Startup Challenges Under The Economy in Egypt 2022

Startup Challenges Under The Economy in Egypt 2022

Since December 2021, the US Fed has raised interest rates; Nasdaq equities have been declining, and VCs are likely to be acting more cautiously as a result, radically altering the global economic environment. Furthermore, if you own an Egyptian startup that depends on imported components, the new importation regulations make it more challenging to carry out your goals. But does this imply that startup funding in Egypt has declined because of the present economic crisis?

To answer this question let’s take a look at the 2022 Egyptian startup ecosystem specifically the number of investments where Egyptian startups received $380 million in foreign investments by the end of May 2022, a whopping 190% higher than in the first 5 months of 2021, these are the official numbers declared by Amr Mahfouz the Head of the Information Technology Industry Development Agency (ITIDA). Those numbers are a huge indicator for another record year for fundraising by startups and in the number of transactions in particular.

The focus for startup investment in 2022 is straightforward: MORE. Additional capital, larger ticket sizes, more foreign participants (VCs and startups), more exits, more Merge &Acquision, and finally, additional fintech.

And regarding VCs, the scene is getting more crowd regardless of the Egypt-based VCs, plenty of international players are heading to the Egyptian Market as well because Egypt’s investment sizes are not huge; yes, has grown in a significant way over the last three years but still, undervalued and underrepresented, especially in the tech scene; that’s what it is expected in the rest of 2022 to get more funds even in the current economic crisis.

The main focus for investors is fintech, fintech, and more fintech; it attracts more money and is expected to attract even more. That is why a lot of startups are taking this approach regardless of their sectors; it is an integral part of their infrastructure, as a requirement for thriving and succeeding.

Moreover, Tech startups are attracting strong talent and going after big markets, and because technology is now in the hands of the masses, available capital in search of returns; More capable and knowledgable entrepreneurs, and, moreover, is increased interest from corporations to government.

Does that mean all the current startups in Egypt are going to survive?

The answer is NO; 2022 is a year filled with startup exits because of the bigger-size investment rounds but with more sophisticated investors and more complex requirements, but this is expected to have a huge potential on startups seen overall with growth opportunities for startups with solid ideas and professional teams.

So what’s next?

Web3 startups are next. Web3 businesses will become the hottest sector, including businesses related to crypto-exchanges, NFTs, blockchain, and smart contracts.

Related Posts