Egypt’s Micro, Small, and Medium Enterprise Development Agency (MSMEDA) a government body focused on empowering small businesses, has made a strategic move to bolster the country’s growing startup ecosystem with a USD 7.5 M investment across three regional venture capital funds.
This funding is part of the country’s broader efforts to stimulate entrepreneurship and attract foreign capital, contributing to the realisation of Egypt’s Vision 2030 for a diversified and competitive economy
Among MSMEDA’s key investments is a USD 2 M contribution to P1 Ventures, a pan-African early-stage venture capital fund founded in 2020 by Mikael Hajjar and Hisham Halbouny. P1 Ventures aims to address the capital gap that limits African entrepreneurs’ potential to scale. With a pan-African approach, the fund targets startups that can expand across the continent, directly aligning with MSMEDA’s goals to leverage regional opportunities for Egypt’s youth. In March 2024, the fund closed its second round at USD 35 M, aiming for a final close at USD 50 M by the end of the year. International players, including the International Finance Corporation (IFC) and European and U.S.-based funds, have also backed P1 Ventures.
In the month prior, MSMEDA had formalised a USD 3 M with Foundation Ventures, a Cairo-based early-growth stage venture capital fund known for supporting scalable business models through signed agreements. Foundation Ventures provides startups with the necessary capital, mentorship, and market access and has successfully backed ventures like NowPay, Capiter and Rabbit.
Meanwhile, in November 2024, MSMEDA committed USD 2.5 M to Tanmia Capital Ventures 2 (TCV II), an Egypt-focused private equity fund targeting USD 150 M to support mid-cap companies in sectors like food and beverage, logistics, pharmaceuticals, and education. TCV II aims to institutionalize family businesses and provide growth capital to companies with expansion potential, aligning with MSMEDA’s goals to attract foreign capital and diversify financing options for Egyptian startups.
These strategic investments seek to bolster support for Egyptian start-ups across diverse sectors, driving innovation and enhancing the nation’s economic competitiveness.
They come as a broader part of Egypt’s “Fund of Funds” program, which was launched in 2021 to directly address the venture capital gaps in Egypt.
Funded by the World Bank, the initiative targets USD 1 B in total funding to catalyze Egypt’s venture capital ecosystem by attracting international investment. It aims to empower local entrepreneurs and position the country as a gateway for international investors targeting African and Middle Eastern markets.
The fund employs a model that mitigates the risks typically associated with venture capital investments by investing in funds rather than directly in startups.
In its 2022 pilot phase, the program successfully deployed USD 50 M across 15 venture capital funds, which have collectively supported numerous startups across diverse sectors. Among the notable success stories is Endure Capital, a fund backed by the program that closed a USD 50 M Africa-focused fund, which has since invested in high-profile startups like Careem, MaxAB, and Breadfast.
Amr Al-Abd, Advisor to the Prime Minister for Entrepreneurship, noted that the program’s expansion is designed to enhance Egypt’s startup ecosystem and extend its influence into African and Arab markets, while Hani Emad, head of MSMEDA’s venture capital division, emphasized its transformative impact on empowering small businesses and fostering innovation.
As Egypt’s startup ecosystem, valued at USD 3.4 B in 2023 according to Startup Genome, continues to grow, challenges like limited early-stage funding and resources persist. However, with its young, tech-savvy population, strategic location, and initiatives like the Fund of Funds, Egypt is poised to attract international investment and cement its position as a regional hub for entrepreneurship and innovation.