Kuwaiti edtech company Baims has acquired 100% of Egyptian edtech startupOrcas, the companies announced in a statement (pdf) yesterday without disclosing the value of the agreement. The acquisition, which Orcas CEO and co-founder Hossam Taher (My Morning Routine) — now the consolidated company’s chief strategy officer — described as a “big transaction,” provides Orcas shareholders with significant upside potential, Taher told Enterprise. We had a chat with Taher to break down the strategic acquisition, the consolidated company’s future plans, and the landscape for the edtech sector in the region.

Orcas at a glance: Founded in 2019, Orcas started out small, with the entire team fitting into a single office at the GrEEK Campus in downtown Cairo, Taher told us. Apart from support from investors, the Egyptian market itself contributed to their ability to go from that to exiting after only a handful of years. Edtech startups operate within what Taher described as a matrix that covers various learning stages — whether K-12, university, or lifelong learning — and various modes of delivery — whether one-to-one, one-to-many, or asynchronous, not to mention on and offline. Orcas’ specialty is one-to-one learning for the K-12 stage, but it expanded beyond that core focus to grow the business.

Why Egypt and edtech go together: With a vast population, a young median age,demographic variety, and a challenging and competitive job market, Egypt serves as an ideal starting point for any edtech company, Taher said. The challenges an edtech company founded elsewhere in the world might face are likely to be magnified due to these traits in the Egyptian market. But on the flipside, the risk for businesses and investors is lower, especially with the weakened currency.

How the Baims acquisition came to be: Amid the ongoing economic challenges in Egypt, Orcas began venturing beyond our borders to boost its business. The company started off by dipping its toes in the GCC market, offering their services in Saudi Arabia and the UAE. This move allowed the company to maintain stability, but it was ultimately after growth, Taher told Enterprise. Orcas held a workshop in Dubai with a number of other edtech companies as it looked to grow into a holding group with different brand verticals. There was instant chemistry with Baims, because together, they ticked many of the boxes of the matrix, Taher said.

Synergy at first sight: While Orcas focuses on one-to-one classes for K-12 students, Baimsprimarily offers asynchronous learning for university students. And while Baims operated in regional markets Orcas had not entered yet — such as Jordan, Bahrain, and Kuwait — Orcas held the key to Egypt, the largest market in the region. After months of negotiations, the two companies decided to become one, signing the acquisition agreement in November 2023.

The post-acquisition structure: Baims fully acquired Orcas and the talent coming from both teamshas been consolidated and integrated together, but the two companies will still keep their brands and products separate. Although this structure may be revisited in the future, the two sides agreed that, for the time being, it is the best way to leverage the existing network, client base, and experience each had already accumulated, Taher told us. The difference is that now, both brands will be offering their services throughout Egypt, Kuwait, Saudi Arabia, the UAE, Bahrain, and Jordan. Orcas co-founder Amira El-Gharib (LinkedIn), who is now the consolidated company’s chief operations officer, is playing a key role in “setting up an organizational structure that maximizes shared knowledge and experience.”

What’s next for the new Baims? In terms of strategy, the company is focusing first andforemost on “acing the integration” process, maximizing revenue synergies, and creating packages out of their products that would offer their clients an effective “holistic learning experience,” Taher said. They are also focusing on creating new income streams for teachers hired locally from the various markets they’re in, as well as expanding their operations team with local talent.

But they’ve also been looking beyond that: The longer term goal is “not just expanding ourreach, [but] redefining the edtech landscape in MENA,” Baims CEO Yousef Alhusaini said. Eventually, they aim to grow beyond the region, Taher said. While it may be too soon to tell where this expansion will take them, Southeast Asia and Latin America are on the list of potential markets.

The message Orcas wants to send with the acquisition? There’s plenty of hope for localstartups: Although ongoing macroeconomic headwinds are a source of increasing pressure for entrepreneurs in Egypt, the challenges can be leveraged as advantages, Taher told us. Egypt offers a wide pool of highly qualified talent that is cost efficient, while operations can run at a fraction of the cost of the same operations run abroad. While Taher sees plenty of space for startups to capitalize on these factors, investors also need to see the Egypt angle, he told us. The low-cost, low-risk nature of the Egyptian market, coupled with the high demand for education, means the startups they invest in will eventually take their experience beyond the Egyptian market, and make the venture worth their while.

And while the edtech landscape is changing, there’s always growth momentum: The initialCovid-19 momentum for edtech is likely waning — and edtech’s growth rate is slowing from where it was in 2019-2022 — the appetite for online and digital learning has prevailed. In 2019, less than 1% of the volume of Orcas’ work was online, while today, 70% are between hybrid and fully online. Hybrid learning will likely be the future of education, after the world was suddenly thrown into online learning as a result of covid lockdowns, which will always create a space for edtech companies to thrive in, Taher said.

AI will also likely be a key fixture of edtech moving forward, Taher expects. Prior to theacquisition, both Orcas and Baims dabbled with the technology, with Orcas employing a tool using data to help teachers and tutors build lesson plans tailored to specific students, while Baims worked with an AI tutor that students could ask questions and receive help from. Today, the consolidated company is developing a tool to help students in Saudi Arabia train for the kingdom’s standardized tests and predict their scores.

In the image above from left to right:Bader AlRasheed (Baims Co-Founder) Amira El Gharib (Orcas Co-Founder) Shams Adly (Orcas CMO) Yousef AlHusaini (Baims Co-Founder) Hossam Taher (Orcas Co-Founder) Mohammed Khalaf (Orcas CTO).