Egypt-based venture capital firm Algebra Ventures announced today that Laila Hassan and Omar Khashaba will be joining its second, $90 million fund, as General Partners (GP). Both are expected to bring “valuable experience to the fund” according to a statement released by Algebra. 

For Hassan, her appointment marks progress in Egypt’s VC ecosystem, becoming the country’s second female partner at a VC. She was previously venture partner early-stage venture fund and seed accelerator 500 Startups, where she will continue to support startups within the 500 Falcons Fund portfolio before starting her position at Algebra later this year. 

The desire to be part of the thriving entrepreneurship community has driven Hassan to return to her homeland, where she sees “a huge potential in the growing Egyptian market”.

“The startup founders and entrepreneurs' profiles have grown quite impressively; they are well-educated, heavily experienced in their fields. They could have joined remarkable international firms but they opted to build their own startups with a solid background,” she says, asserting that the Egyptian market has several attractive attributes that enhance its uniqueness in the Middle East and North Africa (Mena) region as well as the African continent.

Egypt’s ecosystem is one of the most active in Mena, benefitting from a large youth, tech-savvy population. Government focus on technical education to improve the skills of its workforce as well as increased funding geared towards startups has created fertile ground for an ecosystem to develop and bear great potential to become one of the leading ecosystems in the region.

“Egypt has a large population, half of which are under the age of 24, it is an optimal age bracket for tech adoption. Also, the digital infrastructure has evolved from 2016 until now, with 95.75 million mobile connections in Egypt at the moment,” says Hassan, who points out that the biggest chunk of the portfolio companies at 500 Startups was based in Egypt. 

In the first six months of this year, Egypt-based startups have raised $122 million across 61 deals, a promising trajectory when compared to the  $190 million raised in VC funding in 2020. The country currently ranks second in terms of the number of deals, and third behind the UAE and Saudi Arabia in terms of the value of investments.

Nevertheless, the Egyptian ecosystem is still facing some challenges that hinder its progress.

“The biggest challenge is the size of the market, unlike the Saudi market for example, where the purchasing power parity is higher and reflects on the sales of a startup that can be at its earliest stages in comparison to a later-stage startup in Egypt,” says Hassan, adding that the ecosystem in Egypt is male-dominated, which represents another challenge.

According to Hassan, greater inclusion of women in the Egyptian ecosystem drives better economics, helping to capture a wider market.

“If you look at the market fragmentation, especially in the B2C segment, you can see that not all the startups or business models serve women's needs, which means they have condemned 50 per cent of the population,” she says. 

As a GP at Algebra, Hassan says she is determined to empower more female founders to come forward to pitch their ideas, through the AV Sigma Women programme. She is also willing to add a new investment stage to Algebra's second fund’s area of focus. 

“Instead of focusing on Series A only, we will focus on Seed investment as well. By virtue of being four partners now and having the AV Sigma Network, we have the opportunity now to spot the talent and bet on them at the early stages,” Hassan explains.

Last April, Algebra announced the launch of its $90 million second fund, a sector agnostic fund which will focus primarily on Egypt with a small allocation going to sub-Saharan Africa. 

“We are thesis-driven VC, we will focus in our second fund on bottom-of-the-pyramid type of startups. We are open to every sector that can solve a problem or fulfil a need in the market or the society, however, agritech, insurance and market-enabled enterprises are hot sectors that should be tackled in Egypt,” says Hassan. 

Four years into its first $54 million fund, Algebra invested in 21 startups including elmenus, Trella, Halan, Yodawy and other heavyweight startups in Egypt. Its six most established companies are valued at over $350 million.