Up close and personal with MEAPT's most prominent players in the ecosystem. Today we invite the team behind the proactive and ever-evolving AUC Angels (EGY)
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3 questions, 1 player, and endless insight. Welcome to the "FireSide 2022" content series where we reflect on trends, industries, investments, and venture capital in the Middle East, Africa, Pakistan, and Turkey. For today's FireSide chat, we invite AUC Angels:
What's the impact and importance of creating angel networks for the consistency of Early-stage deal-making, and how does having an Education network elevate that endeavor?
If we consider this question from the perspective of the ecosystem at large, it ultimately boils down to ensuring there is a solid pipeline of high-potential startups. The region has been witnessing an increase in the number of startups raising Series A to C, and in fact, one of the findings of your latest venture investment report highlighted the trend of a year-on-year rise in the contribution of mega deals to overall deal value. To support the sustenance of that deal flow, angel networks play a critical role in activating that early-stage deal-making.
For investors, angel networks are a way of getting access to vetted opportunities they may not otherwise have been able to reach. While investing at the early stage, comes with its risks, it also brings with it the satisfaction of co-building with the startups. Many investors consider angel investing as an opportunity to participate in the success story of the startup, in one form or another.
For startups, though we are recently seeing several strong teams able to access institutional capital at the seed stage, for the most part, angel networks provide that entry point capital that is often needed as they continue to experiment with product-market fit, validate their assumptions, and build the traction required before engaging with VCs. For startups accessing angel networks, the support goes beyond funding and inherently involves mentorship, strategic advisory, and in some cases business development opportunities; all of which are particularly critical at the seed stage.
Being linked to the university comes with its benefits. The most obvious is that it attracts alumni from a whole range of professional backgrounds, who then share views on deals, and syndicate together on transactions. The partnership with AUC Venture Lab, the startup accelerator program provides part of the network’s deal flow and ample opportunities for members looking to mentor startups.
Despite a 3-year consecutive dip in Early-Stage deals ( < $500K) observed across MENA, Egypt maintains a healthy Early-Stage deal flow. While Egypt remains the only geography in the top 3 to observe an increase in Early-Stage Deal share of total transactions (+10PP), its peer markets have witnessed further slumps in that area, dropping below 50% in KSA, and below 30% in the UAE. Perhaps attributed to a mix of the arbitrage effect and concentration of Early-Stage investors, Egypt's overall investment growth has been exemplary as recorded in our Egypt 2022 Venture Investment Report.
Can you share with us some of the most anticipated startups and/or sectors in your portfolio over the past year and your thesis behind choosing these investments?
We view the B2B supply chain, currently plagued with inefficiencies, to be ripe for disruption. This could be tackled from different angles, whether in terms of aggregation, distribution, or financing; essentially, more streamlining of the B2B processes is key.
We are seeing activity in the health tech space pick up, supported by a rise in specialized health tech funds entering the region. In general, regional healthcare spending is low, yet the opportunity is massive. There are lots of problems to be solved, and ample room for enhancing the user experience.
When we take a closer look at the solutions being addressed in a number of verticals across fintech, health tech, mobility and logistics, and potentially EdTech as well, most revolve around the need for markets to leapfrog from a development perspective without massive expenditure in infrastructure.
What is your prediction for the VC landscape in Egypt for the year 2022?
From the looks of it, Venture investment in Egypt could hit the $ 1Bn mark this year- fingers crossed!
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