Ahmed Galal’s dental business was not doing well for a year following Egypt’s 2011 uprising, before he started a new project.
The middle-aged Egyptian dentist decided to shut down his clinic and launch an online venture to help connect consumers with the qualified craftsman they need.
"I don't intend to return to my dental career, at least for now as I’m feeling more comfortable with the new project," Galal told Ahram Online. "We are growing so fast, the venture's investments are currently worth LE1.6 million pumped by multinational investors."
His project, Taskty (MyTask), is seeking more finance by venture capitalists whom Galal met at Cairo’s third RiseUp Summit for startups.
The startup scene, empowered by the revolutionary euphoria, began to gain momentum in 2011 while the country endured economic crises and saw its unemployment rate accelerate to 13 percent, up from 9 percent in 2010.
Thousands of attendees participated in the Cairo RiseUp Summit earlier this week in the hopes of following in the footsteps of young entrepreneurs who made millions, said Ahmed El-Ibyari, partner at startup coaching company Intellect ME.
“The trend of having a startup or new business is becoming very popular in the new generation,” El-Ibyari told Ahram Online on the sidelines of the summit which aims to forge connections in the startup scene and promote the growth of new businesses.
Chris Schroeder, venture investor and author of a book on the rise of startups in the Middle East, told Ahram Online that the success of the Yahoo acquisition of Maktoob in 2009 has encouraged young entrepreneurs to establish their own businesses.
Egyptian graduates with degrees in technology are now benefiting from the “universal access to technology that allows them to become part of the global hype around technological service businesses,” Schroeder said.
The boom in technological service startups is a global phenomenon with investments in financial technology startups alone quadrupling to $12 billion in 2014 from $3 billion in 2013, according to Forbes.
Hoping to benefit from that global thrust in investments, Karim Beltaji, founded the Feloosy (MyMoney) application, which connects users to asset managers who help them save for specific targets, such as purchasing a car.
“I think Egypt is the perfect country to leap forward because there is so much opportunity. It is quite underdeveloped in a lot of sectors,” said Beltaji, who expects to seal partnerships with investors within the next six months.
“Now we have Americans and Westerners who are looking east. They are looking at new markets because other markets are too competitive or saturated,” Asseily said.
“Investors would enter the Egyptian market despite the political and economic risks in the country and the region, so long as they believe in the trend,” Schroeder said.
He added, however, that, “venture capitalists do not go all in, in one place. They will invest in several markets for diversification but this means for entrepreneurs here [Egypt] that they have to size up to entrepreneurs elsewhere because it gets competitive,” he added.
Referring to the engineering talent in Cairo, the Brighton School of Business and Management ranked the city as one of the top ten places in the world to launch a startup.
Technology alone will not be enough for young entrepreneurs to rise up, Schroeder said referring to the vitality of the ‘top-down’ policies. “The ability for policy makers and big businesses to come and mentor and support these [entrepreneurs] is the difference between this being good to being excellent.”
In Lebanon, a $1 billion injection into the market has helped the startup scene and funds entrepreneurs, Henri Asseily, founding partner at Beirut-based Leap Ventures, told Ahram Online during the summit.
There is a need for “institutional not just governmental help but help from large entities that will reallocate some funds from other areas of the economy to look at [startups] and take this risk because it is necessary for the economy as a whole,” Asseily said.
Although the government in Egypt has been focusing on supporting SMEs through different entities, such as the social development fund and technological services, startups have found some ground for smaller scale support.
Mohammad Gamal, a young but experienced IT developer, created the Kotobna (OurBooks) application, which serves as a platform for authors to sell their writings directly to readers without going through the traditional publishing houses.
Kotobna works from the governmental Technology Innovation and Entrepreneurship Center (TIEC) located in the Smart Village in the outskirts of Greater Cairo.
“We have started talks with Cairo Angels [Egyptian Venture Capital] and hope to reach a deal soon,” Gamal told Ahram Online.
Startups have attracted much needed international investments to the country, with the latest example seen in the acquisition of Fawry for $100 million.
Egypt is targeting $10 billion in foreign direct investment, which is needed to grow at 5 percent in the fiscal year ending 30 June.