The Rise of Riyadh as the New Startup Hub
Egyptian business tycoon Samih Sawiris recently made headlines with his decision to halt new investments in Egypt and shift his focus to Saudi Arabia. This move received criticism from his compatriots, but his brother Naguib Sawiris defended the decision, emphasizing their love for Egypt. The shift in investments was driven by the instability of Egypt’s economy and currency, with a significant decline in value against the dollar in 2022. The global economic contraction has heavily impacted The country’s economy, resulting in a high debt-to-GDP ratio and a soaring inflation rate.
The startup sector in Egypt has also experienced a slowdown, with fewer startups securing investments compared to the previous year. Although the total investment amount in the first quarter of this year has increased, a significant portion is attributed to a single company’s debt and equity raise. Overall, there has been a drastic decline in investment in Egyptian startups, reflecting the challenging economic environment.
In response to these circumstances, entrepreneurs in Egypt are seeking strategies to save their companies. Relocating their headquarters to Gulf Cooperation Council (GCC) countries, particularly Saudi Arabia’s capital, Riyadh, has emerged as a feasible option. Several Egyptian startups have already announced their headquarters’ relocation to Riyadh while maintaining back offices in Cairo. This trend indicates a shift away from the United Arab Emirates, which was previously the leading destination for entrepreneurs in the region.
Egyptian Startups Flock to Saudi Arabia for Growth and Opportunity
Egyptian startups Taager and Intella have recently relocated their headquarters to Riyadh, Saudi Arabia, signalling a shift in the landscape of entrepreneurial aspirations. Taager, a social e-commerce platform, and Intella, a deep tech research-driven company, both made a move in search of new business opportunities. Tanger aimed to access stronger investment options, having raised a significant $6.4 million Seed round last year, while Intella sought closer proximity to their main market, as nearly 70 per cent of their clients are based in Saudi Arabia. This transition highlights Riyadh’s emerging prominence as a thriving hub for entrepreneurs, challenging the previously favoured destination of Dubai.
The trend of Egyptian startups flocking to Riyadh continues to grow, with three headquarters already relocated and more anticipated to follow suit. Riyadh’s allure lies in its vibrant business scene and the concentrated capital it offers. Entrepreneurs are drawn to the city’s potential for expansion and the chance to tap into a vast customer base with substantial purchasing power. As the focus shifts from Dubai to Riyadh, the stage is set for a compelling clash of innovation and opportunity, as visionary minds converge to script their entrepreneurial destinies on this new frontier.
Startups Brave the Rainy Day, Seek Success in Saudi Arabia
Egypt’s economic conditions have been challenging, leaving little hope for an improvement in the investment landscape. Unlike Dubai, Egypt has not benefited from an economic boost due to the war in Ukraine, which has affected the country more than the GCC. However, amidst the difficulties, there are positive signals and solid figures in the Egyptian market, with increasing purchasing power and stability, despite the economic turbulence.
The present funding climate in Egypt is described as a “rainy day for startups” by Wael Amin, a partner at VC firm Sawari Ventures. He emphasizes the need for startups to show resilience and adaptability in the face of economic cycles, as they inevitably go through highs and lows. Although the ecosystem in Egypt has recently shifted from abundance to scarcity, Amin remains optimistic that this phase will be temporary, encouraging entrepreneurs to adjust their business strategies to thrive in the current financial climate.
Ahmed Shalaby, an angel investor and CEO of Tatweer Misr, dismisses concerns about Egyptian businesses migrating to Saudi Arabia, stating that Egypt has never aspired to be the region’s tech hub. Instead, he sees this transition as an opportunity for Egyptian entrepreneurs and the economy as a whole. Startups relocating to Saudi Arabia can benefit from incentives, while the labour market thrives with the addition of new talent, ultimately leading to a win-win situation for all parties involved.
June 16, 2023
From Egypt to Saudi Arabia, hmmmm interesting! We looking for partners in Egypt as well at our 109 languages SaaS SEO automation Platform GLOCAL… if you know someone, apply here: https://gloc.al/partnership