Back in December 2016, when Algebra Ventures announced it had raised US$40 million to make itself Egypt’s biggest tech-focused VC fund, the more cynical among us may have questioned whether the bark would match the bite.
Eighteen months on, however, and there is much to look back on with positivity. Algebra Ventures has been very busy indeed, investing or co-investing in the likes of Eventtus, elmenus, FilKhedma and La Reina, with more undoubtedly to come.
Yet what makes this company – which has had such an astonishing impact on the Egyptian tech space as it begins to develop at pace post-Arab Spring – tick?
“Algebra Ventures believes that technology has the potential to solve some of Egypt’s most pressing and difficult problems,” managing partner Tarek Assaad told Disrupt Africa.
Consumers and businesses are adopting technology at an unprecedented pace, while more than 30 million Egyptians have access to the internet. Assaad says Algebra is looking forward to a time when more and more people go online not only to log in to Facebook but also to buy goods and services, and consume content.
He said the firm’s team had been in the technology venture capital space for the past eight years, and seen the remarkable development of the ecosystem.
“Local, regional and international investors are putting more money into Egyptian tech startups. Whereas up until three years ago, successful startups raised rounds in the US$1 million to US$2 million range, today companies such as Vezeeta, Swvl and Wuzzuf are raising rounds of between US$5 million and US$10 million,” said Assaad.
“Investment funds are receiving funding from large DFIs such as IFC and EBRD, and also from private investors such as large companies and family offices. Algebra Ventures itself has raised money from EAEF, EBRD, Cisco, and IFC.”
He said the entrepreneurship space as a whole is developing.
“We’re seeing more early stage investors, support organisations, and awareness emerging across the board. For example, RiseUp, the leading event in Egypt, is now attended by 5,000 people and features speakers from around the globe. A few years ago, there were no events to speak of,” Assaad said.
“We’re seeing an inflow of smart entrepreneurs developing tech solutions to address the largest pains faced by Egyptian consumers and businesses.”
Algebra is particularly excited about using tech to provide access to goods and services to a larger segment of the population and at more affordable prices. Ridesharing companies in Egypt now do about 500,000 rides per day, while over one million people make decide what to eat on elmenus. Filkhedma connects households with trusted repair technicians, which has long been a notoriously painful problem in Egypt, while its latest investment LaReina allows women to rent dresses at a fraction of the cost of buying a new one.
Financial inclusion is also an area where significant value is being created, Assaad said.
“When we exited Fawry, from another fund unrelated to Algebra, in 2015, it was doing more transactions on its own network than the entire banking system of Egypt,” he said.
“In healthcare, Vezeeta has become the clear leader in connecting doctors with patients and has the potential to expand into several other opportunities.”
Egypt has huge potential to become a tech hub for Africa and the Middle East given its unique combination of market and talent, he said.
“Traditionally, Egyptian entrepreneurs – all the way back to the 1980s – have been able to develop solutions locally and roll them out to the MEA region. As more capital and talent support tech startups in Egypt, we see more of that happening. Eventtus is already the leading events software company in the Middle East,” said Assaad.
“Egypt has a unique position in core tech, essentially due to the strong technical talent. Both Intel and Synopsis acquired Egyptian tech companies based on the strength of that talent.”