The Pyramids and the future of innovation in Egypt
The Pyramids of Giza, the only wonder of the ancient world to remain standing, is intrinsic to the Egyptian psyche. It is not only a source of pride and revenue thanks to the millions of tourists who flock to the site every year, but a symbol of Egypt’s historical ingenuity and innovative capability.
Now, the country’s startup ecosystem is looking to reposition this wonder to serve as a backdrop for future innovation, and it began with Pitch by the Pyramids, a multi-stage pitching event that saw 15 startups from across the Middle East and North Africa (Mena) hoping to secure investment.
The winner of the people’s vote was UAE-based Yanzo, an on-demand personal assistant app that won $60,000 while the judge’s choice was Egypt-based human resources and payroll platform Paynas, which won $50,000 from 500 Startups.
The event concluded the seventh RiseUp Summit, whose founder Abdelhameed Sharara announced a three-year partnership with Gemini Enterprises Africa, part of the Orascom Group, to co-develop innovation hubs at the Pyramids Plateau and other Orascom-owned holdings, while the former gains exclusivity for any entrepreneurial events in the area.
“Our aim is to position the Pyramids as a hub to merge history and the future, to connect the culture with innovation and entrepreneurship,” said Adly Thoma, chief executive officer at Gemini Enterprises Africa. “Together the ecosystem will reach this objective to position the Pyramids and RiseUp to the next level.”
Since the first RiseUp Summit in 2013, the event has expanded steadily, outgrowing its inaugural home at the Greek Campus in Downtown Cairo. This year, the event attracted more than 8000 attendees, from 56 countries including 290 startups and 400 investors making it the largest entrepreneurship event in the Middle East and North Africa (Mena) region. It was held for the first time in the sprawling campus of the American University of Cairo (AUC) which afforded the organisers the space they needed to host such a large event, but in doing so, it removed the summit away from the heart and bustle of Cairo.
Hosting RiseUp at the Pyramids will likely re-instill the cultural feel of the event, which has proven to be a good gauge of the state of the startup ecosystem in Egypt.
Last year, as mobility dominated the panel sessions, there was a visual battle of logos on buses and scooters that spilled out onto the street, a physical display of the ability of startups to bring real change.
And that is perhaps where Cairo’s ecosystem outshines most – solving for its own market inefficiencies. In nascent ecosystems, startups typically tend to imitate businesses that have seen success elsewhere, with a fair bit of localisation. As ecosystems mature, so too do the startups that emerge, demonstrating an understanding of the local market and providing a level of innovation that disrupts traditional sectors; it appears that Egypt is at this stage of its development.
“It’s really important to build on problems that exist in the country, startups can only thrive if they’re solving for an issue that exists,” said Vera Futorjanski, director of innovation at 500 Startups.
With a population of 100 million, crumbling infrastructure and lack of public services, startups have emerged in the country to provide solutions for these problems. It is why companies like Uber and Careem chose Cairo as the launchpad for their bus services and why local startups like Swvl, Buseet and Halan continue to expand and grow.
Beyond mobility, Egypt is producing a strong pipeline for health technology (healthtech) as well as education technology (edtech) and financial technology (fintech). In a country where more than 80 per cent remain unbanked, Egypt is fast becoming a financial inclusion hub. There was also strong presence from software-as-a-service (SaaS) and hardware technology, reflecting the country’s robust engineering capabilities.
“A lot of governments in Mena want to create ecosystems, it’s finally reached the stage where governments have realised that we need to create entrepreneurial ecosystems be it in edtech or health,” said Futorjanski. “But you need to create a pipeline for talent, no government in the world has enough talent.”
But in some respects, talent does not seem to be lacking in Egypt. With an unemployment rate of 11.8 per cent and a youth unemployment rate of almost 33 per cent in Egypt according to the International Labour Organisation (ILO), it is arguably here that entrepreneurship is the most culturally accepted across Mena as a viable career path. For young engineers and developers, working abroad or for big corporates like Vodafone still remains the most attractive option, but increasingly, startups are able to attract the local talent.
And it is talent that is sought after around the world. Andela, the software outsourcing company founded in Nigeria made a plea to Egyptian software engineers to join its team, only for a member of the audience to speak out against the company, accusing it of poaching Egyptian engineers who could instead be working for Egyptian companies and benefitting the local ecosystem. Andela Egypt country director, Rama El Safty’s only response was “this is our business model”.
Meanwhile Jordan-based Arabic content platform Mawdoo3 announced it will be expanding its Cairo team from eight people currently, to 100 at the start of 2020 to develop its artificial intelligence (AI) voice assistant, Salma.
“We see the talent is here, Microsoft Luis [the language understanding unit of Microsoft which uses machine-learning to build natural language into apps, bot and internet of things devices] is in Cairo, the whole team, not just for Arabic, but for all languages. If you go to Google or Facebook in Silicon Valley you will see a lot of Arab talent,” said Hussein Al-Natsheh, chief AI officer at Mawdoo3.
Mawdoo3 also announced the acquisition of SuperMama, an Arabic online publication tailored to women.
Money and Women
Beyond talent, another lifeline for startups is capital. This is perhaps Egypt’s weakest point in the ecosystem. The country’s strong pipeline of startups frequently look beyond its borders for investment. Swvl, an application for booking buses raised the country’s largest ever Series B round of $42 million from VCs in Sweden, UAE, China and the US. The company is now relocating its headquarters from Cairo to Dubai to sustain its growth.
Egypt has the highest rate of startup failure among the 49 countries studied in the Global Entrepreneurship Monitor 2018 report, with a rate of 10.2 per cent, driven primarily by a lack of profitability and difficulties in accessing capital.
Increasing investment has become a point of focus for the government and financial institutions with new funds being made available. The Central Bank of Egypt recently announced a $58 million fintech fund, while USAID announced the launch of TIYE Angels, a women’s angel investment network, in partnership with the Technology Innovation and Entrepreneurship Centre, United Nations Development Programme and Malaikah Angels.
Enabling female entrepreneurship was one major focus at RiseUp with several panel discussions.
“We’re making men fear us because we’re coming and we’re coming big,” said Neveen El Tahri, chairperson and managing director at 138 Pyramids, an accelerator based in Egypt. “I believe women are much more entrepreneurial than men.”
Be it men or women who pursue entrepreneurship in Egypt, both require greater access to capital and a friendlier regulatory environment to do business.
“We wanted to make sure entrepreneurs have a free hand and have the right ecosystem to grow and flourish and contribute to the economy in a sustainable and resilient manner,” said Sahar Nasr, Egypt’s minister of investment and international cooperation. “We have to make sure the legal, legislative and institutional environment is in place to allow startups to contribute to our economy.”
Too often in Mena there is a risk of viewing the ecosystem in a bubble, become overly positive and celebrate the small successes too much. In a place like Egypt however, it is almost impossible to be so congratulatory. One is reminded of the daily struggles of life at almost every corner. Getting around is a hassle, Cairo is one of the most polluted cities in the world and the country suffers from a poverty rate of 30 per cent. While the economy has picked up over the past few years, gross domestic product (GDP) per capita is less than $3000 and corruption is still common. It is not the easiest of places to live or start a business and if companies can scale here, amid such challenges, it gives them the resilience and know-how to scale in similar markets around the world.