In post-revolutionary Egypt, where young people make up a quarter of the population, the number of startups, incubators, competitions, and angel investors has grown into a rapidly evolving sector.
“After January 25, we took ownership of our country, we do not wait for help from someone else,” says Gamal Sadek, a co-founder of Bey2ollak, a user-driven traffic application that won Google’s first startup competition in the Middle East and North Africa region.
Two and half years later, Egypt’s entrepreneurs have seen incredible challenges. After the Muslim Brotherhood’s Mohamed Morsi became the first democratically elected leader of the country, his ouster by the military has caused unrest that left hundreds dead and thousands of Muslim Brotherhood supporters remain in prison.
The ongoing state of emergency and curfew had put additional pressure on retailers and e-commerce sites, while families and business partnerships have fallen apart because of political differences and polarization of Egyptian society.
The rapid changes in Egyptian society are forcing startups to hone their ideas and services or move faster to introduce new products in response to a changing security situation and customer demands.
“A few companies are shifting their strategies or moving to other parts of the world instead of launching locally because of the current situation,” Ramez Mohamed, CEO of Flat6Labs, a startup incubator that launched in 2011 and has since graduated five cycles of startup companies. “There are so many problems that we can’t [afford to] wait for the government to solve, the problems are not decreasing,” he notes.
As the security situation deteriorated following Morsi’s removal from office in July, Bey2ollak introduced a new service which used a mobile application to coordinate convoys of up to 40 cars to travel to Egypt’s north coast.
“Lots of people were afraid to travel from Cairo to Alexandria. We saw this on social media and created a new category for ‘traveling groups,’ a new feature for specific routes,” Sadek says. “Most of the users are older drivers, mothers with children.” The company hands out Bey2ollak stickers for participating cars to identify each other. It also highlights “convoy of the day.”
Other startups target more specific demands. Mawenly, a GPS mobile application tracking working gas stations, launched in the midst of a gasoline shortage in June, a crisis that helped stoke the popular anger and ouster of Muslim Brotherhood’s Mohamed Morsi. At the stations where there was gas, many lines lasted for hours, allowing drivers to order food and shisha while waiting in their cars.
Mawenly, which means “fill it up” in Arabic, created a user-driven mobile application that allows its users to report on gas stations which had gas and how long the lines were. “After the crisis ended, people kept downloading it,” says Islam Zawawi, a co-founder. “We work hard to tweak it for everyday use, not just when there is a gasoline crisis.”
Now that the large-scale urgent demand for gasoline has subsided, the founders have moved on to the next challenges, preparing to launch two new applications in the coming months: a car services application and a mobile movie tickets application.
PieRide, a commuting solution that launched on September 1, offers riders a safer commute alternative amid ongoing checkpoints and roadblocks on the country’s streets.
Karim El Mansi says the original idea was to introduce shuttles connecting popular residential and business centers, because a typical commute across Cairo’s congested roads can now take several hours.
“This has to be done by the government, it cannot be done by a startup,” El Mansi says. “So we started with a simple solution: just introducing cars with trained drivers.”
One of the key features is safety. Each car is equipped with a GPS and the company trains drivers specifically to address security concerns.
“It’s definitely much safer than being alone in a car or taking a taxi,” says El Mansi.
El Wafeyat, an online obituary platform, launched last week. It aims to fill a niche left by the dying newspaper industry, by announcing the time and location of funerals and allowing users to create their own obituaries.
In Egypt and other Muslim countries, attending a funeral and honoring the deceased is culturally significant, especially given short time window to bury the dead allowed by Islamic law.
“You can miss a wedding or a birthday, but you can’t miss their funeral,” says Yousef Samaa, a CEO of El Wafeyat. “Not everyone reads the newspaper anymore, so there are no proper tools to get the news.”
The company plans to expand regionally to United Arab Emirates and other Muslim countries.
A similar site, called Deadboard.net, also launched recently. It’s a nonprofit site that relies heavily on social media, allowing users to create their own online obituaries to honor the deceased, search for the names of the dead and disseminate information about funerals. With Egyptians being killed in protests and police action around the country in huge numbers, it’s a place for family and friends to see if a missing loved one fell victim to violence. The board or obituaries are sorted by categories, honoring deceased including police, media as well as broader categories like politics and religion.
Domestic investors, and those from the Gulf region, are taking note of Egypt’s maturing startup space.
“The number and size of investments is increasing at angel level,” says Con O’Donnell, regional entrepreneurship advisor at MC Egypt, a for-profit subsidiary of Mercy Corps. “We’ve come to a tipping point of an explosion: the maturity of ideas and teams is growing stronger.”
Not everyone is convinced; many investors remain in “wait and see” mode.
“The startup scene is still nascent, the ecosystem is still building,” says Christopher Schroeder, author of Startup Rising: the Entrepreneurial Revolution Remaking the Middle East. “What they need most of all is a more predictable, stable environment to scale their enterprises.”
When they don’t succeed, many entrepreneurs go elsewhere, as there are not many options available and they are not willing to take on more risk.
“When the business is not working, they leave the country–that is a worrying development. These are some of the brightest people in the country, they are not satisfied with regular jobs,” says Hossam Allam, founder of Cairo Angels, Egypt’s first network of angel investors. “It does show the magnitude of stakes.”