Egypt Startups Ecosystem 101 - Country Overview Dec 2015

Egypt’s Startup Community 101
Country Overview
Ameer Sherif
CEO and Co-founder, WUZZUF
twitter: @AmeerSherif
#500Strong #Batch8
Dec 12th, 2015
#Egypt
#GOAP
#RiseUp15

Agenda
• About Me
• Key demographics and trends
• Intro to Egypt’s startup ecosystem
• SWOT analysis
• Overview of local startups
• Key people, investors, and support entities.
• Investing in Egypt. VC, angels and valuations
• Q&A
Egypt Startup Community 101 | @AmeerSherif #Egypt #GOAP #RiseUp15

About Me
• CEO, Co-founder
• Egypt’s #1 Job site
• Helped 50,000+ people get hired at 4,000+ companies
• Launched Jan 2011, one week before revolution.
• Bootstrapped for 3 years.
• > 10x growth in past 2 years. Now 70 FTEs
• 1st startup from Egypt to join 500 Startups. Batch #8
• Raised one of Egypt’s biggest Series A – after 5 years!
• My story with GOAP…

Disclaimer
• I did not purposefully make omissions
• I could not include every person and business
• I made maximum effort possible to give you the full picture of
Egypt’s startup community. But definitely not exhaustive.

Egypt key demographics and trends
• Total population ~ 90 million
• Greater Cairo ~ 20 million and Alexandria ~ 4 million
• Most startups in Cairo and Alexandria
• Young population.
• 26% of youth unemployed. (source: CAPMAS)
• Makes entrepreneurship a great option!

Egypt key demographics and trends
• 50% internet penetration.
• Doubled in past 5 years.
• #40 by GDP, #13 by population, #12 by
internet users
• Language: Arabic vs. English
• Major emerging market
• Egypt vs. MENA Region
• Population, Internet users, funding.

Main Cities

Intro to Egypt’s Startup Ecosystem
• Most growth since 2010
• Accelerated after Jan 2011 revolution
• Main players: local, regional, and global
• Top Universities: Cairo University, Ain Shams, American
University in Cairo, and Alexandria University (engineering,
public vs. private)
• Key Locations: Greek campus, Smart Village, etc..
• Other areas across Cairo and Alexandria + Co-working spaces
• Ecosystem Support: MIT Enterprise Forum, TIEC/ITIDA,
Wamda, Endeavor, Google, etc…
• Events: RiseUp Summit – Egypt’s biggest by far!

Many global players non-existent in Egypt
Companies with little to zero operations or market share…
and most other payments
And many many more…
Opportunity?

Current Hottest Tech Market Battles in Egypt
vs
vs

Tech Corporates and MNCs
• 3 telco operators: Vodafone, Etisalat, and Mobinil
• Big corporates with strong presence / engineering – IBM,
Oracle, Microsoft, Orange, Intel, Mentor Graphics, Valeo, etc…
• Facebook, Google, LinkedIn, etc... Mostly with regional offices
serving Egypt.

Some Exits and Past Successes
• Internet and payments:
• Sarmady acq by Vodafone ‘09
• Akhbarak acq’d by Vodafone ‘13
• Otlob acq by Rocket Internet / Hellofood ‘15
• Fawry acq’d by Helios $100m exit ‘15
• Hardware:
• Anacad acq’d by Mentor Graphics ‘94
• SysDSoft (acq’d by Intel)
• Silicon Vision IP acq’d by Synopsis
• New Port Media acq’d by Atmel (back office in Egypt)
• Most deals are for undisclosed amounts!

Access to funding is biggest
challenge for Egypt’s startups.
Big opportunity? Bargain
valuations?
But starting to change...

SWOT - Strengths
• Customer service and contact center / major outsourcing hub
• Technical talent - engineering, big data, etc…
• Technical / research centers / MNCs - Microsoft, IBM, Valeo,
Mentor Graphics, etc…
• Good weather and summer :)
• Gateway to Africa and cost-efficient hub to serve MENA and the
world.

SWOT – Strengths (Cont’d)
• High unemployment. Little to no war for talent.
• Youth: warm, energetic, problem solvers.
• Good ratio of women in tech and founders.
• Low cost structure. Cost of living. Salaries ~ 20% of US.
• Relatively good ecosystem – cost and user base
• Personality / culture – Perseverance to extreme levels.

SWOT - Weaknesses
• Many technical talent attracted towards MNCs and corporate
vs. startups. Starting to change…
• Risk averse culture – extra pressure from society and family on
founders.
• Pitching quality.
• Startups are usually perofrming much better than they’re pitching.
• Few opportunities to practice and receive advice.
• Lack of access to mentors. People who did it before.
• Complex legal setup. Mostly need to have offshore legal entity,
BVI, Delaware, Dubai, etc...for doing large rounds. Takes time
and effort.

SWOT - Weaknesses
• Lack of market data, few benchmarks. Undisclosed deals.
• Few have personal savings or family & friends to support initial
start. Difficult economics. Very difficult to start without some sort
of finanial support or incubation.
• Lack of info and awareness regarding vesting, cap table,
fundraising. Local investors used to eat up big chunk of equity
early on due to demand / supply inbalance. Changing...
• Very weak online banking. (opportunity?)

SWOT - Threats
• Global startups entering market with bigger funding. Yet in some
verticals need on the ground presence that local has advantage
in.
• Political instability – risk. But then again startups are risky
business. Upside is still huge. Those who are able to make it,
go big.
• Law not easily enforceable and takes time.

SWOT - Opportunities
• Large and growing emerging market.
• Internet penetration. Mobile. Growth. Huge use of global platforms. Google, Facebook –
are top sites.
• MENA Region: lack of Arabic content compared to Arab population.
• Fintech, unbanked. Most global payment options not here. Cash on delivery ~ 80% of
transactions
• Energy / Solar – a lot of sun, wind, etc… cleantech
• Limited access to finance. Limited fundraising options!!! Bargain deals. Opportunity for
investors.
• Gap in seed. $250 to $1m. Startups have to generate revenues early on to survive.
• Large consumer base Vs. rest of MENA.
• (population > all of Gulf countries + Levant combined.

SWOT - Opportunities
• Time machine. Very early compared to silicon valley.
• Early bets large returns
• Lagging US and global trends… you see the future. Lower risk.
• SMS still in use!
• Few competitors in most domains – than Silicon Valley or even
regional Dubai, UAE and Saudi.
• Egypt is the land of opportunities… other places are over
saturated with solutions to problems…
• education, healthcare, etc.. . local SaaS, Arabic, pricing!
• Social entrepreneurship is huge opportunity

#1 FACT about startups in Egypt
• PERSEVERENCE – It is so damn hard compared to Silicon
Valley and other places.
• If someone can make it in Egypt - they are world class and can
grow easily elsewhere.
• If a startup survives here it can thrive anywhere else. Can
experiment in Egypt with minimum funding.

Key People / Angel Investors
Most important 4 local people to know for global investors & startup support entities if you
plan on doing anything startup related in Egypt. Most connected, supportive, and active!
Con O’Donnell
RiseUp Summit.
Angel investor. Founder
Sarmady
Ahmed Alfi
Sawari Ventures, GrEEK
Campus, VC, Angel,
Flat6Labs
Tarek Fahim
VC, Angel,
Endure Capital
Khaled Ismail
Angel Investor,
Founder SysDSoft

Investors, VC, Valuations
• Accelerators/incubators: Flat6abs (now regional), TIEC, and others.
• Angel investors:
• Cairo Angels ($30-150k as a group) + few other individuals.
• Most individuals put $10-25k. $50-100k very few super angels.
• Local VC firms: Sawari Ventures, Ideavelopers, Endure Capital, and
few others
• AngelList in Egypt?
• EGYPT’s BIGGEST CHALLENGE IS FUNDING!!!! Bargain deals!!!
• Funding gaps in seed and series A. $200-$1m.
• Valuations and ticket size converter…
• divide Silicon Valley valuations by 4 or 5
• Unless having regional / global presence or target market

Investors, VC, and Valuations
• Startups have to generate revenues to survive!!! very early on!
• Oversubscribed is rarely heard of!
• Until they are exciting for regional / global – becomes very hot.
• At WUZZUF – took us 5 years to Series A. Then oversubscribed.
• Regional and international VCs with interest – from Gulf, Levant,
Turkey, and International
• Int’l - 500Startups, Piton, Vostok New Ventures, Rocket Internet, Naspers
• Regional: Wamda, MEVP, BECO, Silicon Badia
• Startups with global target market are hugely advised to apply to
global accelerators! >> 500 STARTUPS, YC, and others…
• Game changer: 500 Startups $30M MENA fund
• More from 500 Startups about the MENA region startups opportunity here.

A sample of Egypt’s startups (seed to Series A)
between ~ $1MM to 20MM in valuation + strong traction
Marketplaces, SaaS, Education, e-commerce, Content, Mobile Apps, Fintech, Clean tech, etc…
Links and details about these startups and more below…
(GoEjaza)
(Iqraaly)

Summary
• Large market. Largely Untapped.
• Still developing… Huge growth potential!
• Risky… but so are startups.
• Bargain deal valuations
• (compared to SV and rest of MENA)
• Cost structure + high potential founders.
• Large variety of startups.
• Need intros?

Thank You!
Q&A

Let’s RiseUp…

Egypt Startups Ecosystem 101 - Country Overview Dec 2015

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