Did you know that 5,000 people from around the globe are flying into Cairo this weekend, all of them eagerly looking for investment opportunities? We are talking about professional investors ready to write cheques to invest in Egyptian businesses that could potentially create hundreds of thousands of jobs. There’s only one catch though — the opportunities they are looking for are startups.
The startup economy, and whether or not it actually brings something to the table, can be a divisive issue with passionate supports and detractors. Tech-loving futurists will boast about startups with a gleam in their eye and prophesize about how startups will eventually solve all human problems. Traditionalists will dismiss startups as pipe dreams that don’t really create anything of value and contribute little or nothing to GDP or the creation of employment opportunities.
Whether you love them or hate them, the fact is that startups have become integral to our every day lives. Facebook, Twitter, Uber, Google, Netflix, Spotify and even the mobile, web or email application you are using right now are (or at the very least, were) startups. Steve Jobs brought us Apple and the numerous gadgets and goodies that come with it. Tesla, led by the iconic Elon Musk, has revolutionized the auto industry by producing the leading fleet of slick, electric-powered cars. He is also leading SpaceX with the ambition to get us to Mars. Hundreds of new and innovative products in education, healthcare, finance and many other sectors are being produced for customers by startups each year.
A recent study by MIT of the impact of startups across a number of US cities reinforces the arguments for the startup economy and concludes that a small group of high-quality, fast-growing startups can deliver both jobs and innovation while attracting sizeable investment and delivering a significant economic impact. There are, however, some valid arguments that downplay the impact of startups on job creation and how much the startup economy really contributes to GDP.
For example, Instagram, which was acquired by Facebook in 2012 for USD 1 billion, famously had only 13 employees when they were acquired. Not exactly a great advertisement for startups and job creation. As for economic impact, despite the fact that in 2015 around USD 60 billion was invested by venture capital firms in startups in the US, because of the high fail rate (around eight out of every 10 startups fail), it is hard to accurately calculate how much startups add to economic growth.
Putting the academic debate to one side, few can deny that Egypt is in need of increased investment (especially if we can attract foreign direct investment) as well as more innovation. Startups are also very good at identifying problems and coming up with practical and commercially viable solutions. We are a country with many problems; it stands to reason that having an army of problem solvers is something we should nurture. Finally, the export potential of many of these startups, especially the tech-based startups, is huge.
So, whether or not startups can also contribute to job creation and economic growth is more of a bonus. The options here are not binary; we can incentivize investment in startups and other sectors that have a more proven record for job creation and strong economic growth, such as manufacturing and agriculture. It is not a zero sum game.
Egyptians should take pride that despite the upheaval and uncertainty of the last few years, the Egyptian startup economy (or “ecosystem” as insiders like to call it) has become a force to be reckoned with, and investors from all over the world are taking notice.
The RiseUp Summit has, from humble beginnings, become one of the leading startup conferences globally, attracting exciting entrepreneurs from Africa and the Middle East along with top investors with deep pockets who are willing to splash the cash if the right investment opportunity comes their way. To put things into perspective: the Egypt Economic Development Conference held in Sharm El Sheikh in March 2015 attracted 2,000 delegates; in the same year, the RiseUp Summit attracted double the number of attendees and they anticipate even more this year.
So who are the Egyptian startups everybody is raving about? The traffic jams and challenge of getting from one place to another is a constant daily struggle; Bey2ollak stepped in to provide an excellent application to try to alleviate the pain. Power shortages and access to clean water is something thousands, if not mns, of Egyptians suffer until this very day. Karm Solar came to the rescue to provide small to mid-scale solar power and desalination solutions to entire villages.
If you are just about to graduate and don’t have the luxury of a wasta, your chances of getting your dream job are slim indeed, but have no fear: Wazzuf and HireHunt are here. Need to set up a conference or event to boost your business? You’re a few clicks away with Eventtus. The list goes on, but don’t take my word for it — check out Forbes’ recent coverage of the 20 most promising startups coming out of Egypt.
Souq.com became the first startup in the Middle East valued at over USD 1 billion (or a “Unicorn” in startup jargon) and several others, including Careem, are expected to follow suit in the near future. The reason thousands of people are coming to Cairo this weekend is because they believe Egypt can join this elite club of ecosystems that can produce talent rich, high quality, fast growing businesses and they want to get in on the action.
If they have faith in us to do the business, we should too.
This article was first published on Enterprise on Friday 9 December 2016