Egypt raises $1.2bn in 3 years, representing 83.3% of total funding for North African startups

Startups in North Africa secured $1.5 billion in investments between 2019 and May 2022, a report from Africa: The Big Deal has found.  

Egyptian startups led, raising $1.2 billion, which represents 83.3% of the total funding raised by the North African region. 

The report found that funding for the region’s startups made up 15% of the investments that came to Africa during the period. 

The 10 largest deals recorded in the region between 2019 and 2021 had all happened in Egypt, until InstaDeep raised its $100 million Series B in January 2022.

The deal helped consolidate Tunisia’s position as the runner-up in the region – though still far behind Egypt – with an enviable growth trajectory: $7m in 2019, $14m in 2020, $23m in 2021, and already $104m in 2022, as of May.

Tunisian startups raised $149 million to lay claim to the second spot. Morocco came a distant third, with $47 billion in investments from within and outside the region. 

The gap widened slightly with Algeria and its $35 million ranking fourth. Most of the raise comes from Yassir’s $30 million Series A in 2021.

Libya and Mauritania, the two other countries featured in the report, picked zero funds during the period. The region is home to seven (7) countries: Algeria, Egypt, Libya, Morocco, Sudan, Mauritania and Tunisia.

Northern Africa is also growing faster than the continental average (3.2x vs. 2.3x). 

More highlights

In 2019, startups in the region raised $141 million. This represents an 11% contribution to the funding that accrued to startups on the continent that year.

Startups raised $172 million, a 10% contribution to Africa’s startup funding for 2020. This is besides the National Bank of Egypt securing $100 million from the European Bank for Reconstruction and Development (EBRD) to help SMEs in the country make improvements in energy efficiency, climate change mitigation, and adaptation.

The region grew fourfold in startup funding status, with this classification of business ventures raising $685 million in 2021. This amounted to a 15% contribution to the funding generated by the continent.

In the first five months of 2022 (January – May), northern Africa start-ups raised $475 million (a 17% contribution so far).

African tech observers expect the figures to improve when the first half of 2022 (H1 2022) reports are released over the next few days. 

Why is Egypt winning?

In September 2020, President Abdel Fattah Al-Sisi’s government passed a new law governing the central bank, with provisions allowing it to give out banking licenses to fintech and digital commerce firms.

And, in an interview with Reuters, Mohamed Essam, a fintech specialist said, “We believe that within the next few months or couple of years we will see a big bang in fintech.”

According to Africa: The Big Deal, a couple of factors are ensuring a good run for the Egyptian tech ecosystem. One, a healthy mix of early and later-stage deals is working to the region’s advantage.

In 2022 so far, a new deal is signed every 2.5 days, which is on par with the 2021 performance. Its share of the regional funding is progressively decreasing though: it came down from 93% in 2019 to 76% in January-May 2022.

The country is also reaping from conscious efforts to support the startup sector.

In mid-2021, Elena Panova, UN Resident Coordinator for Egypt, said that together with the UNDP, the development agency “supported the establishment of 233 tech startups, providing support to 247 tech MSMEs at various stages of growth” in Egypt in 2020 alone.

Commenting on the Egypt Venture Investment Report 2022, Amr Mahfouz, CEO of Egypt’s Information Technology Industry Development Agency (ITIDA) said, “In Egypt, entrepreneurship is burgeoning and the startups’ sector is booming as the entrepreneurial mindset spreads amongst young people”.

He added, “The community is getting more vibrant and sustainable driven by the increased number of quality investors, the vast network of well-designed co-working spaces, innovation clusters, business incubators, and the nationwide Creativa innovation hubs,”,

The Egyptian government supports the growth of startups with unprecedented efforts. For its part, ITIDA has developed a 5-year strategy in collaboration with Deloitte and USAID to further support the ecosystem’s capabilities and ensure greater access to finance, access to talent, and markets.

Conclusion

Egypt is reaping the rewards of investments made to the startup sector in the country, and with more investments, the country gets more attractive and the numbers increase.