Egypt: Africa’s mobile oasis scaling inwards and outwards

Between 28 January and 1 February, our Ecosystem Accelerator team was in Egypt to provide further support to our portfolio start-up, Raye7, and reflect on the progress made since we started funding them back in early 2017. During the week, we supported Raye7 with market development by participating in business development meetings with clients and potential mobile operator partners. In addition, we used this opportunity to meet with mobile-enabled start-ups, local tech hubs, investors, mobile operators, and other stakeholders who provide various types of support to mobile first start-ups. Here are our main takeaways from this packed week immersed in Egypt’s tech ecosystem.

1. Mobile technology fuelling innovation

Mobile is at the heart of Egypt’s innovation ecosystem. Here are just four examples to illustrate this.

When Bey2ollak launched in 2010, the service provided a chat-based navigation system for BlackBerry Messenger (BBM) users. Since then, the service has evolved to an android and iPhone app product that provides a real-time navigation map combined with qualitative traffic data from thousands of customers each day.

Bey2ollak is not the only start-up leveraging mobile technology locally. Iqraaly digitises popular books into audio using Arabic, allowing thousands of commuters to remain productive during their daily three-hour commute. Another start-up, Mumm, is a mobile-enabled platform that connects hungry professionals with wholesome, fresh, homecooked food in their vicinity. Our portfolio start-up, Raye7, is also using a mobile app to support its culturally sensitive carpooling platform which allows people to find convenient and affordable commuting rides while reducing cars on the road.

Part of Raye7’s team

Mobile operators continue to embrace partnership opportunities with local start-ups. For instance, Raye7 is integrated with both Orange Egypt’s SMS API and Vodafone Sherkety platform to facilitate seamless communication with the customer base and tap into mobile operators’ base of business customers respectively. We are confident that the number of win-win partnerships between start-ups and mobile operators in Egypt will increase exponentially as more mobile APIs become available and the pipeline of start-ups with high scaling potential grows.

2. Mix of local venture capital firms is increasing rapidly

Beyond the prevalence of mobile technology, the availability of funding both from international and local investors has contributed significantly to the growth in local entrepreneurship ecosystem.

As the pipeline of local start-ups grows, a number of local investors have seized the opportunity to invest in home grown companies. A case in point is Algebra Ventures, a pioneer fund that focuses on Series A and Series B investments in Egypt. Occasionally the fund invests in earlier-stage start-ups or in other parts of the MENA region. Since its inception in 2016, the fund has invested in about 15 companies across multiple sectors.

Early stage investors play a pivotal role in creating a deal flow of start-ups for later-stage investors. For instance, Sawari Ventures typically invests $250,000 – $1 million tickets in technology-driven and high-growth ventures across the Middle East, including Egypt. Completing the ecosystem landscape, investor networks such as Cairo Angels and local tech hubs such as Flat6Labs Cairo or government-backed Technology Innovation and Entrepreneurship Centre (TIEC) are critical in providing financing, mentorship and innovation spaces for seed stage start-ups.

Beyond local investors, local networks, and local tech hubs, international investors such as DiGAME, EndureCap, BECO Capital, and Silicon Badia, whom we’ve had the opportunity to engage with, continue to provide additional financing and invaluable expertise that enables ventures to scale in Egypt and beyond.

3. Scaling beyond Egypt

Some of the local start-ups such as Iqraaly, Bey2ollak, and Eventtus (a one stop shop for events management, ticketing and interactive events solutions) have all scaled geographically across the Middle East and North Africa. Some of the popular expansion countries for Egyptian start-ups include Morocco, Lebanon, Jordan and the United Arab Emirates.

However, Sub-Saharan Africa (SSA) remains relatively unexplored by Egypt-based start-ups despite SSA’s huge potential. Swvl, a premium alternative to public transportation that offers users the ability to book affordable bus rides through a mobile app, is thinking outside the box. After fundraising and scaling successfully in Egypt, Swvl recently launched in Nairobi, Kenya. Over time, we expect more start-ups from the North Africa region to scale southwards within Africa to tap into favourable market dynamics such as young population, high smartphone penetration and inclusive trade laws recently adapted by Common Market for Eastern and Southern Africa (COMESA) and The Africa Union.

The Ecosystem Accelerator programme is supported by the UK Department for International Development (DFID), the Australian Government, the GSMA and its members.