By: Sherif Khairy
Startology is a startup company with the purpose of supporting the entrepreneurship ecosystem. They’ve published a book about startups in which they interviewed a lot of key players in the Egyptian startup scene, as well as foreign field professionals.
They’ve included statistics, case studies, as well as a guide to the role of each player in the entrepreneurial market. The book titled ‘’Entrepreneurship in Egypt, form evolution to revolution’’ and is available in Diwan, Alef and Shorouk bookstores, as well as on Amazon and Jamalon.
We sat down with Ayman Saeed, one of the cofounders of the startup who talked to us about the book as well as his opinion on the Egyptian startup scene.
You talked about Talaat Harb, and Mohamed Ali Pasha as the key entrepreneurs of their time. Do you see anyone today fitting their role?
There are a lot of entrepreneurs today of course, we highlighted 10 stories in chapter four of our book. We simply wanted to display Talaat Harb and Mohamed Ali Pasha as examples that entrepreneurship is a mindset, not just a career. We displayed the Pharaohs as well; their passion, the idea of making things happen, the Pyramids for example as well as their technology.
Forbes wrote an article a while ago about the top 10 cities for a startup. Cairo was one of them. What do you make of that choice?
There are a lot of different rankings, Forbes based their opinion on a visit they had around November, and they were mainly talking about the vibe of startups that’s really trending now, the engineering talents and number of graduates. They spoke of the choice a lot of people made to pursue their dreams through startups, and how a lot of people are taking their graduation project and turning it into a startup.That’s why Forbes mentioned Egypt as a fast-growing market for startups.
Other well-known ranking is the Global Startup Ecosystem Ranking, their top 20 didn’t include any country from the Middle East or Africa. However, in the top-to-watch list, they included Dubai and Jordan, and Kenya from Africa.
They look at more solid criteria; they consider the performance, funding, market reach, talent, startup experience, like the effect on the employment rate, the number of startups per capita, and other more economic factors. We still need time to have a stronger impact.
What can we do to improve the quality of Statistics & Quantitative data related to Startups in Egypt?
Well, the first thing is classification. Accurate definition of startups, in terms of what is a small business, what is a micro one, and what is medium-sized, that is very important. Egypt Innovate started developing a visual map for Egypt’s ecosystem.
Another huge problem in Egypt is that almost 65% of businesses are informal, unregistered businesses. So we need to think, why don’t people register? After people register, they will have to pay taxes, but they need to get benefits in return. If there are no benefits, why would they register? Startups in India pay lower interest on their loans, bankruptcy laws are relaxed with startups, and they can get a 3-year tax exemption if they work in R&D.
The government has the awareness, but the mechanism of implementation is still lacking. That’s the idea of the ecosystem. In Egypt, we’re still missing a lot of pieces from the puzzle; it’s not just the Government, the banks, or the investors. There has to be entities that drive the ecosystem forward.
In the US, private sector companies like Google drive the ecosystem. This is mainly because the laws are helping them, and also because they want to stay updated and stay close to innovations in Universities. Ford, for example, would want to stay updated with the latest in automotive technology, instead of just relying on their own R&D. So they start helping students and funding their projects. This encouraged them to start their own businesses, and Universities in Detroit also started giving them more support.
Most Egyptian Startups are centered in Cairo. We rarely find startups in other governorates. Is that a big problem for Egypt?
It is a problem, however, all the international donors are now focusing on other governorates. The thing is, business is centered in Cairo. Most multinationals are in Cairo, so it’s logical for startups to be the same. There is a huge potential outside of Cairo, most of Egypt’s natural resources are not in Cairo.
What’s the difference between Startups in Egypt and in other parts of the world?
What’s clear in Egypt’s profile is that entrepreneurs start really early, maybe while still in college. Abroad the average age is 34-35 years. They start after working in the industry, understanding it, and creating their own network. Starting early is a great benefit because with time they will be more mature, and will gain a lot of experience, so their success rate will be much higher.
funding for example is another big difference. In Egypt, initial funding is around $15,000, abroad the average is $1,000,000. TelAviv is around $700,000. They don’t take it as just implementing an idea they had, they’re starting an enterprise.
How can startups better the economy?
Mainly, there are two effects. Launching a startup means employing people while developing solutions for unsolved problems, it also means contracting other businesses to provide services. It creates an economy that drives itself. Then you start making revenues, that’s money flowing to the GDP of the country. In Egypt, 80% of businesses are small and medium, with a capital of 1-5 million EGP.
Informal businesses have their own economy. They have their own banking system that works for them, and it’s actually economically sound, that’s 60% of the country’s businesses. To encourage them, it’s more efficient to create different benefits for them, instead of just convincing them with the benefits of being bankable for scaling up.
It’s the government’s role at first to improve regulations while incentivize private sector to include SMEs in its value chain, nothing else. Some people we interviewed for the book believe that if the government has money to spare, they should give it to a funding entity or to investors, those that have the required skills to invest wisely and monitor their investment.
In your opinion, what’s the role of Social Entrepreneurship in Egypt?
The model for me is GESR, a program of Misr El-Kheir foundation, they’re social incubators. Their role is to create products that serve the bottom of the pyramid, that’s their definition of social entrepreneurship. They work for the poor areas that need aid, the ones Misr El-Kheir researched. Part of their activities is Liter of Light [a global competition], in partnership with PepsiCo. It aims to acquire affordable solar panels that can be used to light up these poor areas.
What’s the gap between Egyptian startups and international startups? How can we decrease it?
The gap is not within the startups themselves. In terms of education, online learning has made everything available anywhere. However, the market is where the gap is. Our market doesn’t give them access to grow and develop, to sit with CEOs of multinationals and engage in deals. That type of activity is not very accessible. If you look at the learning curve of an Egyptian entrepreneur and a foreigner, we’d have a head start, but foreigners will develop much faster with time. This is because they were allowed to enter the market freely.
Tell us more about your upcoming plans for Startology…
Well, we wrote this book as a sort of guide to young entrepreneurs, and used it as a marketing tool for our startup. We’re working on a model called Corporate Acceleration, close to Tech Stars in the US. We want to implement that model in Egypt, basically services for startups. Our target is mainly renewable energy and innovative construction techniques.
You mentioned that an entrepreneur should have a mentor. Who is yours?
For our model now there’s no engaged mentor, but we’re more focused on technical expertise. Globally, I’d go for Elon Musk, founder of Paypal, Tesla, and SpaceX, he’s a genius. But the thing is, the role of the mentor should be to guide you with his expertise and network within the field you’re entering.
For the book, our mentor was Chris Schroeder, author of Startup Rising. He toured the Arab Region after the Arab Spring, talking about the boom happening in Entrepreneurship. He wrote the forward for the book and helped us find distribution channels.
How do you see the Egyptian startup scene developing in the upcoming 10 years?
I believe we’ll become more global, a lot of startups will go global and these will be the ones making an impact, it is some sort of another brain drain, local startups will be more social, serving the bottom of the pyramid.
Investors will come from abroad not locally. Fawry was funded from the US, Wuzzuf from Sweden & UK, Yaoota from Emirates. Foreign investors will start looking at Egyptian startups and the MENA region in general.
What advice would you give to young entrepreneurs?
We actually asked that question to people we interviewed in our book. Our conclusion was that “there’s no such thing as fixed advice”.
If you’ve told someone like Elon Musk to focus on just one track, we may have never seen his incredible diverse startups; he succeeded in 4 different fields. Everyone knows himself, his triggers, and what could drive him to succeed.
The basic advice is to be sure you have passion for your idea and to get knowledge, competency and perseverance. If you have an idea, build competency, or decide against it, don’t keep dreaming about it.
For more about Startology check their Facebook page here!