Egypt has long occupied a central place in MENA, both as the geographical fulcrum between North Africa and the Middle East, as well as a cultural pillar in film, music, and politics. Entrepreneurship, it turns out, is no different. In 2019, it had the highest number of startup raises in the region, and it consistently ranks near the top in terms of number of startups founded and venture capital deployed.
I had the great fortune of touring Egypt’s startup ecosystem with Germine Bouchnack, an Associate at Middle East Venture Partners (MEVP) and their Egypt Operations Manager. Talk about a rising star! Germine’s journey into entrepreneurship started during university and has traversed such notable local, regional and global institutions as Hult Prize, the Commercial International Bank (CIB), and Flat6Labs, before joining MEVP at the end of 2020. I’d suggest you follow her closely, because in a few years, this will be just one of the early articles or interviews profiling her work. I’m confident that her passion for entrepreneurship and venture capital, combined with her desire to make an impact at both a grassroots and national level will continue to lead her career into new and exciting places.
On top of all that, she’s in one of the region’s most exciting places. She summed up her hopes for Egyptian startups beautifully when she told me:
Egypt has faced several challenges throughout its recent history, but I believe that this is why the Egyptian entrepreneur is innovative. This isn’t just in academia or technology, this is in daily life. If you go around the streets, you find innovation in the smallest of things. Nothing is ever broken. Everything has a solution. This spirit and mentality is key for an innovative entrepreneur. With the right tools, financing, and discipline, we can create something extremely valuable. I think this applies to the entire region. It’s full of challenges and full of things to solve.
Read on to Germine’s journey and her insights into startups in the land of the Pharaohs.
Can you start by introducing yourself and your new role with MEVP?
I’m Germine Bouchnack and I graduated in 2017 from the German University in Cairo. While I was double-majoring in Finance and Economics there, I had the good fortune of discovering my passion for entrepreneurship.
I joined MEVP as their Associate and Egypt Operations Manager in December 2020. We’ve just launched our new office in Cairo at the Greek Campus, which is the heart of the entrepreneurship ecosystem. Many events, gathering, and startup competitions take place there.
I’m really excited about the role. It’s the perfect opportunity for me to expand on my experience by combining MEVP’s journey of investing in Egypt, and my personal mission to support entrepreneurship in Egypt.
You mentioned that you discovered your passion for entrepreneurship while you were at university. Can you tell more about that experience?
During my undergraduate years, I felt that I gained the most value from the competitions and initiatives that I participated in. The closest to my heart is the Hult Prize. It is a social entrepreneurship competition led by Ahmed Ashqar and the Bill & Melinda Gates Foundation, that attracts students from across the world. I joined the competition and we actually won in the German University in Cairo, and traveled to the San Francisco Regional. I still remember to this day how my eyes sparkled when I saw the competition’s introductory video. It clicked with something I had in the back of my head for a while; how to build sustainable solutions that would address the deepest challenges people face. In Egypt, I’d see businesses and corporations on one side, and charities and NGOs on the other. I kept wondering how can you make helping people a profitable business? How can you build a sustainable solution to their problems?
Hult Prize tries to address this space. I had the epiphany that, “Yes, it is possible to combine doing something of huge purpose while at the same time making profit.” Hult Prize was on a much smaller scale than what it is now, and it’s been a pleasure to witness the growth it has undergone during the last few years. Now I participate as a mentor and a guest speaker.
My experience with Hult led me to focus more on creating entrepreneurial initiatives and introducing other students to the field. One thing led to another, I volunteered in a couple of startups, putting finance and economics to use. I wanted to understand how startups could impact not only households or individuals, but the entire economy. I started using my bachelor thesis to explore the economic impact of SMEs and startups on employment, GDP, etc. I researched India and the U.S. knowing how successful they were at integrating SMEs into the economy. I also interviewed a bunch of Egyptian entrepreneurs. One thing that came up during this process was that Egypt doesn’t have data. In order for you to get to know bulk data, you need to put in the effort yourself.
How did you take your experiences in university and build them into a career?
While researching my thesis, I realized that similar to the rest of the world, access to finance is a big issue for SMEs and startups in Egypt, and that it probably hinders growth of many talented businesses. I was very lucky to learn that my thesis’ recommendations were in line with the Commercial International Bank’s (CIB) (the largest private sector bank in Egypt) plans to shift from a traditional collateral-based financing for SME’s to behavioral finance. I joined them as my first job after school. I worked directly with senior management on resetting the strategy, policy, and processes for the entire SME financing department.
I was involved with the launch of a few products, but I was most proud of the first SME financing product for Egyptian women. We started developing this inclusive product that includes financing, along with business support and we built a network of very strong business women in Egypt. I’m quite proud that the product continues to operate to this day, and has lent hundreds of millions of Egyptian pounds to over 200 women-led SMEs.
I remained in touch with the startup ecosystem during my tenure at CIB, mostly by supporting entrepreneurs and attending events. The ecosystem’s dynamism and disruptiveness continued to spark something within me. I finally made the move and joined Flat6Labs, which is a regional accelerator and VC. In this role, I worked with the Managing Partner of the Cairo fund to support over 55 tech-enabled startups across different industries. I worked with these entrepreneurs on fundraising, strategy, and business development. In particular, I noticed the fundraising challenges they faced from a totally different perspective than SMEs.
After working there for almost a year, I found the job with MEVP posted online, which is something that rarely happens in the VC world. Intrigued by the value that MEVP adds to its entrepreneurs, and aiming to continue my strides towards supporting the Egyptian entrepreneurship ecosystem, I applied and fortunately got the chance to be a part of MEVP’s great team.
Are there any people in tech or companies that you especially admire or look to for inspiration?
There are three main companies or individuals that each resonate with me in a very important aspect.
The first one is Google. For me, Google shows how disruptive technology can improve our lives. If you stop and think for a minute, especially coming from a country that doesn’t have much accessible or usable data, having everything at the tip of your fingers is an impressive example of how technology can make life much easier by enhancing knowledge acquisition and sharing.
I also really admire Muhammad Yunus, the founder of Grameen Bank. He’s a pioneer. The first time I read about him was in the first year of college. It stuck with me how he’s used innovative and catered solutions to address one of the biggest challenges faced by developing countries in a way that empowers those in need of financing, rather than burdening them.
Last but not least is Airbnb. More specifically, the founders’ empathetic leadership style. I believe that great founders are empathetic leaders. Empathy is much needed In such a globalized world, where you work with people from different backgrounds and perspectives. Empathetic leaders can better support their teams and unite them around a common purpose, which I think unlocks real company growth.
If I were to sum it up, I aspire to invest in and support empathetic leaders, such as the founders of Airbnb, who are developing disruptive technologies like Google, while providing inclusive and innovative solutions that help solve the deepest challenges in the world, like Grameen bank.
When you first decided to go to business school, did you have an idea of what you wanted to do with that degree?
When I first joined university, I wasn’t a business student. I spent my first semester studying as an architectural engineer. Both of my parents are engineers, and we have this kind of cultural thing in Egypt that holds the engineering field in high esteem – it unlocks lots of opportunities, it gives you the logic and problem solving that opens up your mindset. I had a passion for art and design, but after studying architecture for a bit, I realized it was just a passion, not a career. I started talking with business students, understanding what they do, what courses they take, the things they study, and it just felt right. I loved the comprehensive perspective it provided. You look at the entire economy, and then you keep drilling down. You understand how the world works, and how you can address business problems in a way that creates value for both the entire economy and for households individually.
As I mentioned before, I knew I was in the right place when I found Hult Prize. From that point on, I knew that was what I’d be doing. It sparked something different inside me. A different kind of excitement and fulfillment that, to be honest, I don’t feel doing anything else.
I know you’re new at MEVP, but can you give a brief overview of the history of the fund?
We are one of the oldest and largest VCs in the MENA region. We started back in 2010 with a $10m fund. Now, 10 years later, we have over $250m dollars in assets under management. We’ve raised four funds and we have so far done over $100m in co-investments with regional and global VC players. Our four funds are Middle East Venture Fund I, II, and III. We’re currently deploying from III, which has a focus on the MENA region. We also have an impact fund, however it has been fully deployed.
We have currently over 50 portfolio companies that have created more than 2,000 jobs. Our headquarters is in Dubai, with offices also in Beirut, Riyadh, Abu Dhabi, Bahrain, and now in Cairo. In terms of team, we have over 20 team members at MEVP divided between investment team members, portfolio management, legal, product development, tech experts and finance and accounting teams.
What’s the thinking behind the decision to open a new office in Egypt and how will it fit into the broader MEVP team?
We are currently deploying from a $90m dollar fund that we raised back in 2018 and Egypt is a big part of the focus. Even before opening an office, MEVP had a presence in Egypt. We have invested in a couple of companies here including Instabug, Halan, and Eventtus. The micro-dynamics in the Egyptian market are really attractive, as its population size, especially with a very high segment of the population under 30 years old. This means a better understanding of, and greater willingness to adopt new technologies.
The ecosystem has also already had some meaningful successes. Fawry is a fintech firm established back in 2008, that IPO’ed in 2019. Companies like this bring Egypt into the overall global ecosystem and prove that there are opportunities here and that there are talented entrepreneurs. The ecosystem continues to mature and has come so far since 2010, 2011. Different regulatory frameworks are now in place to incorporate startups, and they’re integrating into the supply chains of corporates, governmental entities, and so on. These factors combined to make MEVP feel like now was the right time to invest in some on-the-ground representation in Egypt.
For the time being, I’m the only full time MEVP employee on the ground in Egypt. However, the more we expand in Egypt of course, the more we’ll need to grow our team. The MEVP team in general is very dynamic, so we do have visits from all the team members here, and I visit other offices as well.
What differentiates MEVP from the other VCs in the Arab world, and what’s the firm’s thesis?
We’re one of the oldest and most established VCs in the region, so whether it’s governmental officials, corporates, or investors, we have very deep roots and networks. We use this to provide support as much as we can for our portfolio companies in terms of fundraising, expansion, and strategic guidance in general. We also have a very strong tech expertise on the team. All of this enables us to give startups “smart money.” It’s not just about the financing, but the things that the companies need to use this financing in a productive way. We are one the very few VCs that have presence in both Levant countries and GCC, so we can easily bridge any expansions between the two. Our global connections also allow us to bring international VCs into the region.
Our thesis revolves around building local adaptations of internationally successful technology companies. We invest in high growth tech companies in their series A and B rounds. Our initial investments start around $1m up to $5m, and we have the ability to follow on up to $9m. We look for experienced team members that are able to build and scale companies with product market fit, high growth trajectory, and sound unit economics. Finally, an attractive market segment or market opportunity is something that is very important to us as well.
What are some of the specific startups in Egypt and the region that you’re really excited about?
I can share with you a couple of examples from our portfolio companies. We can start with an Egyptian one – Halan. It’s an on-demand transportation app for 2-and 3-wheelers (“tuk tuks”). Halan caters to an underserved population, which is traditionally a segment that is very hard to tap into. They’ve also expanded into other services, such as logistics, e-commerce, and others that complement their main offering. They have over 2.5m application downloads and over 500,000 active users.
If you look at fintech, we have a very interesting UAE-based company called Rise. It provides essential financial services to the underbanked migrant population specifically in the UAE.
We also have Anghami, which is the leading music streaming service of the Middle East and Africa in general.
We are also excited about our new investment in Yodawy, which we are currently in the final stage of closing. Yodawy is an online medication aggregation ordering and digital medical exchange platform in Egypt.
Can you give me a general overview of Egypt’s startup ecosystem?
If you look back in 2010, 2011, around the time of the Arab Spring in Egypt, the ecosystem was very scattered. It wasn’t structured and formulated, there were just a few one-off initiatives. Since then, the ecosystem has grown massively in the past 10 years, fueled by a few different factors, which I’ll shed light on.
For one, regional VCs started to see Egypt’s potential and entered the market. They’ve provided financing at different stages of startups’ lifecycle, which has been an important catalyst for growth. There is now more government support as well. They’ve established regulatory frameworks specifically catering to startups. Finally, corporates in Egypt are also growing more aware of the value of integrating startups into their own supply chain, whether from buyer perspective or supplier perspective.
Including entrepreneurship as part of the educational curriculum has also advanced greatly in the past few years. Now you have dedicated programs, incubators, and university programs specifically catered to mentor and prepare students for launching their businesses.
Egypt is obviously a huge country. Do you find that there are different characteristics between Egyptian cities and regions?
Egypt’s entrepreneurship ecosystem centers around Cairo and Alexandria but it is catching up in other governorates as well. However you do see some differences between the different markets, mainly in consumer behaviors and needs. These differences are then reflected in the business models of the startups. If a startup chooses to target markets in both Upper Egypt and Cairo, they’ll have to adapt their business model to each market accordingly.
However, as the ecosystem grows, Cairo and Alexandria are becoming saturated in some segments. For example, if you look at Cairo and Alexandria in terms of mobility and logistics solutions, you’ll find over 5 or 6 dominant players, and many smaller and medium players. If you go further into the Delta, or other governorates, you’ll only find one or two startups operating there in that same space. The expansion potential is huge, even within the country. You just need a team that is able to understand the customer needs and cater to the different characteristics of each governorate.
What are some of the biggest challenges, what’s holding back explosive growth in Egypt?
I should start by saying that there are a few different things, but to create a really explosive growth, all of them need to be addressed. Just solving one won’t necessarily unlock startup growth.
So, first, there are still limited opportunities for smart money financing. This requires experience and expertise in the market. There’s a shortage of entities that have a technical understanding, but can also support startups with business fundamentals. For example, you’ll find technically brilliant entrepreneurs, but need strong support in management or fundraising, and vice versa..
This makes it harder for Egyptian entrepreneurs to navigate the regional and global fundraising system. Egypt is somewhat connected, but we need even more work on connecting those startups with global or regional investors.
Another very important thing is that, despite how creative and intelligent they are, startup founders tend to lose sight of the regulatory frameworks that they need to keep in mind when forming a company, more education in this part is very important.
Last but not least, attracting and retaining experienced talent is tough in general, especially technical talent. The talent is out there but it’s tough to attract them to a startup.
Is there also a challenge keeping that talent in the country?
This answer is going to be a bit subjective. You certainly do have huge talent shifting to look at different markets searching for bigger financing opportunities, exposure, etc in other countries in the region, or even globally.
At the same time, you see the other way around as well. You see the Egyptian diaspora coming back from the U.S. and European countries because they recognize how big of opportunity the market is in Egypt. They bring back the experiences they’ve gained in such advanced ecosystems, and they try to tailor it to the market dynamics here in Egypt. This is a really powerful mix of experience and localization.
You mentioned the Arab Spring earlier. What impact do you think that had on the Egyptian ecosystem?
I believe the ecosystem would have grown either way, but the Arab Spring accelerated it. I was only about 16 at that time, but I remember that the entire mindset throughout the education system was aimed at having a corporate job when you graduate. SMEs have been there since the 80s and 90s, but the startup ecosystem actually started to flourish with the Arab Spring. It brought the daily challenges that people lived with back to the forefront. It opened the mindset of the young and driven people – the “entrepreneurs-to-be”, who felt empowered and felt that they can do something to solve those challenges. It boosted them to believe that there was nothing too big to change. This helped accelerate the growth. After 2011, the startup ecosystem has been growing year over year. Of course, many entrepreneurs tried and failed, but many of them tried again, and again, and now have very successful businesses. In 2011, 2012, and 2013, they built this kind of resilience.
What’s the connection like between Egypt and other Arab countries?
It depends on the industry and market segment that the startup addresses. You’ll find some startups that are very well connected with the GCC because they’re eyeing this market for future potential expansion. They want to understand the market dynamics and they want to attract strategic investors or partners there. You have other companies whose services cater more to North Africa, so they work on that. You also have startups that look to expand into Kenya, Nigeria, and other sub-saharan markets. The more I meet startups, the more I realize that it’s relative to the market opportunity. Where is the market opportunity, and where does it make sense to expand?
Looking from a very big picture, Egypt has a very central location. This is the “typical” thing to say, but it’s true! We have a culture that feels familiar to all the different cultures around the Arab World, and our big cities are relatively cosmopolitan. We have expats living here, whether from Africa or from GCC, and we have Egyptians who lived abroad and came back again. There’s a familiarity with different mindsets and backgrounds.
The rise of startup events in Egypt, both local and regional, such as RiseUp, TechneSummit and Startups Without Borders, bring everything together. Especially with COVID, the barrier to entry for meeting investors or partners is becoming lower and lower.
What keeps you going when you’re tired at the end of the day?
It’s simply the passion I have for my work and strong belief in what I do. I really feel that it has an impact far beyond myself. I work in a very dynamic environment and I feel a unique sense of fulfillment by supporting entrepreneurs, their families, their customers, their suppliers etc. I’m grateful to be a part of this value creation. I strongly believe that startups and SMEs are the real engine behind economic growth. If you give them the right kinds of support, you can unlock their huge potential in the Egyptian and global economies. Simply put, knowing that this can create an impact from the household level to the economy level, is what keeps me going.
What does the future hold for you? Do you have any short or long term projects that you’re working on? Do you think that you will continue for most of your career on the financing side, or are you interested in starting your own company one day?
I have a very exciting job with MEVP. I’m very grateful to be a part of their work and part of the ecosystem in general. In terms of small projects, I really want to work with local universities, especially the one I graduated from, on integrating more and more entrepreneurship education. Topics like how to be an entrepreneur, how to make business plans, how to think of new products, and so on. I’d especially love to see the VC part more integrated into the educational landscape in general. VCs are still growing in Egypt and I believe the growth of VCs is parallel to the growth of the startups. I hope that I’ll be able to teach a “Basics of VC” course covering what we do and how it’s different from traditional financing.
From a broader perspective, I don’t know whether I’ll stay forever on the VC side, or flip to the other side of the coin and found my own company someday, but I’m very sure that my career will center on entrepreneurship. For the near future, I’m more than happy to delve deeper into the VC ecosystem and help as many startups as I possibly can.