With almost four million inhabitants, Egypt’s governorate of Assiut became the launchpad of the country’s third angel investor network Nile Angels. Following the footsteps of Cairo Angels and Alex Angels, the network plans to connect investors to promising entrepreneurs and startups and vice versa in Upper Egypt, including Assiut, Qena, Minya, Sohag, Luxor and Aswan, in cooperation with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
Business Forward joined Techne Drifts 2018 as it embarked on its Upper Egypt journey, starting off with Assiut, where Nile Angels introduced itself to the region.
Why does Egypt need an Upper Egypt angel investor network?
“We’ve been planning Nile Angels for a year now. We want to show investors that there are other types of investment out there and close the gap between traditional and new businesses,” chairman of Nile Angels Ahmed Mahmoud tells Business Forward.
Although there are a lot of investors, specifically in Assiut, they tend to place their money in traditional businesses like real estate or healthcare, especially since real estate prices in the governorate have reached staggering highs, with some areas standing at LE130,000 per square meter. In order to incentivize them to become angel investors, Nile Angels focused on talking to the second generation of wealthy families. “We talked to six investors in different sectors, like agriculture, industry and logistics, whose collective investments in the Upper Egypt market are around LE200-300 million,” Mahmoud adds. “Since the launch on April 22, we gained five new investors who want to join us.”
Regarding promising startups and ideas in Assiut, “we found that now there is a lot of potential, specifically in technology. A lot of companies outsource their technology needs to Assiut because it is cheaper. So we thought that the time for Nile Angels had come,” he says.
There is a huge problem of immigration in Assiut and youth are fleeing
A wealthy governorate with an immigration problem
Manar Ahmed, project coordinator at Assiut University-based incubator Hemma, tells Business Forward that the governorate’s youth are very driven to start their own businesses. After mainly focusing on agriculture and veterinarian startups, Hemma became sector-agnostic as more and more IT and tech startups applied to the program. “Most startups that apply are looking for funding,” she explains.
However, Assiut has a remarkable number of wealthy businessmen, according to Farah Abdel Baki, manager of the Greek Campus in New Assiut. The problem lies in the high rate of immigration. “There is a huge problem of immigration and there are no job opportunities here. At least 15,000 students graduate from Assiut University alone every year,” she says.
The Greek Campus’ New Assiut branch is working with a group of partners from Cairo and other governorates to create an ecosystem for Upper Egypt with a permanent stay in the Technology Park in New Assiut, supported by the Ministry of Information and Communication Technology.
“In Upper Egypt, the young people flee after they graduate. We are trying to introduce them to entrepreneurship while they are in high school to motivate them to start their own thing instead of fleeing.”
The nature of the current ecosystem
Assiut’s startups have mainly been focusing on so-called “me-too businesses”, namely replicating existing applications or services instead of starting something new and innovative.
“Every few years there is a trend that emerges for startups in the region. Most startups in Assiut and Minya are related to mobile applications and websites at the moment, replicating successful companies in Cairo,” Mahmoud highlights.
The fear of innovation and penetrating new sectors extends to investors as well, as there are no active mentors or angel investors in Assiut, according to Abdel Baki. “The only people here that make money are business people. No one talks about innovation. People are scared of going into different industries,” she adds.
Moreover, there is no space to gather the different stakeholders of the ecosystems, which is why Hemma is starting an Entrepreneurs Club. “The club aims to gather investors and startups in one place once a month in order to build an umbrella that connects the stakeholders,” Ahmed states.
According to Mahmoud, entrepreneurs struggle with finding talented people to work with in the governorate and are remarkably impatient, always in a hurry to gain profits.
Five years ago, Assiut’s entrepreneurship scene was not the same. The amount of startups and investors which are ready to move on from traditional investments have increased. “That is why we needed to create a network like Nile Angels,” Mahmoud concludes.
Stay tuned for more insights on the entrepreneurship status quo in Sohag, Luxor and Aswan as Techne Drifts 2018 moves further down the Nile.