September already representing a 158 percent increase on 2020 figures. Only Nigerian startups have secured more investment so far this year.

“With the number of funded startups remaining at similar levels to 2019 and 2020, it is the increased size of rounds that accounts for this impressive growth. In 2015, 2016, and 2017, rounds beyond the US$3 million mark were highly unusual, while the US$10 million mark for a funding round was only breached in 2018. Even then, funding success stories like Vezeeta and Swvl remained outliers rather than the norm,” said Disrupt Africa co-founder Gabriella Mulligan.

“Yet in 2021 news of a US$2 million seed round is considered standard and funding rounds of US$30 million and above are increasingly regular. With MNT-Halan reaching the US$100 million mark earlier this year, and Swvl set to join Fawry as a unicorn, Egypt has truly arrived as a tech startup investment destination on the African continent.”

E-commerce is the most populated sector

E-commerce is the most populated sector, with one-fifth of the country’s tech startups active in that vertical. Indeed, there are almost twice as many e-commerce and retail-tech startups as there are fintech ones, which came in second. Startups are active across a diverse array of spaces, with e-health, ed-tech, logistics, recruitment, and AI/IoT also especially busy.

Almost 40 percent of Egyptian tech startups have undergone some form of acceleration or incubation, an impressive statistic and one that speaks favorably to a local support ecosystem that also incorporates government, corporates, and universities.

Increasingly, these startups are also supported by a strong investment ecosystem. At least 318 Egyptian startups have raised almost US$800 million since 2015, according to the report, and capital inflow into the ecosystem has been growing year-on-year. The US$156,248,000 raised in 2020 represents a 1,716 per cent increase on the US$8.6 million banked in 2015, and 2021 looks set to shatter all records. So far, more than 80 Egyptian startups have secured more than US$400 million between them this year.

Most Accelerated Start-ups

The report further shows that so far there are about 37 accelerators or incubators currently active or have been active at points over the last six years, while Egyptian startups have also taken part in renowned international accelerators such as Y Combinator, 500 Startup, Google for Startups and Facebook Accelerator.

“Egyptian fintech startups are the most popular with accelerators and incubators, with just shy of half the 65 fintech companies tracked by the report having taken part in some kind of program. E-health ventures are the next most sought after, with 47.2 percent accelerated or incubated, followed by marketing (47.1%) and recruitment (45.2%),” shows the report.

Since launching its research arm in 2016, Disrupt Africa has built up a significant portfolio of publications, most notably the African Tech Startups Funding Report and Finnovating for Africa, previously available for sale but now made available free for all via open-sourcing initiatives with various partners across the continent’s tech ecosystem.

The Egyptian Startup Ecosystem Report 2021 is the first geographically-focused publication released by the company, made possible by support from key partners the Information Technology Industry Development Agency (ITIDA) and Global Ventures. Other supporters of the report are AUC Venture Lab (V-Lab) and Quona Capital.

The report can be accessed here