Insights 2021: Egypt on the VC Map
With boosted investor participation and an unprecedented influx of capital, we highlight Egypt’s top insights from our 2021 Egypt Venture Investment Report brought to you by ITIDA as benchmarked with its peer Emerging Venture Markets.
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The Egyptian ecosystem stands at a pivotal moment after observing an unprecedented year for VC funding in 2021. Over the past years, the Egyptian entrepreneurial ecosystem has gained investor confidence, proving able to emerge with hyperlocalized offerings, tech-enabled solutions, and conducive infrastructures paving the way for next-generation transacting. In doing so, Egypt was able to record a 5-year consecutive growth in VC funding, to observe its record-high of $491M in 2021.
Nearing the $500M mark is an important milestone for the Egyptian ecosystem, representing a 168% YoY growth in funding over 26% more deals than FY’2020. This is particularly impressive given that the number of active investors in the space almost doubled YoY, with remarkable non-local investor participation accounting for 77% of all active investors with the global players the likes of Sequoia Capital making their debut investments in this North African Market. While non-local investor participation exceeded that of markets like the UAE (45%) or the KSA (25%), Egypt joined these markets in raising its Mega Deal ($100M+) in 2021. Halan’s $120M funding round not only showed investor confidence in the Egyptian VC market but more importantly portrayed the ecosystem’s readiness to house major players.
With Q1’ 2022 nearing an end, we’ve already recorded some interesting entries to the Egyptian market. Saudi-based B2B marketplace and digital wholesaler Sary acquired its Egyptian counterpart Mowarrid to enter the North African market. In doing so, the new entity now competes with equally major players like MaxAB, and Capiter which shows healthy signs of evolution for the E-commerce space in Egypt. Similarly, we’ve seen the emergence of regional players through local acquisitions like that of Egypt-based Automotive marketplace ContactCars acquiring its local counterpart, or cross-market acquisitions like SA-based SweepSouth acquiring its Egyptian counterpart FilKhedma, and Saudi-based T&L startup DIGGIPACKS acquiring FWRUN. As we release our 2021 Egypt Venture Investment Report brought to you by ITIDA, here’s how the Egyptian VC ecosystem benchmarked with its peer markets in EVMs in 2021:
Early-Stage Growth, Later-Stage Takeoff
With boosted investor participation, the Egyptian VC ecosystem was able to catch up and surpass its peer Emerging Venture Markets. In 2021, Egypt ranked first by total number of transactions in Africa, followed by Nigeria with a 7-deal difference, and South Africa with a 53-deal gap. While Egypt was surpassed by the UAE in number of transactions in 2021, to rank second in MENA by number of deals followed by the KSA, it was the only geography amongst the top 3 to observe an increase in the proportion of Early-Stage Deals (<$500K), growing by 10PP YoY. With Early-Stage investors like Flat6Labs, AUC Angels, and Falak Startups and private/public initiatives like the Creativa Innovation Hubs (a partnership that turns public universities into early-stage venture hubs) and FinTech for Youth by the Central Bank of Egypt, the Egyptian ecosystem was able to maintain a solid pipeline for future venture growth.
Nonetheless, investor tendencies towards larger rounds were still evident in Egypt as the proportion of Later-Stage deals ($10M+) increased by 6PP to record an all-time high in 2021. Later-Stage deals in Egypt accounted for 10% of all transactions which bodes well compared to its peer Emerging Venture Markets like the UAE (13%+) and Pakistan (8%).
Fintech and T&L lead investor mandates
As investor mandates diversify and lean towards larger funding rounds, we’ve seen some sizable investments in the Egyptian VC space. With global and local influx of capital, we’ve seen the average Series A round size more than double in 2021, growing by almost 400% YoY. This being said, and in congruence with the general trend across Emerging Venture Markets, FinTech was able to reign as the most transacted industry in Egypt, accounting for 17% of all transactions closed over the year. While we’ve observed major investments in payment gateway and alternative payment providers like Dopay, Paymob, Sympl, and Telda- the Transport & Logistics (T&L) industry raised the lion’s share of investment driven by Halan’s $120M Mega Round. This was in congruence with the general surge of FinTech across MENA, accounting for 18% of all transactions and raising almost every fourth dollar of investment in 2021.
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