Last weekend’s RiseUp Summit in Cairo was ‘massive’. The old campus at The American University of Cairo hosted local and global entrepreneurs, investors, and ecosystem stakeholders, to network and discuss gaps and opportunities. In-between panels and workshops held at the Greek Campus, the Garden, and Edward and Fountain zones, attendees had some free time to get to know startups exhibiting at the startup station.
The three-day summit featured three tracks in each zone: capital, creative, and tech. It also featured workshops and events, including Wamda’s Mix N’ Mentor, which was held on the first day.
Mix N’ Mentor featured four mentorship sessions, each led by two to three mentors, with topics driven by the challenges entrepreneurs discussed. These mainly hovered around the difficulty of raising funds to grow the business, while their main issue was the absence of product testing.
Philip Bahoshy, CEO and founder of startup matchmaking platform MAGNiTT, advised the founder of Blendery, an online education platform, to replace thinking about monetization, by proving the demand. This would help the startup to optimize its growth potentials.
“You need to create a dummy course first. Get one customer, find a niche, and build it [the platform] slowly,” he said, advising the entrepreneur to keep it simple and film the very first courses by themselves. “Film a teacher using an iPhone if you had to.”
The lack of focus was another issue identified during the sessions. Bahoshy told the attendees that it is very important to focus on one industry that will generate a lot of revenues, than focusing on different industries with multiple revenue streams. When talking to the founder of Shareco, a service that reviews sharing economy apps, Bahoshy emphasized again on finding a niche. “Find one industry that has many shared economy apps. Once people know you well, you move to another industry.”
It’s after the business and revenue models are tested and proven that entrepreneurs need to fundraise. Yet looking for the right investor is a must and requires conducting meetings with several ones prior to picking the profile that fits, especially if deciding upon a tech or an industrial investor. Bahoshy believed entrepreneurs should go for the one that will help them generate revenues. An industrial investor is an investor that also plays the role of a supplier and can help entrepreneurs with funding and production. “If they [industrial investors] are a supplier [for the entrepreneur’s product], then yes just don’t dilute yourself and beware of equity percentages.”
Equity, understanding what investors want, and company valuation were also one of the most highlighted topics during the capital track panels.
These panels also revolved around valuation and how startups should change their management structure after a Series A round.
Putting a high valuation on a business when it’s not ready to meet the target, drags the founder to a weaker spot whenever they seek to raise another round.
“If you get a high valuation and you don’t achieve it, you will be perceived as an underperformer,”said Omar Ramadan, founder of house repair startup Filkhedma.
Panelists on ‘How to achieve higher valuation for your business’ agreed. They warned entrepreneurs from both overpricing and underpricing their startups. However, a low price makes it harder for entrepreneurs to raise a bigger round in the future.
“100 percent of entrepreneurs underprice their products. You know all the bugs and challenges. The reason why increasing your price is important is because it tells us a lot about the entrepreneur. Being able to see that over time you are taking a risk, because people can’t pay for your service, and lose certain merchants, is a massive indicator that you are willing to do a lot to keep your business sustainable,” said Chris Neumann, venture partner at global accelerator and fund 500 Startups.
Investment panels tackled the startup stages that follow Series B, C and D rounds. This hints to the region’s ecosystem maturity which might bring to light later stage funding rounds. Startups at the seed level must focus on picking the right team to execute on the vision and once they generate enough traction and prove to investors their ability to scale, they should raise a Series A, the panelists agreed. At this stage, entrepreneurs must focus on growing the company and the business model and delegate more tasks.
“You need to hire middle management and focus on one product, without being distracted by clients and employees’ requests,” said Khalil Shadid, founder and CEO at Reserveout, a restaurant booking startup.
Shadid emphasized that every round of funding requires different skills, while few remain constant. He believes that after Series A, entrepreneurs can no longer afford testing different revenue models. Once they raise an A round, they should focus on making money and becoming profitable, he said.
“The CEO’s job is cash, culture, and people. When you raise a round, you need to have [enough cash for] 18 months prior to raising the second,” said Kunal Kapoor, founder and CEO of The Luxury Closet, a fashion ecommerce platform.
A launchpad for announcements
RiseUp Summit was also a ground for startup competitions, HIPOs (high potential startups) and startup exhibitions, and a launchpad for new announcements. Some of the major ones included Seedstars opening a fintech coworking space in Cairo in January; publishing firm Nahdet Misr Group launching a new investment fund for edtech called EdVentures; the launch of The Legal Clinic, a place where entrepreneurs can access lawyers and receive legal advice, in addition to announcing the $2 million funding round of personal assistant app Elves.
With around 9.5 million people living in Cairo, increasing coworking spaces and accelerators, and more local success stories like Eventtus, which recently raised $2 million from Egypt’s Algebra Ventures, the startup scene in the country is promising if not transformative. With this ecosystem dynamism, Cairo doesn’t have to look for success in any other market. Will the next big exit story come from Egypt?