{"id":584703,"date":"2023-04-04T00:00:00","date_gmt":"2023-04-04T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/startups-are-capitalizing-on-the-countrys-plastic-waste-problem-will-vcs-follow\/"},"modified":"2023-04-04T00:00:00","modified_gmt":"2023-04-04T00:00:00","slug":"startups-are-capitalizing-on-the-countrys-plastic-waste-problem-will-vcs-follow","status":"publish","type":"goinggreen","link":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/startups-are-capitalizing-on-the-countrys-plastic-waste-problem-will-vcs-follow\/","title":{"rendered":"Startups are capitalizing on the country\u2019s plastic waste problem \u2014 will VCs follow?"},"content":{"rendered":"

How Egyptian startups are turning plastic trash into cash: <\/span>Egypt is estimated to generate <\/span>up to 5.7 mn tons annually in plastic waste,<\/span>according to a <\/span>UNIDO 2021 report (pdf)<\/a><\/span>. And the problem could only worsen: \u201cThe plastics market in Egypt is expected to grow at a rate of 10% annually in the next 10 years,\u201d putting Egypt as the largest consumer of plastics in Africa, the report states. In the MENA region, <\/span>40% of plastic is mismanaged<\/a><\/span> or uncollected, 54% ends up in landfills, and just <\/span>5% is recycled<\/a><\/span>. Local companies have noticed the problem, and are capitalizing on its potential.<\/span><\/p>\n

Homegrown companies are tapping into the plastics recycling market: <\/span>Local startups have <\/span>spotted the potential in our recycling industry, with startups collecting, treating and turning plastic waste into new products. Some have already started exporting these products while others are planning to do so. We spoke with some of these startups, who tell us that more companies are setting up shop and entering the recycling business in Egypt as Egyptians \u2014 both on an individual and industry level \u2014 are becoming more environmentally aware. There\u2019s potential for Egyptian companies to export, especially with more global awareness and readiness to adopt recycled goods. Yet despite this, VCs are either hesitant or unaware of the potential of this industry, which is in need of their investment. <\/span><\/p>\n

More startups are entering the space:<\/span> \u201cThere was no ecosystem in 2015, people had no idea <\/span>what we were doing, but in the last few years there\u2019s been more activity and more startups coming into the scene and creating products from waste\u201d said Yara Yassin <\/span>(LinkedIn)<\/a><\/span>, co-founder of <\/span>Upfuse<\/a><\/span>, a company that turns plastic waste into bags and apparel. She\u2019s not wrong: there have been a variety of startups entering the recycling space, including <\/span>Mobikya<\/a><\/span>, <\/span>Reform Studio<\/a><\/span>, <\/span>Dawar<\/a><\/span>, <\/span>Very Nile<\/a><\/span>, <\/span>TileGreen<\/a><\/span> and <\/span>Mubun Furniture<\/a><\/span>, to name a few.<\/span><\/p>\n

Egyptian consumers are more eco-conscious: <\/span>\u201cMore consumers are appreciating Verynile\u2019s <\/span>work,\u201d says Farah Abdel Baki (<\/span>LinkedIn<\/a><\/span>), <\/span>Very Nile\u2019s<\/a><\/span> marketing and communications consultant. In addition to clearing the Nile of 200 tons of plastic waste, the company has partnered with the <\/span>Egyptian clothing bank<\/a><\/span> to collect plastic bags, which they turn into sellable fashion and furniture.<\/span><\/p>\n

Abdel Baki goes on to say that she\u2019s noticed clusters of eco-friendly consumers changing the way some businesses operate, \u201cfor example some cafes now offer wicker instead of plastic straws.\u201d<\/span><\/p>\n

This has translated into growth:<\/span> Upfuse revenues doubled y-o-y in 2022 and the company is putting final <\/span>touches on a new store in Gouna, scheduled to open in late April, said Yassin. TileGreen, a company that produces construction materials out of recycled plastics, has over the past six months installed floors for corporate offices, including for SODIC, Nestle, Redcon, and <\/span>Henkel<\/span>, said co-founder and CEO Amr Shalan (<\/span>LinkedIn<\/a><\/span>). Meanwhile, Very Nile\u2019s revenues almost tripled in 2022, Abdel Baki told us.<\/span><\/p>\n

Cue exports:<\/span> Although always part of their growth strategies, some are now expediting export <\/span>growth as a means to increase their sales. With all three companies upcycling plastic waste and exporting finished products rather than exporting the plastic waste itself. \u201cWe\u2019re starting to get orders from Europe and are focusing a lot on growing in the GCC, because the market is booming,\u201d said Upfuse\u2019s Yassin. Very Nile\u2019s Abdel Baki told us that the company is partnering with a distributor in Europe while TileGreen is looking to capitalize on upcoming climate talks in Abu Dhabi. \u201cWe are in talks with several real estate developers in the UAE to roll out different pilots in the run up to COP28,\u201d Shalan told us.<\/span><\/p>\n

So then why are VCs not taking note? For one, there\u2019s very little information on the wider <\/span>recycling industry<\/span>, which <\/span>is fragmented<\/a><\/span>. \u201cThere isn\u2019t real specific data to help us get a figure, but I look to other markets that have numbers as a guide. I believe Egypt is a big market, and there is global demand for high-quality recycled products,\u201d Tarek Roushdy (<\/span>LinkedIn<\/a><\/span>), founder and Managing Partner at boutique investment outfit <\/span>UI Investments<\/a><\/span>, tells us. This and the fact that the formal recycling industry in Egypt is in its infancy, has meant many investors are cautious. But Roushdy remains confident in the sector, going on to say that he is already assessing a few other companies in plastics recycling for potential investment opportunities.<\/span><\/p>\n

Furthermore, quite a few of the investors we spoke to expressed that this is not an <\/span>industry on their radar.<\/span> \u201cThe industry hasn\u2019t been tested, unlike the metals recycling industry which has been around since the 1930s \u2014 so investors are reluctant to back plastics recycling,\u201d says Mohamed Abou Hashish, founder and CEO of Pharos Recycling Company. <\/span><\/p>\n

But some startups with a proven business model are managing to tap into the investment <\/span>scene: <\/span>TileGreen have already received a USD six figure backing from UI Investments and are gearing up for a seed round of fundraising, Shalan told us. Yassin, meanwhile, said that Upfuse has been approached by investors, however wouldn\u2019t disclose who it was or the amount of money they are looking to raise.<\/span><\/p>\n

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