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REGIONS MIDDLE EAST & AFRICA


Thepromiseofunicorns A


FAWRY HAS BECOME EGYPT’S MOST COVETED START-UP, AND OTHERS ARE SET TO FOLLOWSUIT. JASON MITCHELL REPORTS


lthough Fawry, Egypt’s top e-payment platform and lead- ing fintech, became Africa’s


latest ‘unicorn’ this year via a listing on an African bourse, it will not be the last to emerge from the country’s burgeoning tech scene, according to the International Finance Corporation (IFC). “Egypt will produce further uni-


corns one day, absolutely,” says Walid Labadi, the IFC’s country manager for Egypt, Libya and Yemen. “We fundamentally believe in the power of the entrepreneurial spirit and its abil- ity to address fundamental market needs, which will eventually create significant eco- nomic value and can become a driver for creat- ing future entrepreneurs. “Entrepreneurs are resilient, forward-look-


ing and agile and we can see now how many more young Egyptians want to become entre- preneurs and create theirowncompanies. They will create the future unicorns of the country.”


Leading theway Founded in 2008 by Ashraf Sabry andMohamed Okasha, the company listed on the country’s main bourse, the Egyptian Exchange, in August 2019 and was valued at $275m. However, at the start of October this year, its valuation sur- passed more than $1bn. It is the third African start-up to reach uni-


cornstatus and the first one to do so after going public on an African stock exchange. Jumia, a pan-African e-commerce company based in Lagos, was the first unicorn out of Africa after listing on the NewYork Stock Exchange in April 2019. In November 2019, Interswitch, the Nigerian digital payments firm, also became a unicorn after Visa acquired a minority stake. Fawry offers an online payment gateway for


business owners to transact with customers via cash, credit cards and e-wallets. It has helped to transform the Egyptian economy by reducing the reliance on cash, lowering costs and offer- ing a more convenient way to pay. Its good for- tune is partly due to the Covid-19 pandemic that prompted many people to place a high demand on its e-payment solutions. Its revenue for the first nine months of 2020 surged to E£892m ($57m), a 45% jump on the same period last year. “Fawry developed a unique business model that was specific to the Egyptian market and to


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Egyptian pain points,” says Mr Labadi. “Egypt’s economy was traditionally dominated by cash; they found a way to tackle this challenge effec- tively and efficiently. “Thecompany’s success can be attributed to


a very talented management team, a strong vision and understanding of the market, and a very disciplined execution. That is a rarecombi- nation. We invested in Fawry in 2012, after the revolution in the country. This was a timewhen very fewinvestorswerecoming to Egypt, butwe believed in the country and its potential and wanted to showcase the opportunities there. We also believed Cairo had the potential to develop into a great digital hub. Today, there are other companies in Indonesia and Africa looking to replicate the Fawry model, which is a testament to its success.” The IFC, part of theWorld Bank, is a growth-


stage investor and has invested $6m in Fawry since 2013. It partially exited the company at the time of the initial public offering, but still holds around 4% of the equity.


Up-and-coming In 2015, Egypt had a nascent tech ecosystem, mainly owing to a lack of serious investors pre- pared to take early-stage investment risks. This ecosystemhas nowstarted to flourish. The country remained the most active ven-


ture capital market in the Middle East and North Africa (Mena) during the first half of this year, accounting for 25%of the 251 transactions in the region, according to the Mena Venture Investment Report by Magnitt, a start-up data platform. In the first half of 2020, $659m was invested in Mena-based start-ups, a 35% jump on the same period last year (by value, Egypt attracted 19%of the total). Magnitt says that the country is attractive


to foreign venture capital groups because it has a large addressable market for entrepreneurs, with Egyptian students and professionals increasingly turning toward entrepreneurship to capture the opportunity of the quickly devel- oping market. Egypt’s economy (at $303bn, according to the World Bank) is the third big- gest in Africa and alsomakes the country’s tech ecosystemattractive to foreign investors. The IFC believes it helped to kickstart this


ecosystem by expanding access to early-stage capital. It has committed $2.5m in equity financing to Flat6Labs, a Cairo-based early-stage incubator, since July 2017. It has also invested


www.fDiIntelligence.com December 2020/January 2021


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