Egypt Startups Ecosystem 101 - Country Overview Dec 2015

Egypt’s Startup Community 101

Country Overview

Ameer SherifCEO and Co-founder, WUZZUF

twitter: @AmeerSherif #500Strong #Batch8

Dec 12th, 2015

#Egypt #GOAP

#RiseUp15

Welcome to Egypt

Egypt Startup Community 101 | @AmeerSherif #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


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 EgyptCompanies 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 InvestorsMost 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’DonnellRiseUp Summit. Angel investor.

Founder Sarmady

Ahmed AlfiSawari Ventures,

GrEEK Campus, VC, Angel, Flat6Labs

Tarek FahimVC, Angel,

Endure Capital

Khaled IsmailAngel 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.

http://500.co/500-falcons-hasan-haider-mena/

http://500.co/global-series-middle-east/


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…