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Egypt’s MSMEDA Invests $7.5M in Regional VC Funds to Boost Startup Growth

Egypt’s Micro, Small, and Medium Enterprise Development Agency (MSMEDA) has announced a $7.5 million investment across three regional venture capital funds, reaffirming its dedication to fostering entrepreneurship and supporting startups. This funding aligns with the Egyptian government’s broader Vision 2030 strategy, which prioritizes economic diversification and innovation.

A recent $2 million investment by MSMEDA in the P1 Ventures Fund aims to support high-potential startups across multiple sectors. While the fund primarily focuses on Egypt, it also targets startups capable of competing in African markets. Basil Rahmi, CEO of MSMEDA, emphasized the significance of tapping into Africa’s growth potential to create opportunities for Egypt’s youth, enhancing both market competitiveness and regional integration.

In a similar vein, MSMEDA committed $3 million to the Foundation Ventures Fund just a month earlier. This initiative is part of a larger investment program launched in collaboration with the World Bank, aimed at fostering entrepreneurship and generating jobs. Notably, it represents Egypt’s first “Fund of Funds” (FoF) initiative, financing local, regional, and international venture capital funds to support early-stage Egyptian startups within a competitive and diverse ecosystem.

In November 2024, MSMEDA formalized a $2.5 million investment in the Capital Ventures Development Fund 2 (Tanmia Capital Ventures 2). This move reflects the agency’s strategy to attract foreign capital and offer varied financing solutions for startups. It also underscores the government’s commitment to driving economic growth and diversification under the Vision 2030 framework.

Together, these investments mark significant strides in creating a robust and competitive startup ecosystem in Egypt, aimed at stimulating innovation, job creation, and regional economic integration.

Egypt’s latest funding contributions are part of the ambitious “Fund of Funds” (FoF) initiative, which aims to secure up to $1 billion to transform the country’s venture capital ecosystem by attracting international investment. During the program’s pilot phase in 2022, $50 million was deployed, funded by the World Bank, and distributed across approximately 15 venture capital funds. These funds received 10% to 20% of their capital from MSMEDA.

Amr Al-Abd, Advisor to the Prime Minister for Entrepreneurship, highlighted the program’s strategic role in strengthening Egypt’s startup ecosystem and extending its influence into African and Arab markets. “The Fund of Funds is the main driver of this strategy,” he explained in an interview with Al Sharq Bloomberg Channel.

The FoF model is designed to reduce risk and diversify investments by channeling funds into multiple venture capital firms rather than directly investing in startups. This approach has already yielded notable success. For example, Endure Capital, one of the program’s beneficiaries, closed its $50 million Africa-focused fund in 2022. Founded by Tarek Fahim, Endure Capital has backed prominent startups such as Careem, MaxAB, and Breadfast, underscoring the potential of the Fund of Funds initiative to accelerate startup growth and regional expansion.

Hani Emad, head of MSMEDA’s Central Sector for Venture Capital Investments, underscored the transformative impact of the Fund of Funds initiative. “Our focus is to empower small projects operating in Egypt and enable their expansion into regional markets,” he stated. The program’s diversified portfolio, which spans sectors including logistics and fintech, reflects its ambitious vision to foster innovation and entrepreneurship.

With Egypt’s youthful demographic and growing startup ecosystem, the initiative seeks to position venture capital as a key pillar of the country’s economic diversification efforts. The Fund of Funds is designed to bridge Egypt’s venture capital gap while attracting international investors. Moreover, Egypt’s strategic location as a gateway to African and Middle Eastern markets presents an attractive opportunity for global investment, reinforcing the country’s role as a regional hub for innovation and economic growth.

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Written by Grace Ashiru

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