Global Courant
From its humble beginnings, the Egyptian tech startup ecosystem has experienced exponential growth. Now it stands tall as a prominent tech powerhouse in Africa, rivaling established startup ecosystems such as South Africa, Nigeria and Kenya in entrepreneurial innovation and investment levels.
In the 3rd edition of Egypt FinTech Landscape Report In 2023, the startup ecosystem reached a milestone despite the global headwinds in global FinTech investment over the past year. A total of $796.5 million, of which $437.7 million comes from private equity investments, has been injected into Egyptian FinTech and FinTech startups by 2022.
In addition, venture capital investments have skyrocketed, reaching a new high of $358.8 million; which has multiplied by 28.7 times in just 3 years, indicating that this year was an even bigger record breaker.
The emergence of innovative FinTech and FinTech-backed startups in the market highlights the growing traction and vitality of the ecosystem in 2022. Here are some key conclusions from the report that shed light on the state of the ecosystem.
Egypt is home to over 177 startups and PSPs
Currently, 177 FinTech & FinTech-enabled startups and Payment Service Providers (PSPs) are providing innovative solutions in the Egyptian market. Of these, 139 (79%) startups offer pure FinTech solutions, 38 (21%) technology solutions and embedded finance.
In the past five years, the number of innovative startups and PSPs has increased by 5.5 times due to the rising demand for FinTech & FinTech solutions in the Egyptian market.
Primary subsectors of startups and PSPs
Currently, the FinTech industry in Egypt is largely dominated by three sub-sectors, which together account for nearly 60% of the 177 startups and PSPs. Payments & Remittance stands out as the leading subsector, representing 36% of the FinTech landscape. Closely followed are Lending & Alternative Finance and B2B Marketplace Solutions, at 11% and 10% respectively. The Data Analytics/AI, Insuretech/Healthtech and Agritech subsectors each make up 5% of the FinTech industry in Egypt.
Geographical representation
Of the total of 177 startups and PSPs analyzed, 9 were headquartered abroad, while the majority, 168, were based in Egypt. Of the 168 startups and PSPs headquartered in Egypt, about 67% (113) were based in Cairo, 30% (50) in Giza, and the remaining 3% (5) were spread across other governorates. Interestingly, of the 113 startups and PSPs based in Cairo, 17 additional had offices in other governorates.
Of the total of 46 startups and PSPs with additional offices abroad, the majority, 58%, are in the United Arab Emirates, while 36% have offices in Saudi Arabia. In addition, 18% of these startups and PSPs have expanded their operations outside the MENA region, with the United States as the primary destination.
Of the 52 startups and PSPs with clients abroad, the United Arab Emirates is the top destination country, accounting for 57% of them. Closely followed is Saudi Arabia, with 47% of these startups and PSPs serving customers there. Nigeria is fifth with 12% while the US is at 10%.
Power of the customer
Of the 143 startups & PSPs that shared their data, 25 startups & PSPs have not yet acquired customers. However, there were a total of 99.9 million registered customers with the rest of the startups and PSPs. Of these registered customers, approximately 54.7 million, representing 55%, were active in the past 90 days.
Of the 72 startups and PSPs that provided gender-disaggregated data, female registered customers account for nearly a third (4.4 million) of their total registered customers (15.6 million). Among these startups and PSPs are a total of 1.2 million active female customers, representing 27% of the active customer base.
When analyzing customer diversification for any startup, it becomes clear that the average activity level of female customers tends to be higher than that of male customers. On average, for any startup, active women represent 55% of the female customer base, while active men represent only 47% of the male customer base. This suggests that female clients are more engaged and active in using startup services than their male counterparts.
Female founders and co-founders
Of the total number of startups and PSPs analyzed, only 29% (52) have female co-founders, indicating a relatively low representation of women in founding teams. In addition, an even smaller proportion, just 2% (3) of startups and PSPs, have all founders as women. The majority, 69%, do not have a female founder or co-founder, further underscoring the need for conscious action to achieve gender balance in the industry.
By taking conscious action to achieve gender balance in the startup ecosystem, companies can unlock numerous benefits and contribute to a more inclusive and successful entrepreneurial landscape.
Challenges in the ecosystem
In the ecosystem, startups and PSPs face several challenges that impact their growth and sustainability, and one of the most common hurdles is securing access to adequate funding. Despite the current strong performance of the ecosystem, there remains an urgent need for additional funding. Especially in the early stages, startups and PSPs often struggle to raise capital due to investor hesitation or a lack of awareness about their innovative solutions.
Financing issues aside, navigating regulatory requirements and obtaining the necessary licenses can prove to be time consuming and financially demanding. Consequently, this hampered the speed at which these entities could enter the market and scale their operations.
In addition, currency volatility or devaluation is a concern as it is an obstacle to maintaining profitability, securing adequate funding and ensuring operational stability. These currency-related challenges pose risks to their overall financial health and ability to effectively support their business endeavors.
Interestingly, it’s important to note that these issues are not unique to the Egyptian ecosystem; they are recurring problems throughout the African continent.
