(MENAFN- Daily News Egypt) Cairo Angels has invested over EGP 12m in 15 start-ups over the past three years. It aims to invest in yet another company within days to boost total investment to EGP 13m in 16 companies.
Menna AbdelRahman, general manager of Cairo Angels, told Daily News Egypt in an exclusive interview that the group invests in four to five companies per year.
How do you see entrepreneurship in Egypt in the current period?
Entrepreneurship received considerable attention during the past period and featured many institutions that are interested in supporting and sponsoring entrepreneurs. Business leadership is not a job per se, but it is a way of thinking and a way of enhancing a company and the work done by the entrepreneur through creativity and innovation.
An entrepreneur is characterised by his or her ability to take risks for the sake of success. Companies based on thought leadership are able to achieve rapid growth, especially when coupled with the flexibility to cope with surrounding circumstances.
What are the most important qualities of an entrepreneur?
An entrepreneur must be ambitious and strive to succeed. Though they may receive many job offers from large companies such as Google and Facebook, entrepreneurs who are pursuing a particular goal refuse such offers instead investing in the success of his emerging company.
An entrepreneur must also take constructive criticism into consideration, analyse it, and try to fix problems. Additionally, an entrepreneur must be able to transform challenges into opportunities and not succumb to obstacles during his leadership of the company.
How do you see the entrepreneurship ecosystem in Egypt?
The Entrepreneurship ecosystem in Egypt has grown well in the past period, supported by the proliferation of emerging companies, the increase in their numbers, and the development of technology.Organisations supporting entrepreneurship activity in Egypt emerged with the need to support the increase and the diversity of the needs of emerging companies, such as the business incubator Flat6Labs.
Investors like Cairo Angels began to appear in order to finance emerging companies that need financing for amounts of EGP 250,000 and up to EGP 2m. Entrepreneurship in Egypt is growing exponentially with its own ecosystem improvement.
What is missing in the entrepreneurship ecosystem in Egypt?
The sector needs government attention to create a legislative climate for the emerging companies, facilitate the proceedings for the establishment and closure of companies, and amend laws and develop them to suit the evolving activities of the emerging companies because all these measures obstruct companies possibly resulting in their closure.
Emerging companies in Egypt take a longer time than those in Dubai, Europe, or the United States to achieve growth and attract investment due to obstacles in the Egyptian market.The normal rate for a company to get Class A finance is two years, but in Egypt it takes more than 5 years, and even 7 years for some companies.
The government must create a climate for entrepreneurs by introducing legislation to keep the small investors’ rights and to eliminate bureaucracy.
Has entrepreneurship become a trend?
It has already become a trend among young people, not only in Egypt but around the world. There are a lot of companies that fail in Silicon Valley in the US, despite receiving investments. In Egypt too, there are plenty of companies that fail and only a few that succeed.
Although it is a trend among young people, many companies based on creative innovation have managed to achieve success, such as Wuzzuf and Instabug, which recently received funding worth $1.7m and provides solutions to more than 25 international companies, including Hilton, Xiaomi, Tilt, Souq.com, Namshi, Verizon, Sound Cloud, Yahoo, and PayPal.
This is a healthy phenomenon because it will attract attention and showcase companies that display real value, pushing them forward for growth. Success and sustainability rates of start-ups are no more than 10% among all companies; with more attention the rates go up to 15%.
But investing bodies divide their investments among a large number of companies as only some companies will succeed. This strategy aims to offset the losses with the investments in the successful companies.
Are there enough funders for local start-ups?
There is a gap between funding bodies and start-ups requiring funding, but this gap is on its way to being bridged in the coming period. Some incubators will invest in major companies, such as Flat6Labs. Moreover, investment funds are willing to re-inject investments into the market.
But there is another gap over funding stages. Some companies require investments between $300,000 and $1m, which is not always available from funding bodies.
What is considered a success to start-ups and entrepreneurship?
In Egypt, receiving funding is considered a success, but this notion is incorrect. Companies obtain investments to continue growing. Funding is a means not an end.
Egyptian companies have been receiving investments from foreign investment funds recently. This means that the success of these start-ups echoednot only on a national levelbut worldwide.
Has the economic situation affected entrepreneurship and start-ups?
Yes, it has positive and negative effects. Prior to 2011, start-ups were not thought of. But the current situation pushes youth to pursue ideas and start new businesses.
However, government bureaucracy and inanimate laws, as well as the shortage of hard cash, pose challenges to entrepreneurship. Austerity policies also weigh on investors, which of course, impact emerging companies.
How could we own companies such as SySDSoft?
We must teach entrepreneurship to students in schools and support them to build business models. We can also utilise graduation projects at universities and search for creative youth in provinces.
The Ministry of Communications has plans to set up technological zones in provinces. How does this affect entrepreneurship?
Establishment of technological zones and innovation centres will help to spread concepts of entrepreneurship to provinces. This will build ecosystems for entrepreneurship across the entire republic and help start-ups emerge. Some provinces could have emerging companies that provide for solutions for yarn and textile manufacturing, while others could focus on furniture and agriculture, and so on.
How did Cairo Angels begin its activities in the Egyptian market?
Cairo Angels was founded by Hossam Allam who worked in the field of angel investing in London and cares about the financing of emerging companies.Upon his return to Egypt, he noticed the growth of entrepreneurship activity in Egypt and the need of emerging companies to find financiers to pay for their growth. This led him to establish Cairo Angels.
The activity began with investments from the founder of Cairo Angels and a number of his friends in some of the emerging companies.
How many companies did Cairo Angels invest in?
We have officially invested more than EGP 12m in 15 companies. We have been working to invest in another e-commerce company and will reach an agreement within days, boosting our investments to EGP 13m.
Among our most prominent investments are Zoomaal, Taskty, Simplex, and Instabug.
How do you inject your investments?
We are not an investment fund but an angels club. Each of our member investors has the will to inject funds into companies. Our work team studies start-ups and selects the best options to present to our investors every three months. The company chooses four to five companies per year to invest in. We will have a new season meeting in September.
Our investor base currently includes 80 members, but not all of them are active.
What are your criteria for choosing companies?
The work team must be integrated and cooperative. The company should have at least a demo product or a base of customers in case its product is a service. Moreover, it should have a plan for growth and sales increase. They also must be in need of funding that covers their basic requirements for a period between 9 and 18 months until peak.