Egypt’s VC Ecosystem Witnesses Triple-Digit Growth as Local Startups Collected Largest Number of Investment Deals in Africa

Egypt’s VC Ecosystem Witnesses Triple-Digit Growth as Local Startups Collected Largest Number of Investment Deals in Africa

Startups raised $491m across 147 transactions, hitting an all-time-high volume of foreign investors

Following a four-year consecutive growth in VC funding, the Egyptian ecosystem observed a 168% YoY increase in capital investment to reach a new all-time high record of $491M, according to Magnitt’s 2021 Egypt Venture Investment Report

Egypt ranked first by the number of deals in Africa during 2021 and came in 3rd place in total funding where the local startups gripped 18% of total capital deployed across the whole continent.

For its position and ranking in the MENA region, Egypt came in 2nd place by the number of VC deals with a record-high of 147 deals, representing 24% of all transactions closed across the MENA region in 2021.

Amr Mahfouz, CEO of Egypt’s Information Technology Industry Development Agency (ITIDA) commented: “In Egypt, entrepreneurship is burgeoning and the startups’ sector is booming as the entrepreneurial mindset spreads amongst young people”. “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,”, Mahfouz added.

Mahfouz also noted that 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 the talent, markets.

Philip Bahoshy, CEO and Founder of MAGNiTT remarked: “This report highlights Egypt’s position as a leading venture ecosystem across both the MENA and Africa landscapes. The record investments into the Egyptian space reflect the market maturity. Most importantly a record number of different investors, up 68% YoY, shows the increased interest from investors from across the region and international market”.

The report indicated that Egypt’s share in both the total capital raised and deals closed across MENA increased by 2 percentage points between 2020 and 2021. Venture capital directed towards Egyptian startups grew by 168% between 2020 and 2021, driven by a USD120 m mega-deal closed by Transport & Logistics startup Halan, as funding activity inclined towards late-stage deals.

Egypt proved to be an attractive investment destination as an all-time-high volume of investors backed its local startups. The number of investors increased by 68%, to a record-high of 124 different funding institutions in 2021, compared to 74 investors in 2020.

Additionally, the startup ecosystem in Egypt witnessed a surge in investors from outside the MENA region that accounted for 51%, with 63 investors. The report added that Egypt has also attracted the highest non-Egyptian investors with 77%, while the MENA region had 44%, 46% for the UAE, and the KSA had 25%.

MAGNiTT highlighted that Fintech has led the transactions activity in Egypt representing 17% of the total deals closed in the country in 2021 which comes in line with the regional trend across the MENA region where Fintech accounted for the highest share (18%) of all VC transactions in the year.

Additionally, the Transport & Logistics industry claimed over a third (36%) of all capital deployed in Egypt in 2021, driven by Halan’s USD120 m funding round.
As for the top 5 industries by the number of deals in Egypt in 2021 the rankings came as follows: Fintech (25 deals); E-commerce (23 deals); Transport & Logistics (15 deals); Healthcare (12 deals); Food and Beverage (11 deals).

On the other hand, for the top 5 industries by funding in 2021 the rankings were as follows: Transport & Logistics (USD177 m); E-commerce (USD96 m); Fintech (USD60 m); Retail (USD42 m); Food and Beverage (USD38 m).ش