{"id":609586,"date":"2023-11-07T00:00:00","date_gmt":"2023-11-07T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/how-startup-accelerators-factor-into-our-green-startup-ecosystem\/"},"modified":"2023-11-07T00:00:00","modified_gmt":"2023-11-07T00:00:00","slug":"how-startup-accelerators-factor-into-our-green-startup-ecosystem","status":"publish","type":"goinggreen","link":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/how-startup-accelerators-factor-into-our-green-startup-ecosystem\/","title":{"rendered":"How startup accelerators factor into our green-startup ecosystem"},"content":{"rendered":"

The role startup accelerators play in Egypt\u2019s green startup ecosystem: <\/strong>The role of climate-focused accelerator programmes is becoming increasingly important as growth-stage VC funding to climate tech startups is drying up in MENA<\/a> and globally. Owing to the challenges green startups in Egypt face \u2014 including access to finance, sourcing technical assistance and talent, and a host of legal hurdles \u2014 climate-focused accelerators play an essential role in developing Egypt\u2019s green economy ecosystem. <\/p>\n

2023 wasn\u2019t a good year for climate tech to land VC funding:<\/strong> While startups working in e-commerce, fintech, and logistics managed to attract investment, global VC and private-equity funding to climate tech dipped by 40% in 2023 due to economic uncertainty and a dip in investor confidence due to geopolitical tensions, according to a report<\/a> by PwC. The report \u2014 which analyzed 8k climate tech startups and over 32k agreements worth more than USD 490 bn \u2014 also found more funding was occurring at the mid-stage than at the early stage for the first time ever for reasons including challenges around scaling or implementing capital intensive climate tech, as well as a challenging macroeconomic environment. <\/p>\n

Enter accelerators:<\/strong> Accelerator programmes help catalyze the growth of young startups by providing access to mentorship, networking opportunities, and drumming up funds from external investors. Some programmes offer grants and others extend equity-based investments. <\/p>\n

The award for most accelerated goes to \u2026 : <\/strong>Egyptian startups are the most accelerated in Africa, with almost 40% having taken part in some kind of acceleration or incubation programme, according to a 2021 report (pdf)<\/a> by Disrupt Africa.<\/p>\n

The rise of the green accelerator: <\/strong>Accelerators have come as a key policy recommendation<\/a> to bolster climate entrepreneurship. MENA began building its first generation of accelerators some years ago, according to the US-based Center for Strategic and International Studies<\/a>, reflecting that there is talent, interest and potential for the green startup ecosystem.<\/p>\n

And there\u2019s been moves at home:<\/strong> \u201cOur efforts began three years ago in Tunisia with the Green4Youth program<\/a>, after a growing awareness of environmentalism around the world,\u201d Chief Programs Officer at Flat6Labs Yehia Houry told us. Flat6Labs\u2019 Ebtekar Agritech Program<\/a> has invested over USD 1 mn into Egyptian startups working in biotech, smart farming, internet of things (IoT), big data and AI, logistics and more.<\/p>\n

Green means good business:<\/strong> \u201cOur thesis has always been that making green investments is good business,\u201d Changelabs<\/a> founder Karim Samra told us. Samra\u2019s Scale Up to Green<\/a> accelerator helped to raise USD 2 mn of investment across its top six startups in the 2022 cohort. \u201cThe investors we put our startups in contact with are not \u201cclimate-focused\u201d investors. VCs are realizing that there\u2019s a huge opportunity in Egypt for agritech and waste management,\u201d he added. \u201cWe were able to bring on nine corporate partners in the programme\u2019s fourth cohort, as opposed to just one in the first cohort.\u201d<\/p>\n

And there\u2019s more than one success story: <\/strong>Hydrofarms, a hydroponics company that saves 75% of water used in agriculture, is now expanding into Saudi Arabia. \u201cWe\u2019re in the process of helping [company founder] Adel El Shentenawy raise USD 500k and introduced him to 80-90% of investors in that round,\u201d Samra told us. Another company in the Changelabs portfolio, Tekaya, is soon expanding into Saudi Arabia and recently licensed in Japan. <\/p>\n

Funding and support is more scarce in Upper Egypt:<\/strong> Athar is an accelerator based in Upper Egypt, which has graduated three cohorts of startups on its Green Accelerator<\/a>, and launched an agribusiness incubator<\/a> for women-led startups in Minya Governorate this year. \u201cThere are virtually no VC funds or angel investors in Upper Egypt,\u201d said Athar founder Shoaib AlQady, whose first cohort had raised a total EGP 1.53 mn by the end of 2022. \u201cAs for accelerators, some exist, such as the TIEC accelerator<\/a> programme under the Communications Ministry. Most university graduates move to Cairo to receive professional training, from which they enter Cairo-based accelerators. It is extremely difficult to reduce this gap.\u201d<\/p>\n

There\u2019s still a long way to go:<\/strong> \u201cStartups across all of our programmes have received close to USD 250 mn in external investments, but less than 2% of that went into green startups,\u201d Houry said. \u201cWe have started expanding our network of investors to environmentally-minded impact funds. For example, Catalyst Fund<\/a> recently invested in Bekia<\/a>, one of the startups in our portfolio, and Katapult Fund<\/a> is another well-known impact investor in MENA.\u201d<\/p>\n

In part two, we\u2019ll explore the economic, educational and regulatory barriers facing green startups and how accelerators are addressing them. <\/p>\n

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