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The challenges facing Lebanon’s fashion ecosystem

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Christina Chehade is the managing director at Endeavor Lebanon https://www.wamda.com/2019/05/challenges-facing-lebanons-fashion-ecosystem

Lebanese designers have been rising in the ranks, dominating international Fashion Weeks, red carpets and catwalks for decades. In addition, many successful fashion businesses have been established in recent years, positioning Lebanon as a creative hub.

However, rising through these ranks is much more challenging for these designers than it seems. The brands that have made headlines are considered an exception and many local aspiring talents are struggling to succeed. Investigating this further, we found that it is primarily due to weaknesses in the local fashion ecosystem that have not received the attention they deserve. The main challenges voiced by various designers and industry professionals that are pertinent throughout the journey of the designer include branding, supply chain, financing and tech advancements.

To expand on this issue, Endeavor Lebanon, together with the Beirut Digital District, gathered industry professionals to understand the changing fashion landscape, and to propose solutions for the challenges that exist.

The Brand at the Core

Of course, behind every successful fashion label is a visionary designer, backed by a team of skilled professionals who together, can realise the vision. The experts first emphasised the importance of developing the designers’ creativity, mentoring them to develop a unique brand that would ultimately help them build their story and grow. While the industry requires the right support to help designers scale on numerous fronts, the core challenge is inspiring creativity.

Experts who gathered at the roundtable discussion pointed to the importance of authenticity and the unique story told by each designer as pillars of the business, which could determine its scalability as a result.

Strengthening the Supply Chain

In addition, there is a need to encourage more industrialists to enter the fashion sector and build factories as a means to attract the right talent needed for the designers to successfully produce that brand. This ultimately creates more jobs and contributes to growing the Lebanese economy.

To date, only a handful of Lebanese designers have managed to penetrate international markets and gain access to specialised production facilities in these markets, such as France and Italy.

During the roundtable discussion, Rabih Kayrouz, founder of Maison Rabih Kayrouz emphasised the need to build factories that cater to fashion production needs as a first step. He mentioned that one of the reasons for which Italy and France are leading in this field is because they have the industrial know-how. However, it is up to the country to encourage fashion industrialists by financing and building factories. He suggested that the Lebanese should work towards opening factories and bringing experienced people from abroad to train the local talent. He believes this could become sustainable within a couple of years.

“There is a certain conflict today when the designer goes to a small factory and has a limited production choice…it affects the final product,” said Kayrouz.

Technological Disruptions

With the rapid advancements in technology, many have been unable to adapt fast enough, especially compared to the international scene. There are many technological tools that are disrupting the fashion and luxury industry globally, representing a great opportunity for fashion designers on the one hand as they need to leverage this technology to grow; and technology players on the other hand to develop this technology.

According to Edward Sabbagh, managing director at Farfetch Middle East, the online and offline worlds should not be disconnected, they need to co-exist. In reference to a Bain & Company Luxury Goods Worldwide Market Study 2018, Sabbagh said, “The two worlds need to merge seamlessly and the traditional retail world needs to develop. Online luxury e-commerce represented 10 per cent of the luxury market but is expected to grow to 25 per cent by 2025. This means that the growth in the industry will predominantly come from the online channels, but it also means that brick and mortar is here to stay”.

Financing the Ecosystem

Another weakness in the ecosystem is the lack of financial support for the industry.

Once designers are poised for growth, they need more support from investors, banks and other private and public institutions to develop incentives to grow this sector in Lebanon.

We will only see the growth and success of Lebanese designers once we begin to address the main challenges that they face starting with the brand itself, the supply chain, financing opportunities, and finally, tech advancements.

All participants of this discussion included: Christian Daccache, Founder of Bureau Des Créateurs (BDC), Christina Chehade, Managing Director of Endeavor Lebanon, Delphine Eddé, Co-Founder of Diwanee, Edward Sabbagh, Managing Director of Farfetch for the Middle East, Gonçalo Cruz, Co-founder of Platforme, Stephanie Abi Abdallah, Programs Director of Beirut Digital District, Nadim Chammas, Founder of Fashion Next Door and Rabih Kayrouz, Founder of Maison Rabih Kayrouz.

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Ecosystem

MENA startup ecosystem highlights in February 2020

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Every month, MAGNiTT releases a Dashboard report, providing a condensed and data-driven overview of all the key activities that took place in the month from a venture capital and startup funding perspective.

With 25 deals taking place last month, as highlighted by this month’s Dashboard, February 2020 saw a decrease in the number of deals compared to the same period last year. However, due to a flurry of high-profile later-stage deals, February 2020 saw a significant increase in total funding, with $193M raised by MENA-based startups.

Looking at the countries, we see similar trends as previous years emerge. The United Arab Emirates (UAE) took the lead by total funding, with the country accounting for many of the high-profile funding rounds. Moreover, the UAE accounts for more deals than any other country in the region, with which it reclaims the top spot from Egypt in 2020 YTD, which saw the highest number of deals in 2019.

The development comes as multiple UAE-based government initiatives are being launched, with Dubai announcing the Dubai Future District at the beginning of the year, which includes a fund to support venture capital firms and startups. Simultaneosuly, Abu Dhabi is also increasingly focusing on entrepreneurship and venture capital, with Abu Dhabi Investment Office (ADIO) expanding its scope to include later-stage investments as well.

Moreover, Saudi Arabia saw an increase in the number of deals as well, with the country recently launching its new Ministry for Investment in a major government overhaul. As part of the move, the Saudi Arabian General Investment Authority (SAGIA) will become the Ministry of Investment, led by former Energy Minister Khalid Al-Falih, the new Minister of Investment. SAGIA has increasingly focused on the startup ecosystem, including the signing of several international venture capital firms, to spur innovation and investment in the Kingdom.

This, along with many more data-driven trends on funding and venture capital in the MENA region, are included in this month’s Dashboard.

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Lebanon’s Basma, the digital dental startup secures US$1.2M Seed funding

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Author: Basma

Basma, the Beirut-based digital dental startup, secures a Seed round of US$1.2M and opens up access to simple and affordable orthodontics in the MENA region.

This financing round was led by prominent Beirut-based VC firms, B&Y Venture Partners and Cedar Mundi Ventures, with the joint participation from iSME and various business angels.

Basma is a direct-to-consumer healthcare brand that wants to give customers straighter and brighter teeth. It’s a digital health company founded on the belief that affordable dental care should be accessible to everyone. 

According to their Founder and CEO, Dr. Cherif Massoud: “7 out of 10 people in the Arab world can benefit from straighter teeth. But we think that everyone deserves to smile confidently. Aligners are the best alternative to braces, by changing the distribution channel and putting everything online, Basma cuts the treatment cost by up to 65%. Patients are constantly connected to doctors on our advanced telemedicine platform and are able to receive the treatment kit that will have a series of clear custom fitted aligners, straight to their homes.”

“Basma understands the consumer desire to improve their smile discreetly and they have the tools to make it happen.” Their CEO adds: “Adults should not feel pressured to wear wired braces. They are looking for invisible braces that don’t affect their confidence and this is exactly what we can give them.”

Bassel Attieh, Chairman and Managing Partner of Cedar Mundi Ventures, says: “We see much appetite for HealthTech and cosmetics services in the Middle East, both from consumers and professionals. And the teeth aligner industry is only getting started here. We believe in Basma’s bright future, building on local entrepreneurial and tech talents, and leveraging internationally-acclaimed remote professional initiatives for and from the region.”

The funds will further push Basma’s tech base and fuel expansion in the MENA region.

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Ecosystem

Lebanon ecosystem agonizes in the absence of any capability for being a catalyst for new jobs

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Lebanon ecosystem is between a rock and a hard place. That the least one can say about the current state of the Lebanese ecosystem. Challenging economic times can serve as a catalyst for the entrepreneurial spirit and lead to the creation of much-needed new jobs but it doesnot seem that the current Lebanese stakeholders are able to jump on any new opportunity. The economic crisis triggered massive anti-government protests, resulting in the cabinet’s resignation in October.  Deteriorating economic conditions and scarce dollars led to a restrictions on the permitted value of withdrawals of both U.S. dollars and Lebanese pounds.

Despite the Central Bank’s intervention, the Lebanese pound lost over 30 percent of its value, reaching 2000 Lebanese pounds to the USD. Lebanese citizens are taking severe measures as they face difficult economic conditions, lose their jobs or fail to provide for their families. Following years of economic mismanagement, Lebanon is facing dark days, and still more ahead.

BLOMINVEST reports that despite rising from a record low of 37.0 in November, the latest PMI reading of 45.1 pointed to another sharp deterioration in business conditions across the Lebanese private sector in December. The result was partially driven by a decline in output that was faster than the long-run average. However, similar to the trend for the headline index, the rate of contraction in output eased from November’s. Many panellists stated that lower activity was driven by political uncertainty.

According to the latest MAGNITT report Lebanese startups didnot report any significant funding deal during 2019. It is true to say that the agony of the ecosystem didnot start last year.

Throughout the last six-year period, as they had been before the launch of 331, the existing legal and judicial frameworks remained ill-suited for facilitating an economic activity that needed permission to fail fast and reboot. Before and after 331, some good projects never even got such  permission as they were killed by over-cautious investment committees. In times of 331, however, failures of ambitious startup projects happened, but they were often not revealed in ways that would allow the system’s players to learn all they could from them. Transparency, from the ecosystem’s financial top at BDL to its operational bottom layer of VC funds, remained as alien as an interstellar visitor.

Another record year for total funding when excluding the investments of Souq & Careem

Main highlight of 2019

2019 saw an increase of 12% in total underlying funding; This reflects a 33% 5-year CAGR as the ecosystem grows and matures. Egypt ranks first by number of deals for the first time

  • Egypt accounted for 25% of all deals in MENA in 2019
  • Saudi Arabia’s share of total deals increased by 4%

Of course No single measure captures entrepreneurial activity perfectly. However, by looking at several different measures, we can piece together the big picture and use it to see how entrepreneurship fare during the present Recession.

A view of entrepreneurial activity can be obtained by comparing numbers on incorporated and unincorporated self-employment. That comparison lets us tease out how the recession affected two different kinds of people who work for themselves—those who run corporations and are likely to employ others and those who don’t, mostly sole proprietors less likely to have employees. Both types of self-employment fell during the lasy=t two years, but the decline was much more severe for those running corporations. 

Self-employment is one variable that economists use to measure entrepreneurship, as the self-employed are in business for themselves. The wage-employed, in contrast, work for others. As a statistic, self-employment has the advantage of measuring what happens to the widest range of entrepreneurs because it includes people starting corporations with employees as well as those starting sole proprietorships without employees.

Some economists believe that entrepreneurship is best measured not by self-employment, but by the number of people who own and operate businesses. Therefore, understanding what happened to the stock of employer firms during the Great Recession is important for assessing the impact of the recession on entrepreneurial activity.
Another view comes from financing the ecosystem ; Executive magazine noted that internal and external stakeholders—such as the promotional units attached to the system and international partners with interests in its success—had embarked on several mapping exercises from the third and fourth year after the launch of 331. These exercises, however, tended to be afflicted by the difficulty to obtain data (which was limited due to the system’s very brief existence) and even more so by methodological imperfections or, all too often, special interests.      

The outlooks and assessments of the ecosystem stakeholders participating in the Executive roundtable on November 18 were decidedly uncheerful in the short term, to the point of diagnosing the death of financing paradigms that had been in force until now. According to participants, absent visibility on the future of 331, uncertainty on the ability to still tap into any of its hitherto unused funds, and a strong expectation that the funding environment would not be sustained in the coming months were juxtaposed with the understanding that entrepreneurship will be vital for economic development and job creation after the tremors in the political economy recede.

Where do we go from here?

We can expect that the economic downturn will first affect the overall stock market and the VCs appetite to invest here. Tech equities are generally high beta, meaning they swing more than the market, and they generally trade at high price/earnings ratios, meaning that investors expect great earnings in the future. However, when the market dips, these great future earnings suddenly seem much less certain, and investors flee those stocks. This happened in 2008: even though its earnings weren’t greatly affected, Apple, Microsoft, and Google’s stock prices all lost over 50%.

If public tech valuations suffer, then private ones will, too, because public valuations act as benchmarks for what private ones might reach. If public valuations are down 25 percent across the board, then a tech company attempting to go public would see its target price similarly slashed. Or a public company may use its stock to acquire a private company; therefore, when stock prices are down, a public company has less liquid assets to conduct acquisitions, meaning the private company might have to reduce its valuation to be acquired at all. And when late-stage valuations come down in private markets, then early-stage valuations necessarily do, too, since expected exit values decrease.

Early-stage valuations would also suffer because the cost of capital increases. Most venture capital funds raise frequently—roughly every two to four years. In a (prolonged) downturn, it seems likely that high-risk, high-reward venture capital funds become less attractive to investors. When VCs have a harder time accessing capital, there’s less for them to invest in startups, and the capital they do have on hand would likely be invested more conservatively. This means that raising capital would generally be more expensive for startups: VCs would demand more equity, startups would raise less money per round, and valuations will be lighter.

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Entrepreneurship

500 Startups invested in 37 Egyptian startups, 30% of its MENA portfolio

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00 Startups is a venture capital firm on a mission to discover and support the world’s most talented entrepreneursBy Nihal Samir, Daily News Egypt

https://www.zawya.com/mena/en/wealth/story/500_Startups_invested_in_37_Egyptian_startups_making_30_of_its_MENA_portfolio_venture_partner-SNG_161630736/

Currently, most of the youth globally, and in Egypt specifically, are pursuing entrepreneurship rather than finding a fixed job. And subsequently, they look for funding or investors for their startups. Accordingly, some companies have made it their mission to help youth around the world succeed in their startups by funding them, and among these companies is “500 Startups.”

Meanwhile, there are many summits all over the world that help connect both stakeholders and startups, providing startup owners with exposure, resources. and advice. Among these events is the Rise Up Summit that is held annually in Egypt and will be held this year from 5 to 7 December, which means that there is only a day left for the beginning of the summit which is considered one of the more major summits in the Middle East for entrepreneurship.

On this occasion, Daily News Egypt interviewed Hasan Haider,  venture partner at 500 Startups- MENA region, to learn more about his company’s participation in the coming Rise Up summit, the amount of his company’s investments in the Egyptian startups, his company’s selection criteria for the startups that it funds, as well as the company’s five year strategy.

First of all, can you tell us more about 500 Startups?

500 Startups is a venture capital firm on a mission to discover and support the world’s most talented entrepreneurs, help them create successful companies at scale, and build thriving global ecosystems. It is one of the most active venture capital firms in the world.

500 Startups in the MENA region:

Silicon-Valley based 500 Startups is one of the most active early-stage venture capital funds in the Middle East and North Africa (MENA) region. Since its first investment in the region in 2012, 500 Startups has committed to investments in over 160 startups across the MENA region.

500 Falcons, a MENA-focused fund, that is a part of the global 500 Startups network, was launched in 2017. To-date, the company has invested in over 150 startups and plans to invest in another 50 companies, in addition to follow-on investments into the top performing companies.

Earlier this year, the oversubscribed MENA-focused 500 Falcons fund was closed at $33m.

Up until now, how many Egyptian startup companies has 500 Startups funded? And what’s the amount of investments?

To-date, 500 startups has invested in 37 Egyptian startups in our portfolio, which is around 30% of our total investments in the MENA region. We typically invest an average of $100,000 as an initial investment and can go as high as $500,000, which is the case of our top 20-30%.

© 2019 Daily News Egypt. Provided by SyndiGate Media Inc. (Syndigate.info).

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Business

2019 is Record Year Investment for MENA countries; MAGNITT

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Another record year for total funding when excluding the investments of Souq & Careem

Main highlight of 2019

2019 saw an increase of 12% in total underlying funding; This reflects a 33% 5-year CAGR as the ecosystem grows and matures. Egypt ranks first by number of deals for the first time

  • Egypt accounted for 25% of all deals in MENA in 2019
  • Saudi Arabia’s share of total deals increased by 4%

MENA deal flow hit a record of 163 investments in Q3 2019

  • 2019 saw a higher number of deals in each quarter compared to 2018
  • Q1 2019 was a record quarter for MENA investments when exc. Careem’s $200M funding in Q4 2018

FinTech ranks first by number of deals for the second year in a row

  • FinTech accounted for 13% of all deals in 2019
  • Accelerators and governments play a key role in supporting FinTech startups

What would MAGNITT expects for 2020??

MORE THAN $1B TO BE INVESTED IN MENA-BASED STARTUPS
While this was predicted for 2019, the funding gap left by the Careem acquisition was too big to cover by other, earlier-stage startups.
Moving into 2020, we expect this gap to be filled, as more startups look to raise growth capital, and government initiatives such as
Funds of Funds and matching programs come into effect.

ANOTHER RECORD YEAR FOR EXITS IN 2020
Several industries in the region, including e-commerce and transport, are heavily fragmented, and investors and startups will look to
consolidate to gain a competitive edge. We will also see international interest in more established startups, as we have seen with the
likes of Careem, Souq, Harmonica, and others.

MORE VENTURE-BACKED INTERNATIONAL STARTUPS WILL SET UP SHOP IN MENA
International startups will capitalise on the increased government initiatives to support startups in the region. With the emergence
of flexible co-working spaces across MENA and initiatives to help reduce the cost of setting up and moving, the barriers to entry are
reducing, making the MENA region more accessible than ever.

MORE FAILURES OF VENTURE-BACKED STARTUPS
Bassel Idriss, founder of Generics, shared his 5 learning lessons from the failure of his startup with MAGNiTT. As the ecosystem
matures, it is statistically inevitable that a higher number of startups will fail. This is not a bad thing, as long as we collectively learn
from these experiences and encourage founders to become serial entrepreneurs.

MORE INTERNATIONAL INVESTORS AND ACQUIRERS OF MENA-BASED STARTUPS
The success story of Careem and the increased media attention for venture-backed companies is a positive. Consequently, many will
start looking to scale out of the region for continued growth – international startups and investors alike will look for opportunities as
they become more familiar with the MENA landscape and as they seek arbitrage opportunities. Look out for more Asian venture capital
and corporate investors with experience in South-East Asia and China to start developing an interest in the region.

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Entrepreneurship

500 Startups company invested in 37 Egyptian startups, making 30% of its MENA portfolio: venture partner

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SOURCE: Daily News Egypt


Currently, most of the youth globally, and in Egypt specifically, are pursuing entrepreneurship rather than finding a fixed job. And subsequently, they look for funding or investors for their startups. Accordingly, some companies have made it their mission to help youth around the world succeed in their startups by funding them, and among these companies is ‘500 Startups.’

Meanwhile, there are many summits all over the world that help connect both stakeholders and startups, providing startup owners with exposure, resources. and advice. Among these events is the Rise Up Summit that is held annually in Egypt and will be held this year from 5 to 7 December, which means that there is only a day left for the beginning of the summit which is considered one of the more major summits in the Middle East for entrepreneurship.

On this occasion, Daily News Egypt interviewed Hasan Haider, venture partner at 500 Startups- MENA region, to learn more about his company’s participation in the coming Rise Up summit, the amount of his company’s investments in the Egyptian startups, his company’s selection criteria for the startups that it funds, as well as the company’s five year strategy.

First of all, can you tell us more about 500 Startups?

500 Startups is a venture capital firm on a mission to discover and support the world’s most talented entrepreneurs, help them create successful companies at scale, and build thriving global ecosystems. It is one of the most active venture capital firms in the world.

500 Startups in the MENA region:

Silicon-Valley based 500 Startups is one of the most active early-stage venture capital funds in the Middle East and North Africa (MENA) region. Since its first investment in the region in 2012, 500 Startups has committed to investments in over 160 startups across the MENA region.

500 Falcons, a MENA-focused fund, that is a part of the global 500 Startups network, was launched in 2017. To-date, the company has invested in over 150 startups and plans to invest in another 50 companies, in addition to follow-on investments into the top performing companies.
Earlier this year, the oversubscribed MENA-focused 500 Falcons fund was closed at $33m.

Up until now, how many Egyptian startup companies has 500 Startups funded? And what’s the amount of investments?

To-date, 500 startups has invested in 37 Egyptian startups in our portfolio, which is around 30% of our total investments in the MENA region. We typically invest an average of $100,000 as an initial investment and can go as high as $500,000, which is the case of our top 20-30%.


At what stage will 500 Startups prefer to fund the start up? And what is the selection criteria for start-ups to receive funding from 500 Startups?

As a firm, we typically invest at the seed stage of a start-up’s development. How that is defined varies, but on average we are looking for startups that have launched a product and have been generating revenues of at least $5,000 a month, for the last three-six months, growing at least 20% month over month. Startups at this stage are generally raising between $300,000 – $500,000 in total to scale their customer acquisition, traction, and metrics.

We’re looking for balanced founding teams, with a bias towards execution, going after a large market with few to no competitors, and a product that users want.

As we are only a day away for the Rise Up summit, what is your opinion about it?

Rise up Summit is one of the best startup events in the MENA region. We actively look forward to it every year. I believe the key advantage that Rise up Summit has is that it genuinely feels authentic. The startups and community come together to make something grassroots, organic, and real. It’s not a series of government speakers in a ballroom in some hotel, but a real festival and celebration of entrepreneurship, founders, and startups.


How many times have you participated in the Ruse Up summit?

Almost every year.

What’s your expectations for your participation in the coming edition?

I’m looking forward to interacting with amazing startups from Egypt and all over the MENA region again, catching up with the other investors that will be there, and hopefully providing some useful insights to as many founders as we can through our speaking engagements.

How many startups have you funded through Rise Up summit and with how much in investments?

We’ve invested in many startups that we’ve met with during Rise Up and hope to continue doing so.

In your opinion, what distinguishes Egypt in terms of entrepreneurship than other countries in the Middle East? And what are the challenges?

In my opinion, Egypt is one of the fastest growing startup ecosystems in the MENA region. We love investing in Egyptian startups – the founders are passionate, driven, motivated to succeed with an amazing technical talent base. Combining that talent, motivation, and the large market size that exists – Egypt really is the main market to be investing in. Egyptian founders do face challenges, like recruiting talent related to growth, and the low spending power of users, but we’ve generally seen them succeed against all odds.

What are the promising sectors in Egypt that you would like to invest in?

There is a massive untapped opportunity in Egypt in fintech – finding ways to provide financial services to the mass unbanked market is an attractive option, and we’ve seen successes in other markets which leapfrogged the banking system to mobile based wallets. In addition, there are a lot of logistical and transport-based opportunities within Egypt, as well as on-demand products and services. We’ve been actively investing in all these sectors, but more broadly we’re interested in backing starts that can scale both within and outside Egypt.
 
The government is adopting a digital transformation strategy, in your opinion what are the challenges that Egypt faces in terms of mobile technology and e-commerce? What are the opportunities?

Every challenge and obstacle is just an opportunity to solve in the right hands. I believe that the largest challenge, particularly for e-commerce startups, is the availability of online payment options other than cash on delivery. Additionally, connectivity – making sure the majority of the population can afford data and access to the internet is an infrastructural obstacle. Combined with logistics, these three points are the main obstacles for growth in the tech industry. Having said that, I believe Egyptian founders have overcome these issues and have been thriving with their startups, and Egypt has passed the tipping point to enable success stories in the market.

Finally, what is the company’s five year plan in Egypt?

We’re going to continue to actively invest in the Egyptian market as we have been, and I believe the market will just get bigger and better. We’ll also start to see more and more exits there. Egypt is one of our key markets and will likely be for the foreseeable future.

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Entrepreneurship

Flat6Labs graduates 11 startups

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SOURCE: Disrupt Africa


The Flat6Labs Cairo startup accelerator has concluded its latest programme with a demo day showcasing the 11 Egyptian startups graduating from its second cycle of the year.

Launched in 2011 as the first office of the Flat6Labs MENA regional startup accelerator,  the Flat6Labs Cairo programme provides startups with cash funding of between EGP500,000 (US$31,000) and EGP750,000 (US$46,000) with access to possible follow-on funding.

Participating companies also gain access to strategic mentorship, office space, a multitude of perks and services from various partners, and entrepreneurship-focused business training and workshops.

The latest cycle commenced in August, with 11 startups chosen to take part from over 1,200 applications. It has now concluded with a demo day, where the startups pitched in front of an audience of Flat6Labs investors, mentors, government officials, experts and the media.

The 11 graduating startups include smart home solution developer AION, medical insurance platform Axon, cloud-based engineering solution BeXel, expert-finder Consulting Pad, medical service booking platform Curotrip, and business procurement service Fridge.

Also taking part were logistics startup HOVO, laundry service Makwa, shipping platform ShipHaly, recruitment service Talents Arena, and website builder Wuilt.

“We’re extremely happy to be graduating this latest batch of 11 startups and cannot wait to see how they’ll continue to scale their businesses to a new level post-demo day,” said Flat6Labs chief executive officer (CEO) Ramez El-Serafy. 

“We can say with confidence that this group of entrepreneurs are go getters and relentless in their quest towards success, and we fully stand behind them even after they’ve left Flat6Labs Cairo’s doors.”

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Entrepreneurship

Flexxpay eyed by Wamda funds

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SOURCE: Wamda


Wamda has invested in UAE-based financial technology (fintech) startup FlexxPay (flexxpay.com). The social impact company provides employee benefit solutions for businesses of all sizes in the Middle East and North Africa (Mena) region. Wamda’s investment is part of FlexxPay‘s latest round of funding, which includes previous individual and corporate investors.

FlexxPay’s proprietary cloud-based solution provides employees access to a series of services and benefits, including the ability to access their earned salary and earned commissions whenever needed. By offering an alternative to the traditional payment cycle, FlexxPay aims to reduce the financial stress on employees and increase their motivation, and in turn, enhance productivity, sales and employee retention rates for businesses.

“FlexxPay is targeting a very clear pain point with an innovative and unique solution that will help unlock individuals’ income on an as-earned basis. We are confident in the team’s ability to drive the company forward and are excited to partner with them on that journey,“ said Fadi Ghandour, executive chairman at Wamda.

Commenting on the business and Wamda’s investment, Michael Truschler, co-founder and CEO of FlexxPay said: “FlexxPay solves a real world problem for employers and their employees. Giving employees access to what they have already earned helps them to cover unexpected expenses and motivates them at the same time. Having Wamda as an investor further validates our business model and inspires our team as a whole.”

Financial matters rank top of the list for employees when it comes to primary sources of stress, with 59 per cent stating finances were their primary cause of concern, according to “PwC’s 8th annual Employee Financial Wellness Survey” of 2019.

This has created a space for fintech startups to address employee benefits and create a system supporting traditional human resources (HR) and finance teams in addressing pay period timing and bridging the gap between pay and spend times for employees. The model has widely been proven in the US and Europe with players such as Earnin (US), PayActiv (US) as well as Wagestream (UK) and Hastee (UK).

FlexxPay currently operates in the UAE and Saudi Arabia, with plans to expand to the rest of Mena in the near future.

The team will use the funds to enhance its technology platform and will focus on onboarding corporate clients.

FlexxPay previously raised an undisclosed funding round in July 2019 and recently signed a partnership agreement with Riyad Bank, one of Saudi Arabia’s largest financial institutions.

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Ecosystem of the MENA

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