A health check on Egypt’s startup scene in 1H 2024: The first half of 2024 was a turbulent one, with exchange rate instability, the float of the EGP, and rising interest rates. Many sectors found themselves struggling to keep up with the rapidly-changing macroeconomic conditions of the country, but how did the startup scene fare?

By the numbers: Local startups raised a combined USD 88.7 mn across 39 transactions during the first half of the year, according to data compiled by Cairo-based think tank Entlaq for its EgyptianEntrepreneurship Sector Diagnostics Report that dives into the trends that drove the startup scene during the six-month period.

The bigger picture: Egypt currently houses over 2.1k startups with a total valuation of more than USD 8 bn. The country’s startup ecosystem employs over 50k people.

Who received the lion’s share of the funds? One of the biggest funding rounds the local startup scene saw this year was F&B logistics startup OneOrder raising USD 16 mn in a series A round. Other startups that received big funds during the period include pharma delivery startup Yodawy, which raised USD 10 mn from Egypt-based private equity firm Ezdehar Management, fintech Connect Money, which raised USD 8 mn in seed funding, and Sahl, which closed a USD 6 mn funding round led by the government’s Ayady for Investment and Development.

Who contributed the funds? Among the top local investors were Acasia Ventures, Ezdehar, and Nahdet Misr’s VC armEdVentures, while the top foreign investors included Saudi’s Sukna Ventures and Nigeria-based Ingressive Capital.

FLUCTUATIONS THROUGHOUT THE YEAR-

Despite the large number of funds raised and rounds closed, startup funding showed significant volatility during the first six months of the year.

It started off strong: January recorded the highest amount invested in local startups all year long — investors poured some USD 28.0 mn into our startups during the month. The figure dipped to USD 4.6 mn in February as investors grew cautious of the Egyptian market, which at the time was looking at major discrepancies between the official EGP / USD exchange rate and the black market rate.

Then the float of the EGP in March appeared to reignite investor confidence and investments started picking up again to hit USD 25.2 mn in May and USD 15.1 mn in June.

Rating our VC funding: The report gave venture capital financing a score of 2.81, placing it between the 2.0 below average score and the 3.0 average adequacy score.

WHATS NEXT-

What is to be done? To boost the startup ecosystem and push it to the next level, the report lays out a number of recommendations. These include offering targeting programs for growth-stage startups, introducing tax breaks for VC firms and investors to stimulate VC funding, and introducing incentives for foreign investors.

Also on the agenda: The report also recommends strengthening the financial infrastructure for smooth cash transfers, encouraging private sector players to set up incubators and accelerators, and setting up PPP funds.

And on the regulatory front, the report recommends the establishment of a unified government strategy for entrepreneurship coupled with effective policy and regulatory mechanisms. It also recommends the state simplifies and updates existing regulations to make the process easier for entrepreneurs and investors and boost dialogue between the state and entrepreneurs.

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