VC funding in Egypt reached its highest quarterly and half-yearly amount with $166M invested in H1’21

After growing by 29% YoY, Egyptian startups received $166M in venture funding in H1’21, deployed across 60 deals. This amount was the equivalent of 91% of total capital
deployed in FY’20.
As observed across all the Emerging Venture Markets we cover (MENA, Turkey & Pakistan), most capital in H1’21 was invested in the months of June, a trend reflected in
Egypt. Year-over-year, capital invested in June 2021 surged by 436%.
The Egyptian startup ecosystem grew steadily at a CAGR of 90% between 2016 and 2020.

Egypt was the only one of MENA’s top three countries to mark a slight YoY increase in number of deals
The 60 deals closed in Egypt in H1’21 was only slightly more than 58 transactions in H1’20. However, amongst the top three MENA countries, UAE, Egypt and KSA, Egypt
was the only one to see an increase in deal count YoY in H1’21 (+3%).

In fact, since the drop in deal flow to 25 transactions in the summer of 2020, the subsequent three quarters all saw investment activity higher than this low.

Although the share of accelerated deals in Egypt fell rapidly in 2020, the 2pp drop between FY’20 and H1’21 wasn’t as drastic as a 12pp drop across MENA, highlighting the
importance of these programs to its maturing ecosystem.

When compared to other MENA countries, Egypt ranked second by deal count, accounting for every fourth transaction, and third by
funding amount
Egypt accounted for 24% of all deals closed by MENA-based startups. Between H1’20 and H1’21, Egypt’s share of total transactions in the MENA region increased by 5pp,
the largest across all top 10 countries in the region.

In terms of funding, Egypt slipped in ranking by one place YoY to finish third in H1’21. The 29% YoY surge in funding in H1’21 was outpaced by KSA’s 64% growth in venture
capital. KSA finished H1’21 with $168M in VC funding, while Egypt fell $2M short of this figure.

Unlike other MENA geographies, in terms of deal share, early stage investment between $0k to $500k in Egypt saw a 10pp increase in share versus 2020. Interestingly,
Egypt also recorded its highest proportion of later stage investments, with 16% of all activity coming from investments greater than $10M.

Despite E-commerce dropping in deals across MENA, the sector led growth in Egypt alongside the Delivery & Logistics sector

E-commerce startups closed the most transactions in H1’21 (10), accounting for 17% of all deals closed in the country. This highlights the popularity of the industry versus
other geographies like the UAE (9% of all deals) and KSA (4% of all deals) where E-commerce saw a decline.
The emergence of Fintech across MENA held true for Egypt too as the sector was responsible for 13% of the deals closed in the country, albeit lower than its share in UAE
(23%) and KSA (25%).
Seven Delivery & Logistics startups raised $42M, constituting more than one-fourth (26%) of the capital raised in the country in H1’21.The sector also saw a 10x increase in
funding YoY. A $30M deal closed by Trella accounted for 71% of the capital deployed into the industry.

Contrary to the trend observed across MENA, early-stage funding rounds grew more frequent in Egypt in H1’21
Funding rounds sized below $500K in Egypt increased by 10pp between FY’20 and H1’21.
However, capital allocation remained skewed towards later-stage deals. The average round size of Series A rounds increased by $11M and Series B rounds rose by $19.7M
between FY’20 and H1’21. In comparison, the biggest average round size increase by stage during this period was that of Series B rounds in KSA ($11.7M) and Series A
rounds in UAE ($4.5M).
Just three deals sized over $10M accounted for 36% of the funding in the first half of 2021. These were raised by Delivery & Logistics startup Trella ($30M), E-commerce
firm Homzmart ($15M), and Fintech venture PayMob ($15M).

Egypt saw the participation of 57 investors in H1’21, 32% of which were headquartered outside of MENA
Egypt proved to be an attractive market to both MENA-based and overseas investors. Of the investors that backed Egyptian startups in H1’21, 18% were based in the USA
while 30% were stationed in UAE and KSA combined.
Only 30% of investors that participated in the Egyptian ecosystem in H1’21 were locally based. This was similar to the participation of local investors in the UAE (29%), but
vastly different from their more active involvement in KSA (69%).
Accelerated deals accounted for 17% of all transactions in Egypt in H1’21, a 2pp drop from 19% in FY’20. This represented a healthy proportion when compared to UAE and
KSA, where accelerated deals only accounted for 2% of deal flow in H1’21.
Egyptian firm Flat6Labs closed 10 deals in the country in H1’21, followed by UAE-based Global Ventures with 7 deals. Ranked 6th amongst all investors in Egypt in this time,
500 startups was also the top ranked investor among international firms (3 deals).

EdTech startups recorded an exit in Egypt in H1’21

Three years after its foundation, EdTech firm Tareeqi announced its acquisition by eMushriff in June 2021. Historically, the Egyptian VC ecosystem achieved the highest
number of exits, 6, in 2019.