2011, a look back

As Egypt stumbled through one of its most turbulent years in history, we thought it was a great time to continue investing in innovative ideas and smart entrepreneurs.  In fact, in 2011 we invested over EGP 40 million, 4 times the amount we invested in 2009.  Why?

Warren Buffet, perhaps the greatest investor of all time, once said “Be fearful when others are greedy and greedy when others are fearful.”  We as investors believe there has never been a better time to invest in the technology sector in Egypt.  As Internet penetration reaches a tipping point, and the Internet generation comes of age, the online segment in Egypt is poised for exponential growth.  Therefore, while Egypt’s quarterly GDP growth rate reached a record low of -4.2% in March of 2011, and people started running for the hills, we saw opportunity.

We met with over 60 companies during the course of the year.  Some of the trends that we are seeing in new startups that are cropping up in Egypt include:

  1. Cloud Computing and Software as a Service: We met with a number companies diligently working to create software solutions offered over the cloud for various sectors from tourism to healthcare.
  2. Online and Mobile Games: From fresh grads to seasoned entrepreneurs, everyone seems to want to cash in on the boom in online and mobile games.  Most games companies we met with were very early in development but with grand visions.
  3. Group Buying: As the Groupon phenomenon spreads like wild fire globally, Egypt remains no exception to the exceptionally high number of entrepreneurs wanting to try their luck at group buying.  I can safely say that Egyptian entrepreneurs ranging from the delusional to highly rationale are considering rolling the dice when it comes to group buying.

So after all of that, where did we decide to put our money?

Last year we invested in Nefsak, Egypt’s leading online e-commerce company, Offerna, one of Egypt’s leading Group Buying operations, and Nezal, Egypt’s soon to be leading online and mobile games producer.  In addition, we completed follow-on investments in Fawry, a company that no longer needs a description next to its name, and IdentityMinds, a company providing innovative solutions to the global marketplace for online payment fraud.

With that I’ll leave you with parting thoughts on 2012.  We expect the political and economic uncertainty to prevail over the year, however we remain optimistic on the long-term prospects for Egypt.  As our investment horizon is still way out in the future, we looking forward to another year of investing towards future prosperity.

Happy New Year!

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