Egypt's other uprising: Start-up companies are flourishing

Despite a struggling economy and political repression, some Egyptians find that creating a business is a way to work toward a positive future.

In June 2013, Omar Gabr was preparing to travel to San Francisco to launch his software start-up, Instabug, at a mobile tech conference.

But then masses of Egyptians poured into the streets to demand the resignation of their Islamist president. A few days later, the military staged a coup, and foreign embassies shuttered, fearing violence.

Unable to obtain their US visas, Mr. Gabr and cofounder Moataz Soliman had to watch via Twitter while a friend presented Instabug at the conference on their behalf, dashing their dreams of a grand entrance.

But today Instabug, which makes it easy for developers and users to report bugs from within mobile apps, is running on more than 100 million devices. The two founders are currently in San Francisco working with Y Combinator, an influential start-up accelerator that has nurtured companies like AirBnB and Dropbox.

Despite years of upheaval, a struggling economy, and increasing repression under President Abdel Fattah al-Sisi, Egypt's start-up sector is thriving.

For some young entrepreneurs, creating a business is a way to work toward a positive future here when avenues of political change appear closed for the moment. They are developing innovative businesses that are beginning to attract international funding.

In just a few years, entrepreneurship has gone from an unfamiliar word to something of a buzzword, as an ecosystem of incubators, mentors, investors, and start-ups has grown virtually from scratch.

“Start-ups in Cairo are continuing to flourish regardless of economic conditions and regardless of the political situation. They’re one of the bright spots of the past few years,” says Ahmed El Alfi, founder of Cairo-based venture capital firm Sawari Ventures and Flat6Labs, the country's first private start-up accelerator.

Sense of empowerment

The start-up scene was already growing before Egypt’s 2011 uprising against longtime strongman Hosni Mubarak. Thereafter it continued to expand, driven by some of the same factors and feeding off its energy. Mr. Alfi attributes the surge to a global entrepreneurship movement; young people not expecting or aspiring to work for one company for their entire lives; and by access to technology and global communications.

“All of those things are leading to a sense of people feeling empowered about changing their own future by starting a company, doing something positive,” he says.

Before 2011, “people didn’t think that it’s possible to do anything,” says Gabr via Skype from San Francisco. But ousting Mubarak gave people energy and motivation. “Just the feeling that as a person, as an individual, you can do something that big – you can overthrow a regime, overthrow a person that’s been ruling for 30 years – that feeling gave people hope, responsibility, gave people ownership of the country, that we own the country so we can do big things.”

Egypt now has a handful of incubators helping entrepreneurs build their companies, and more investors are willing to fund them, though a shortage of funding remains a problem. A December entrepreneurship conference attracted more than 4,000 people from around the region and the world.

“When we started, there were no start-ups, no mentors, no accelerators, no one who could talk about entrepreneurship,” says Mai Medhat, who in 2011 quit her job as a software engineer with a large company to co-found Eventtus, an online platform connecting event organizers and attendees.

To survive difficulties, work harder

Her family was at first dismayed by her choice, but she believed in her idea – enough to use her savings to start the company. Now Eventtus has 14 employees, offices in Cairo and Dubai, and has been cash-flow positive for six months. More than 7,500 events in 15 countries have been created on the app since its launch.

Entrepreneurs like Gabr and Ms. Medhat have paved the way for other young Egyptians who have formed a tight-knit community, helping and encouraging one another.

Still, Egypt’s situation creates challenges. Medhat says numerous events have been canceled because of the instability; hiring employees can sometimes be hard because of a brain drain. But adversary can also be inspiring. 

“To think that we’ve built a company that succeeded in the middle of two revolutions in circumstances that the odds were really against us,” Gabr says. “It made us so determined to work better, to work faster, to work harder than anyone.”

Not all the start-ups are focused on mobile applications. Karm Solar, started by Ahmed Zahran and three cofounders, produces solar-powered irrigation and pumping systems for agriculture and tourism businesses not connected to Egypt’s power grid.

'A form of resistance'

Off-grid companies in Egypt rely on subsidized diesel fuel, so Karm had to develop innovative technology and a strong business model to compete. The company also invests in solar stations and sells the power, and has created an architectural design and construction firm focused on energy efficient and environmentally sustainable building.

“Instead of having to depend on fuel, or the government grid, we empower people and make them independent from all of that,” Mr. Zahran says. He and his cofounders see a global application for some of the problems they’re solving in Egypt, and hope to expand internationally.

But they consider their work in Egypt “a form of resistance” against a corrupt and authoritarian system, says Zahran. “The same problem that we had with [former President] Mubarak, is a problem that we have with business as well because there are tens and tens of Mubaraks and Sisis in business. And we are trying to topple them by creating business models that are more resilient, that do not depend on bribes and being close to government, and kickbacks.”

The challenges in Egypt are staggering: beyond a repressive government, there is high unemployment, a failing education system, and crumbling infrastructure.

But startups are “one of the solutions," says Medhat. “We don’t have to rely on the government to do everything. We have to do it ourselves.”