Egypt’s leading venture capital (VC) firms, Algebra Ventures has launched a $90 million fund for investment into tech startups in the country and North Africa at large.
The VC company intends to leverage its latest funding to expand its pool of portfolio startups in the North African tech ecosystem. It is a testament to the growing investment appetite among local VCs in Egypt that Algebra’s $90 million fundraise comes just a day after another VC firm, Sawari Ventures secured $63.8 million investment funding.
Algebra’s cumulative fund is set to reach a total of $144 million, after it first closed a $54 million fund in 2016. The VC firm has now positioned itself to manage one of the largest indigenous funds in the Middle East and North Africa (MENA) region.
VC Funding On the Rise in Egypt
Over the past couple of years, VC financing has significantly grown in Egypt’s tech space. According to an AfricArena report citing Partech research, Egypt received the third largest VC funding ($269 million) in Africa in 2020.
This total was 27.4% more than the VC funding recorded in 2019 when Egypt raised up to $211 million in venture capital investments. Clearly more investors see the country’s burgeoning tech space as hugely promising.
Moreover, Partech analysis shows that Egypt closed the most VC funding rounds (86) on the continent in 2020, leading South Africa (72), Nigeria (71) and Kenya (53).
Early-stage Funding Boost for Tech Startups
Although Egypt has gone on an upward trajectory in terms of startup activity and venture capital investment, only 10% of startups in the country are successful each year, according to a study.
Startuplist Africa puts the number of tech startups in Egypt at 153. With 86 funding rounds closed in 2020, it’s safe to say that up to 80 startups (52%) raised VC funds (one startup may have closed 2 or more rounds). Going by this metric, at least 48% of these startups got no funding during the year.
A big factor responsible for this is the dearth of early-stage funding for startups; that is, Series A and/or Series B investment.
Algebra and Sawari are both focused on funding startups at this stage of their development, hence, their recent fundraises bode well for Egyptian startups seeking VC financing at these growth levels.
From Algebra’s focus statement on its official website, the VC says it is focused primarily on Series A and Series B rounds in Egypt although it does not exclude investments in earlier-stage startups.
Speaking on the the firm’s latest fundraise, Managing Partner at Algebra Ventures, Karim Hussein said: “One of the lessons learned in our first fund is that we see that there are more interesting opportunities and great entrepreneurs in the seed stage. And given that we’re more on the ground in Egypt, sometimes we wait for them to mature to Series A.
“But going forward, we might need to build relationships with those we find exceptional at the seed level and also expand our participation on the Series B level.”
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