By Mohamed Alaa El-Din
Flat6Labs has marketed five companies from among 12 that graduated from the last two rounds of its investment programs. Investments in the five companies equalled EGP 5 million.
Ramez Mohamed, CEO of Flat6Labs, said that the company hopes to develop 20 information technology (IT) companies on a yearly basis, with investments of EGP 1 million to EGP 1.5 million per year.
He mentioned that the company was established in 2011 by Sawari Ventures, which had begun working in the field of IT investment for the three years prior. The company began investment in start-up companies that had begun achieving profits.
Mohamed said that concrete steps to establish an incubator of ideas started with an agreement with the American University in Cairo made ten days before the January 25Revolution. Flat6Labs was subsequently delayed until last October because of the numerous difficulties that faced the Egyptian economy.
He noted that the role of Flat6Labs role is to identify promising new ideas and to provide comprehensive support so that they become viable investment opportunities. Once the new businesses become viable, Flat6Labs helps market them to investors and companies in the IT sector and beyond.
Mohamed said that Flat6Labs helps to incubate new ideas and help new companies turn ideas into marketable products. Companies under Flat6Labs’ tutelage receive financing between EGP 10,000 and EGP 12,000 for four months, the length of the company’s trial period.
The company focuses exclusively on developing companies in the IT sector. Mohamed said that smartphones applications, internet, and social media are the fields most attractive to investors in the current period and the ones with the most potential for growth.
Flat6Labs receives applications through its website from companies that wish to enrol in its four month tutelage periods. Mohamed said that the company receives hundreds of applications from potential entrepreneurs with ideas for web design, mobile applications, hardware, software, mobile games, and social networking.
Mohamed noted that Flat6Labs narrows the applications down to approximately 15 of the best ideas, with between 5 and 7 ideas being chosen after consulting with Sawari Ventures.
Companies that receive funding work with Flat6Labs for a period of four months during which they receive office space and do not bear any administrative costs. Flat6Labs receives between a 10% and 15% share in exchange for the financing.
Flat6Labs provides specialists in the field of management in addition to intensive courses in cooperation with the American University in Cairo. Ramez said that the instruction helps start-up companies build teams, make their ideas more robust and economically viable, and develop strategies for growth.
Companies also have an opportunity to work with representatives of large IT companies such as Yahoo, Vodafone, Google, and Nokia. In addition, Flat6Labs has signed a partnership with Microsoft to provide technical support and training to start-up companies.
Ramez noted that start-up companies begin by offering their product on a trial basis in the second month of the program. In the third month, the company attempts to attract investments from a number of investment companies during a “demo day.”
He noted that 50% of the companies to which Flat6Labs provides training and funding work in the field of mobile applications, saying that the field is attractive to investors and represents significant opportunities for growth. In addition, he said that other companies specialise in creating social media applications, including applications that connect users to other services. One company, “Ogra,” meaning “fare,” in Arabic, created an application that allows users to call a taxi by sending a text message to the nearest driver.
Flat6Labs will have invested approximately EGP 200,000 dollars in start-up companies between October 2011 until October 2012. The company hopes to invest between EGP 1m and EGP 1.5m in 20 start-ups yearly.
He noted that the purpose of a meeting with the American Secretary of State, Hillary Clinton, was to get to know a number of Egyptian business pioneers.
Sawari Ventures established Flat6Labs in cooperation with the School of Business at the American University in Cairo. Companies that graduate from Flat6Labs’ programs are eligible for an addition EGP 40,000 in financing.