Managing Director of Venture Lab (V-Lab) at the American University in Cairo (AUC) Mohamed Hamza says that Angel Investment is a key engine for entrepreneurs and startups to upgrade and is a doorway for new business ideas to be seen.
The AUC’s V-Lab is Egypt’s first university-based startup incubator and accelerator. Over the past five years, V-Lab has incubated 115 startups that generated EGP 88 million in revenues, attracted more than EGP 220 million in investments and created more than 500 new jobs. V-Lab has also been recognised as a top university business incubator in Africa and a high-impact incubator in the Middle East and North Africa (MENA) region by UBI-Global.
Speaking to Ahram Online, Hamza explained that Angel Investment provides funds for new startups through individuals, not donor corporations or banks, as a new win-win form of investment, adding that it first appeared in the Egyptian market in 2011, but has gained greater attention over the past few years.
This type of investment involves what are called Venture Clubs, such as Cairo Angels, Made Angels, and Alex Angels, which allow funds to be disbursed to a startup through a number of investors, which eases risks for investors and gives them room to invest in more than one project.
One year ago, the AUC established AUC Angels, which now deals with around 30 angel investors who have invested in 107 startups. V-Lab has managed to attract about EGP 1.5 billion and create 8,000 jobs since its inception.
AUC Angels is the first university-based angel investor network in the MENA region. Angel investors are individuals who are interested in investing in early-stage startups with growth potential, which in turn supports the growth of a dynamic entrepreneurship ecosystem.
The mission of AUC Angels is to build an angel investment network for AUC alumni and friends, provide a strong pipeline of startups for angel investors, facilitate deals, support innovative Egyptian startups, secure seed funding, and provide support after the investment is completed.
This type of investment, according to Hamza, is suitable for startups in Egypt, especially since banks demand startup owners to submit documents that they do not have given their nature as emerging enterprises, such as the commercial registers and a specific capital ceiling.
“Despite phases of unrest the Egyptian market has faced since the 25 January revolution, it has managed to attract this type of investment. In fact, the Egyptian market has begun to recover, and such markets are able to attract investment in entrepreneurship and startups more strongly than other markets. Furthermore, Egypt has many problems and challenges that can be addressed through such innovations, especially in agriculture and industry,” Hamza said.
Hamza also said that Egypt faces a problem of entrepreneurs choosing the service sector at the expense of other sectors, and so incentives need to be introduced to encourage entrepreneurs to delve into other promising sectors in the Egyptian market.
Industry, especially tech-manufacturing, financial technology, healthcare, renewable energy, and the environment are promising fields for new startups and remain untapped opportunities, Hamza said.
Agri-business, especially agri-tech, also needs more incentives and greater attention, as business owners in this field do not have the sufficient capital to obtain equipment.
Hamza said that there had previously been a number of hurdles that impeded entrepreneurship and innovation in Egypt, especially a lack of awareness about entrepreneurship among young people, but now, young people have become aware, and universities, both public and private, have started to provide entrepreneurship and innovation content in their curricula.