The evolution of angel investing in Egypt

The Evolution of Angel Investing in Egypt

Yallah! (Go!) 

When I first started as the Entrepreneur-in-Residence as part of the Pilot State Department Global Entrepreneurship Program in Egypt funded by USAID, angel investing was high on the priority list.  In initial discussions on the subject, “experts” would bring up thousands potential problems; Egyptians won’t invest and entrepreneurs are too stubborn to share their ideas.  Fortunately I did receive one great piece of advice from Usama Fayyad the Founder of Oasis 500.  “Mike just start, everything else will fall into place”. Two months later we held our first Angel Pitch sessions at the local Abraaja offices.

Finding Heroes

It was August 7th 2011; I had been talking about angel investing in Egypt for over 6 months and meeting with different business groups and associations.  I talked to anyone I thought to be a successful business person; giving my best sales pitch on angel investing. Despite my efforts I had little to show.  Lots of people were happy to wait on the sidelines and jump in when they saw success, but nobody was willing to take the first step.  Then I met with Hossam Allam and I couldn’t believe my ears.  Hossam was part of an angel group in London and was ready to lead the first angel group in Egypt.  Then I met Con O’Donnell an Irishman who came to Egypt 18 years ago to learn Arabic, started some of the first Arabic web sites which he later sold and was looking to support startups.  The same month I met with Dr. Khaled Ismail, who has one of the most impressive bios of anyone I have met – a Ph.D. from MIT, a recognized engineer at IBM’s Watson Research Center and founder of a company that designs wireless communications systems, which he later sold.  He wanted to invest into Egyptian entrepreneur’s and asked if we could help him find some potential candidates. One big mental change I had to make was to understand that I was an American who will someday leave; so I shouldn’t be the catalyst for change. I had to find, support, and encourage the other ecosystem heroes to be that catalyst.

Finding Entrepreneurs Ready to Walk Through Walls 

It was great to have investors but what was missing were entrepreneurs who were committed to building a great company.  Too many programs taught young people they just needed an idea and a nice business plan or pitch to get funded.  The fact of the matter is that only a small percentage of young start-ups are ready for financing.  Too many are not committed to do the hard work of building a business, letting go of control, and allowing other smart people to lead parts of the company.  The other issue was entrepreneurs don’t even understand an investor, who will want to create a corporate governance structure to keep the entrepreneurs focused. Nobody likes to have a supervisor, especially entrepreneurs. Donors and governments need to think about how to support great entrepreneurs before thinking about putting more money into another investment fund. An ecosystem with easy capital and inexperienced entrepreneurs with a business idea is a path to failure. Thankfully due to the efforts of the Egyptian Angel Investors and a great number of other programs to support entrepreneurs in Egypt, about $2 million dollars of additional capital for serious entrepreneurs has been made available over the last year.

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