Egypt’s MSMEDA Allocates US$3 Million To Back Local Startups

(Image courtesy Egyptian Cabinet on Facebook.)

Egypt’s Micro, Small, and Medium Enterprise Development Agency (MSMEDA) has inked a US$3 million investment agreement with Egypt-based early-growth stage venture capital fund Foundation Ventures to support Egyptian startups across various sectors. 

According to a statement, the investment will allow startups to develop products and strengthen their market presence. It is also expected to create new job opportunities and contribute to economic development. The initiative aligns with Egypt’s Vision 2030 and aims to improve Egyptian startups' competitiveness in local and regional markets.  

MSMEDA CEO Basil Rahmy stated that the collaboration with Foundation Ventures is intended to provide financial support and help businesses expand their operations. Similarly, in a conversation with Inc. Arabia, Mazen Nadim, managing partner at Foundation Ventures, highlighted the potential impact that this initiative can have on the entrepreneurial landscape in Egypt. 

According to Nadim, the Egyptian market must address three main challenges in order to enable MSMEs in the country: access to funding, expertise, and policy advocacy. "According to MAGNiTT’s financial year 2024 venture investment summary, Egyptian startups saw a 21 percent year-on-year decline in funding," he said. "This is why Foundation Ventures is looking to deploy $25 million in Egypt, and the aim is to be able to attract foreign direct investment (FDI) for follow-on investments, compounding the dollars invested in the country."  

Discussing Egypt’s regional competitiveness, Nadim outlined key areas for improvement. "Egypt is well-positioned to maintain and grow its competitiveness in the region by developing local talent to be competitive on a global scale, adopting additional regulatory reforms to increase the overall ease of doing business, improving transparency, and providing real insights, including bottom-up research reports into the market to increase investor attractiveness," he said. Here, Nadim hinted at an upcoming initiative by Foundation Ventures in this area, while also highlighting the importance of fostering public-private partnerships to encourage collaboration between government entities and the private sector.  

He also noted that while Egypt has strong tech talent, they often lack specific skillsets, particularly in areas like data science. That said, Nadim pointed out that initiatives by both MSMEDA and the World Bank have been proactive in offering workshops and technical programs to support upskilling in these areas. Additionally, the lack of policy advocacy remains a challenge, with Nadim saying that there is room for greater collaboration with government agencies to streamline regulatory processes. 

Looking ahead, Nadim pointed to the need for technological empowerment of traditional industries to help them stay relevant and enhance competitiveness. "All industries need tech enablement to remain competitive, especially with the rise of artificial intelligence (AI)," he said. "Incumbents that fail to enhance their efficiency risk becoming obsolete: customers, whether they are businesses or consumers, are increasingly expecting seamless, digital experiences, and tech enablement has the potential to significantly reduce costs, delivering better returns for companies and their investors. Currently, we are witnessing significant advancements in the agritech, fintech, and healthcare sectors in particular, and we at Foundation Ventures are particularly eager to see further innovations aimed at improving supply chain efficiencies.” 

Nadim also pointed out that investment funds can help drive economic development and job creation in Egypt, while stimulating the local economy and driving exports. "By engaging in direct job creation, enabling startups that employ thousands of employees throughout the country, as well as developing the next generation of investors in the local market, funds contribute significantly," he explained. He also stressed the importance of investing in small and medium enterprises (SMEs), calling them "the heart of any economy," and underscored the regional economic boost created when startups are enabled to scale and expand their reach. This, he noted, can help create demand for Egyptian goods, talent, and services, stimulating the local economy and enhancing Egypt’s exporting capabilities. 

When asked about the trends that excite him the most as he looks forward to 2025, Nadim highlighted several developments that inspire optimism among entrepreneurs. “There are a few trends and shifts in the landscape that are exciting for entrepreneurs already building and those looking to build in Egypt in 2025,” he said, noting that “government support and regulatory tailwinds” are creating opportunities for entrepreneurial innovation across industries. "To give a few examples: changing electronic know your customer (eKYC) policies to further digitalize the financial sector; [the] Universal Healthcare Initiative [that] creates the opportunity for public-private partnerships; initiatives to modernize the agricultural industry, a pillar of the Egyptian economy; strong support for increasing export abilities; and the Instant Payment Network."  

Nadim also pointed to the "rapid adoption of digital technologies amongst consumers and businesses" as an opportunity for Egyptian startups. Finally, he noted that Egyptian startups have a cost advantage over their regional peers given the significant currency devaluations that have taken place over the past few years.