Year of Discovery (Week 40: Egypt’s Startup Ecosystem and Upstream/Downstream Innovation)
I escaped a cold Brussels to a less chilly Cairo this week despite all odds. My week spent in Brussels was quiet and extremely fulfilling as I started my last quarter of university remotely — after an 8-year hiatus. Going back to school has given me a broader appreciation of the kinds of people and knowledge we have access to when we are in our teen and early adult years. Despite the growth of online courses since I was in university, I haven’t found a strong replacement for the live interaction, office hours, and the unifying force of an institution that binds different stakeholders together towards a goal. All to say, it’s been an absolute joy to be immersed in the learning environment, burying myself in new knowledge, creating new neural pathways, and bringing it together in all the practical work that I’m doing in human flourishing.
Today, I’m writing a reflection on Egypt’s startup ecosystem and upstream/downstream innovation.
Egypt’s Startup Ecosystem
I came to Egypt for the first time in 2015 without any goal but to explore and learn from the country and the people I’d meet with. It was an enriching experience but limited in terms of engagement.
This week has been the complete opposite as I became a sponge, trying to absorb as much information as I can and connect it to my broader understanding of the world and where to operate. Meeting Egyptian entrepreneurs, investors, and builders of the startup and innovation ecosystem, I’ve been incredibly inspired by the resilience and persistence of humans to be the creators of change.
It’s been 10 years since the 2011 Egyptian revolution when tens of thousands gathered in Cairo and thousands more in other Egyptian cities to protest police brutality, state-of-emergency laws, lack of political freedom, civil liberty, freedom of speech, corruption, high unemployment, food-price inflation, and low wages. And if the growth of startups is to be an indicator of positive change, the country is moving in the right direction. Egyptian tech startups have raised almost $800 million since January 2015, with more than 50% of that secured in the first three quarters of 2021. A few people I spoke with this week said that the revolution kickstarted newfound confidence and belief that Egyptians could truly create the change they want to see and the astounding growth of their startup space is a testament to that.
While I heard a few comments critical about the decisions made by the leadership of the country, numerous people said they were feeling more optimistic than ever and that this was truly Egypt’s time. They even described Egypt’s periods of turmoil as ‘indigestion’. This was a welcome change from the defeated and indifferent energy I’ve felt from people in Uganda since moving my base there in October.
Egypt has a number of institutions in universities/academia, government, investors, and corporates and I was impressed by how aligned they were. But what’s stood out to me is that despite the growing ecosystem (which can start feeling more impersonal and more territorial), the people I’ve met have been kind, open, and seemed to exhibit high integrity about what was working, what wasn’t, and what they’ve learned. The ecosystem is one I wasn’t familiar with before and one truly to follow. If you have any perspectives to share or if any particular companies in the future of work or mental health in the MENA region come to mind, please do share!
Upstream/Deep Tech vs Downstream/High Tech
What’s been fascinating to me while I learn about the tech ecosystems in Africa from a birds-eye view is the number of high tech companies covering the headlines versus Deep Tech. Let’s start first with definitions:
- High tech focuses on the narrow bands of problems for businesses and industries. It re-invents core processes and delivers newer, more efficient outcomes. It focuses on top-line and cost savings in a shorter time horizon.
- Deep Tech (“Deep Knowledge”) focuses on the bigger picture and a 5-50 year horizon. It unlocks the future of mankind, delivering new pathways that a decade earlier were not available. Globally, Deep Tech is having a profound impact on segments including autonomous systems, robotics, smart homes/cities, medical devices, cleantech, energy efficiency and more.
To compare to manufacturing or energy production, Deep Tech focuses on the upstream part of the process (which hosts all the activities needed to find and gather the materials required to create a product). High tech focuses on the downstream part of the process (organizing the materials collected into production and distributing and selling the finished product).
In Africa, there are plenty of examples of high-tech companies (most of the fintechs) and much fewer examples of deep tech. Much of the real value globally in moving the world forward is created by deep tech companies. So how does Africa create more Deep Tech companies? Is it the availability of skills or funding? What will truly catalyze the growth of more of such companies?