An exciting time for startups

Niveen Wahish , Friday 22 Oct 2021

Egypt’s digital startups have been capturing the attention of investors and conquering users, with the Covid-19 pandemic helping to accelerate existing trends.

Tech startups are facilitating services from groceries delivery to banking
Tech startups are facilitating services from groceries delivery to banking

The summer of 2021 was an exciting time for Yodawy, a digital pharmacy marketplace, since it raised $7.5 million in investment to grow the business.

It was the second round of funding for the business, indicating that it was beyond the initial development stage and was targeting to expand market reach. The platform serves customers, insurance companies, pharmacies, doctors, and pharmaceutical and fast-moving consumer goods (FMCG) companies in Egypt, and the idea behind it, according to Yasser AbdelGawad, the co-founder, is to simplify healthcare through digital transformation.

However, “change is often challenging, and digitising healthcare is no different,” AbdelGawad said. The company’s recipe is to solve tangible problems for each stakeholder.

For patients and consumers, this has meant untangling sometimes cumbersome processes in meeting healthcare needs. For pharmacies, it means giving them access to a wider market base and exclusive deals from FMCG and pharmaceutical brands. For health insurance companies, it means offering digital solutions to process claims and approvals more efficiently.

Yodawy is only one of dozens of digital startups — young companies built on technology — that have taken the Egyptian market by storm in the past couple of years and offer everything from grocery deliveries to medical checkups.Ismail

 

The sectors that are likely to thrive in the new industry are ones related to the digital transformation of the economy, said Ayman Ismail, an associate prof essor at the American University in Cairo (AUC) School of Business and founding director of the AUC Venture Lab that supports early-stage, high growth, and innovative startups from different industries.

Besides health-tech, which is digitising parts of healthcare services, including access to medications or medical consultations, he said the boom was also in fintech, which is digitising financial transactions, starting from payments and going through consumer credit and small and medium-sized (SME) business lending.

Noor Sweid, founder and a partner in Global Ventures, an international venture capital firm and one of the investors in Yodawy, agreed, saying that Egypt’s young population, often unbanked and working in a cash-dominated economy, offers strong opportunities for fintech companies and investors.

Mobility solutions allowing for better coordination of transportation and trucking services are another sector that could benefit from digitisation, Ismail added. Sweid said that logistics and mobility were demonstrating great potential, as logistics expenditure in Egypt is set to exceed $50 billion by 2024.

Egypt’s Vision 2030 development plans includes the development of transportation infrastructure.

Sweid

Moreover, Sweid said, there is increasing demand for education in Egypt driven by a largely young demographic with steady population growth in a culture that has long valued it as a means to socio-economic mobility.

Over 60 per cent of Egypt’s public-school students, according to Sweid, complement their formal education with extracurricular tutoring services. This presents immense opportunities in the supplemental learning market, she said.

Tech-enabled startups enable access to such services to broader segments of the population that currently do not have access, with higher affordability and a better user experience, Ismail said.

They have an edge in their ability to grow at exponential rates, due to their use of technology and mobile connectivity.

COVID-19 IMPACT

The Covid-19 pandemic has been instrumental in the growth of these tech startups.

It acted as a catalyst for digital transformation, Ismail said, explaining that with limitations on movement, people started using digital solutions for ecommerce, transportation, financial services, healthcare services, and other areas. “This push in user behaviour accelerated the growth of these startups, and it is likely to create a broader transformation in the economy at large over the next decade,” he added.

AbdelGawad agreed, saying that the pandemic has “pushed the digital economy light years into the future.” While it has shaped consumer adoption and expectations, it has also been instrumental for his line of business because it “impacted the priorities of all the players in the healthcare   ecosystem.”

The increased demand for digital ordering and contactless e-commerce helped push forward his company’s agenda to help small and medium-sized pharmacies expand their sales reach and reinforce their online presence.