Egyptian startups must develop exit strategies

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Egyptian entrepreneurs must develop solid exit strategies as they are set to play a pivotal role in creating a new source of foreign direct investment (FDI for the country.

Disrupt Africa reported last week VC funding was gradually returning to Egypt after the political turmoil of recent years, with notable recent deals including online recruitment startup WUZZUF raising US$1.7 million, and Yaoota, which operates a shopping search engine helping users compare products and prices in a variety of online stores, raising US$2.7 million.

More startups need to prepared for exit strategies in order to encourage investment, however, according to the organisers of RiseUp, a platform that connects entrepreneurs and investors in the MENA region. FDI is on the rise, but could still grow.

“These investments are being brought in mainly by the government’s mega projects such as the New Capital city, the Suez canal corridor and others,” said Abdelhameed Sharara, chief executive officer (CEO) of RiseUp.

“We’re witnessing a new rise of ‘mega’ projects among Egyptian youth, and that is the startup generation. This has the potential to be an incredible source of FDI, if entrepreneurs become more aware of and educated on developing solid exit strategies, and if they have access to the resources that allow them to achieve this.”

He said there were so many opportunities in Egypt for incredible exits, with international VCs eager to come to this region. With this in mind, startups have to demonstrate they have what it takes.

Tarek Assad, an Egyptian venture capitalist, said having managed a large VC fund for the last six years, he had seen “serious large exit discussions”.

“ROI on tech investments in Egypt is no longer built on just future assumptions. It is starting to be based on local practice,” he said.

Endure Capital partner Tarek Fahim said the MENA startup scene was witnessing tremendous growth.

“The trends are clear: more exits, greater interest from foreign investors, higher valuations and companies that are able to develop products fit for global markets, not just local consumption. The market is more globally connected, and through platforms like RiseUp, we expect this to propel entrepreneurs forwards even further,” Fahim said.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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