Egypt nears its $1 billion Fund of Funds mark
Egypt is making big strides in his plans to land up to $1 billion in funding for a national “Fund of Funds” initiative. The funding attempt is based on a strategic effort aimed at accelerating the country’s venture capital (VC) landscape. According to Amr Al-Abd, Advisor to the Prime Minister on Entrepreneurship, negotiations have begun to raise between $500 million and $1 billion for the program.
The announcement comes on the heels of the initial success of a $50 million investment pumped into the Fund of Funds in 2022. The World Bank was the major driver behind this investment. This initial tranche was deployed through the Micro, Small, and Medium Enterprise Development Agency (MSMEDA) and invested in around 15 venture capital funds, contributing between 10% and 20% of each fund’s capital.
The success of the $50 million pilot phase showed the Fund of Funds’ potential for attracting international capital and supporting high growth startups.
The $50 million pilot phase demonstrated the Fund of Funds’ potential as a mechanism to attract international capital and support high-growth startups. Its portfolio spans various sectors, from logistics and e-commerce to fintech, reflecting the broad ambitions of Egypt’s entrepreneurial community.
In an interview with Al Sharq Bloomberg Channel, Al-Abd highlighted the aim of the program’s expansion which was to reinforce Egypt’s growing startup ecosystem while extending its reach to growing African and Arab markets. “The Fund of Funds is the main driver of this strategy,”. He said.
The idea of a fund of funds works by investing in multiple underlying investment funds rather than directly in startups. This initiative offers diversification and risk mitigation for the investors participating in it. In Egypt’s case, the ‘Fund of Funds’ program is targeted at building local capacity in venture capital by supporting both existing and new fund managers. This will ensure multiple financing options for startups across various sectors.
Hani Emad, head of the Central Sector for Venture Capital Investments at MSMEDA, emphasised the transformative role of the Fund of Funds in integrating venture capital into the agency’s financing strategy. “Our focus is to empower small projects operating in Egypt and enable their expansion into regional markets,” Emad said in previous remarks.
Notable venture capital firms like Endure Capital, which closed a $50 million Africa-focused fund in 2022, have already received support from the fund. Endure Capital, which was founded by Tarek Fahim, has been a major face in the startup ecosystem, having invested in companies like Careem, MaxAB, and Breadfast.
Plans to scale the program significantly are underway and the Egyptian authorities hope into the country’s demographic advantage and rising startup activity. The latest funding push, if realized, could provide a much-needed boost to local venture capital, which remains relatively underdeveloped compared to regional peers.
The Fund of Funds Initiative follows the broader regional trends as governments are increasingly focused on venture capital as an instrument for realizing economic diversification and innovation. Egypt’s strategic location and its role as a gateway to African and Middle Eastern markets provide additional incentives for international investors to participate in the program.
