High-growth companies selected for venture capital investment

Daily Star Egypt Staff
5 Min Read

Egypt s Technology Development Fund backs top early-stage IT companies as they expand to the international market

DUBAI: The Technology Development Fund (TDF), a venture capital fund propelling the growth of innovative, early-stage Egyptian companies in the field of information technology, has selected nine companies exhibiting well-researched, viable and innovative plans for inclusion in the Fund.

The Fund, managed by EFG-Hermes Private Equity, owned by financial group EFG-Hermes, provides the chosen companies with venture capital financing, strategic support services – including strategic and financial planning, partner identification, management consulting and legal counseling – as well as incubation facilities in Egypt s Smart Village.

Established by EFG-Hermes Private Equity and Telecom Egypt, Ideavelopers acts as a Fund management advisor, assisting in assessing investment opportunities and portfolio management and providing strategic and consulting services to the companies.

“The importance of building entrepreneurship in the Middle East cannot be understated, especially for companies in an early stage of high growth and maturation. This is an exciting time for these companies and for the burgeoning IT scene in Egypt, says Ideavelopers Chief Executive Officer Ahmad Gomaa.

The first round of the Fund, at LE 50 million, opened in July 2004 and has been covered by Egyptian institutional investors such as Telecom Egypt, Misr Iran Bank for Development, Faisal Islamic Bank, El Charq Insurance, Misr Insurance and Egypt Reinsurance. The Fund has also received strong backing from the Egyptian Ministry of Communications and Information Technology (MCIT) due to its potential impact on the Egyptian IT sector.

The second round will see the amount triple to at least LE 150 million and is expected to open in the coming year, with the largest asset allocation dedicated to outsourcing as well as other export-oriented opportunities.

The IT development in Egypt is no longer under construction and has progressed and grown so fast that it is internationally recognized. This can be attributed to initiatives like the TDF which is a public / private partnership between the Egyptian government, Telecom Egypt and the Arab world’s premier investment bank, EFG-Hermes and other shareholders. Besides encouraging small teams and SMEs to take a step forward with their innovative ideas and prove their success, it has several international and local investors to take a part in this race that is not ending in the future to come, says MCIT Minister Dr. Tarek Kamel. This is why the Egyptian government, Telecom Egypt, EFG-Hermes and the shareholders, have all rallied together to create this impressive investment opportunity.

The Egyptian IT sector has asserted itself as a key component in the growth of the economy, bringing in annual revenues of LE 20 billion ($3.4 billion), and IT companies increasing at a compound rate of 34% during the ten years ending 2005.

“The Technology Development Fund is a win-win situation, providing a financial boost to companies on the cusp of regional and international expansion while providing an excellent avenue for keen investors looking for solid returns on their money. EFG-Hermes has a strong track record in delivering returns to our investors and this is proving to be true yet again with this Fund, says EFG-Hermes, Chairman Yasser el Malawani, adding that “Set initially at LE 50 million ($8.7 million), the Fund’s first issue has attracted such investment that we are opening a second issue for which the investment opportunity will triple to at least LE 150 million ($26.1 million).

The Fund companies are exhibiting their technologies at Dubai s Gitex, the regions top annual IT trade show, under the theme of Egypt Innovates

The nine companies, chosen out of an original 104 by a screening committee, offer a wide-range of products and services, ranging from online engineering tools and e-learning to custom open-source software development.

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