Entrepreneurship and incubators in Egypt

Transcription

1 Green Innovation and Entrepreneurship Programme (GIEP Tempus) Young and sustainable entrepreneurship in Egypt for a more inclusive society (PoliSocial award 2014) Entrepreneurship and incubators in Egypt Boris Mrkajic July 20 th -24 th, 2015 Milan, Italy

2 Content Project introduc-on Entrepreneurship ecosystem concept Entrepreneurship in Egypt Business incubators: concepts and defini-ons Business incubators in Egypt Ques-onnaire ENTREPRENEURSHIP IN EGYPT 2

3 Project introduc-on Project -tle: Young and sustainable entrepreneurship in Egypt for a more inclusive society PoliSocial award Politecnico di Milano PoliSocial Award scheme Research projects with social purposes / outputs Main goal Addressing unemployment of educated youth in Egypt through entrepreneurship Team and dura-on Research fellows and senior scholars of Politecnico di Milano, School of Management October 2014 June 2016 Network (Advisory Board) Alexandria University, American University of Cairo, UNCTAD, ITU, PoliHub Incubator (Milan), CIHEAM IAMB (Bari), Edison, ENTREPRENEURSHIP IN EGYPT 3

4 Project introduc-on: Focus Youth technology- based entrepreneurship in Egypt Egypt Tech- based entrepreneurship Exploita-on of medium or high technology ICTs pervasive, but other technologies as well Innova-ve ventures Not necessarily research- driven Educated youth Ex.: start- ups by engineering students and graduates ENTREPRENEURSHIP IN EGYPT 4

5 Project introduc-on: Mo-va-on Youth tech- based entrepreneurship as a lever for sustainable development in Egypt and globally Egypt Educated young people: Severe unemployment, dissa-sfac-on with current job opportuni-es Weak private business growth Concerns for natural resource conserva-on and not only Egypt: Challenges for many countries, including Italy ENTREPRENEURSHIP IN EGYPT 5

6 Project introduc-on: Mo-va-on Entrepreneurship by educated youth & social sustainability Youth entrepreneurship, by graduates more par-cularly, is a driver of social cohesion Tech- based entrepreneurship & economic sustainability Tech- based entrepreneurship is a source of innova-on, and the diffusion of new technologies and products is a motor for long- term produc-vity and compe--veness Tech- based entrepreneurship & environmental sustainability Tech- based entrepreneurship is a source of innova-on, and the diffusion of new technologies and products is likely to fill gaps in the efficient use of natural resources ENTREPRENEURSHIP IN EGYPT 6

7 Project introduc-on: Mo-va-on Excessive youth unemployment rates world- wide 12.6% of youth unemployed 40% of total unemployment Large and growing youth popula-on world- wide Currently 25% of the total working age popula-on Projected to rise in the next 20 years Even more pronounced in emerging countries 90% of global youth popula-on 2% average annual growth of youth (Source: ILO, 2013) ENTREPRENEURSHIP IN EGYPT 7

8 Project: Objec-ves / Phases 1. Overview of YTBE in Egypt Based on literature survey and interviews 2. Inves-ga-on: Incubators and MNEs (mul-na-onal enterprises) as supports of YTBE in Egypt Based on in- depth case studies 3. Recommenda-ons for Incubators and MNEs ENTREPRENEURSHIP IN EGYPT 8

9 GIEP week programme PROGRAM Lunch th Welcome and intro on GIEP Entrepreneurship and incubators in Egypt (Garrone, Mrkajic) Technology Transfer Centre - TTO (Tiezzi) 21 st Empretec (UNCTAD) Empretec (UNCTAD) 22 nd Empretec (UNCTAD) Empretec (UNCTAD) 23 rd Entrepreneurship and incubators in Egypt (Garrone, Mrkajic) Fondazione Politecnico Social innovation (Calderini) 24 th Visit to PoliHub Final discussion Final discussion, questionnaire and evaluation! ENTREPRENEURSHIP IN EGYPT 9

10 Content Entrepreneurship ecosystem concept Entrepreneurship in Egypt Business incubators: concepts and defini-ons Business incubators in Egypt Ques-onnaire ENTREPRENEURSHIP IN EGYPT 10

11 Entrepreneurship ecosystem Babson entrepreneurship ecosystem framework (Isenberg, 2010) ENTREPRENEURSHIP IN EGYPT 11

12 Entrepreneurship ecosystem Finance Entrepreneurs of all types and sizes require a variety of financial services Different phases of start- up financing: Bootstrapping Pre- seed funding Seed funding Later phase financing Different sources of financing: Personal resources, FFF Business angels Debt issuers (e.g. banks, typically micro- loans and micro- credits) Governmental financial support (e.g. grants, loans, etc.) Venture capital Remains a major obstacle for many aspiring entrepreneurs, par-cularly in developing countries (Stein, Goland, & Schiff, 2010). ENTREPRENEURSHIP IN EGYPT 12

13 Entrepreneurship ecosystem Finance ENTREPRENEURSHIP IN EGYPT 13

14 Entrepreneurship ecosystem Human capital Human capital represents a collec-on of sol (e.g. self- confidence, networking, etc.) and hard (e.g. managerial skills, financial literacy, business planning, etc.) skills possessed by an individual or by popula-on in sum Enables individuals to produce economic value, or more generally, accomplish certain objec-ves Human capital is gained through educa-on and work experience Educa-on is considered to be key elements to consider regarding empowerment of prospec-ve entrepreneurs ENTREPRENEURSHIP IN EGYPT 14

15 Entrepreneurship ecosystem Policy and regulaaons Principal driver that can influence the role of other elements of the ecosystem Proac-ve role of a government is necessary Na-onal entrepreneurship strategy and underlying policies Effec-ve enforcement mechanisms Effec-ve monitoring mechanisms (measurement systems) Dynamic adjustment of the policies to meet desired direc-ons Alignment with strategic processes of the neighbouring countries, in order to exploit synergies with them Examples of new- venture- friendly legisla-ons: ease of star-ng business, protec-on of intellectual property rights, contract enforcement, indirect monetary incen-ves like tax benefits, tax waivers, etc. ENTREPRENEURSHIP IN EGYPT 15

16 Entrepreneurship ecosystem Culture and social norms Influence general behaviour of individuals, and hence entrepreneurial ac-vity They can even be cri-cal for entrepreneurship (Mueller & Thomas, 2001) Different communi-es have inherently different social norms and values with respect to business Examples: Legi-macy and awareness of entrepreneurship Entrepreneurs social status and related success stories Tolerance of risk, mistakes and failures Propensity for innova-on, crea-vity and experimenta-on Ambi-on and hunger for success ENTREPRENEURSHIP IN EGYPT 16

17 Entrepreneurship ecosystem Supports Can be an essen-al components of an entrepreneurial environment Infrastructure and logis-cs: Affordable access to energy Telecommunica-ons Transporta-on and logis-cs Specialised ins-tu-ons that support entrepreneurship: Incubators Accelerators Auxiliary suppor-ng network of professionals: Legal professionals Accoun-ng professionals Technical experts and advisors Business- related organisa-ons: MNEs NGOs TNOs ENTREPRENEURSHIP IN EGYPT 17

18 Entrepreneurship ecosystem Markets Important pillar of the entrepreneurial ecosystem Market condi-ons determine how new ventures enter business arena and subsequently compete for their market share Globaliza-on and technological development have opened new commercializa-on possibili-es and created new mechanisms of reaching customers, which is par-cularly true for emerging markets Some important features: Access to suppliers Existence of and access to early customers Interna-onal market access and export channels ICT diffusion among poten-al customers ENTREPRENEURSHIP IN EGYPT 18

19 Youth tech- based entrepreneurship ecosystem in emerging countries Evident lack of elaborate research, both conceptual and empirical, on youth entrepreneurship Specific needs, virtues and entrepreneurial poten-al (ILO, 2006) Constrains and barriers (e.g. no work experience, no previous business track record, etc.) S-mula-ng advantages (e.g. familiarity with the ongoing ICT revolu-on and easier acceptance of similar types of technological change, agility, etc.) ENTREPRENEURSHIP IN EGYPT 19

20 Youth tech- based entrepreneurship ecosystem in emerging countries Ecosystem) element) 1.)Finance) ) Key)points)for)youth)entrepreneurship)in)developing) countries)!"bootstrapping"particularly"difficult"!"instead,"early"stage"external"funding"is"crucial""!"debt"financing"is"typically"too"difficult"to"obtain" due"to"lack"of"credit"history"!"need"of"special"bank"programmes"designed""!"need"of"special"governmental"programmes"and" grants"!"need"of"pre!seed"funding"!"matching"of"entrepreneurs"and"investors" Agents) ;)Governments) ;)VC)firms) ;)Business)Angels) ;)Incubators) ;)Banks) ;)MNEs) ;)NGOs) ;)TNOs) ) Lack of access to finance is repeatedly iden4fied as the major constraint for entrepreneurs. (Caroline Anstey, World Bank Managing Director, 2012) ENTREPRENEURSHIP IN EGYPT 20

21 Youth tech- based entrepreneurship ecosystem in emerging countries ) Ecosystem) element) 2.)Human) capital) Key)points)for)youth)entrepreneurship)in)developing) countries)!"entrepreneurial"education"as"a"key"mechanisms"!"formal"school"and"university"education"!"informal"training"programmes"!"utilization"of"the"existing"educational"programmes"!"engagement"of"new"agents"in"the"educational" process"!"incubators"as"potential"hubs"/"intermediaries"!"online"learning"platforms"(moocs)"" Agents) ;)Governments) ;)Universities) ;)Incubators) ;)MNEs) ;)NGOs) ;)TNOs) Our ins4tu4ons of higher learning have to [ ] teach the technical and entrepreneurial skills needed to succeed in the real world. (Kofi Annan, Former Secretary- General of the United Na-ons and 2001 Nobel Prize for Peace laureate) ENTREPRENEURSHIP IN EGYPT 21

22 Youth tech- based entrepreneurship ecosystem in emerging countries Ecosystem) element) 3.)Policy) ) Key)points)for)youth)entrepreneurship)in)developing) countries)!"decreasing"time"and"cost"for"starting"a"business)!"introduction"of"ict!procedures"for"reporting""!"legal"solution"for"bankruptcy"and"failure"of"new" firms"!"re!start"mechanisms" :)Stable)and)long:term)policy)measures) :)Quality)of)governance)!"Intellectual"property"rights"protection"!"Specialised"tax"reduction"or"waiver"programmes) Agents) :)Governments) :)TNOs) :)NGOs) ) ) Policymakers need to evaluate and benchmark the current environment in which entrepreneurs set up, operate and grow their businesses, [ ] define the overall entrepreneurship strategy and priori4es, in terms of objec4ves and targets as well as policy gaps and shortcomings, [ ] design a focused set of ini4a4ves to address gaps and shortcomings iden4fied. (Fiorina Mugione, UNCTAD) ENTREPRENEURSHIP IN EGYPT 22

23 Youth tech- based entrepreneurship ecosystem in emerging countries Ecosystem) element) 4.)Culture) Key)points)for)youth)entrepreneurship)in)developing) countries)!"awareness"and"legitimacy"of"entrepreneurship"!"success"stories"" :)Tolerance)of)risk,)mistakes)and)failures) :)Propensity)for)innovation,)creativity)and) experimentation) :)Level)of)ambition)and)hunger)for)success)!"Lack"of"trust"in"youth"and"age"discrimination) Agents) :)Governments) :)Universities) :)Incubators) :)MNEs) :)NGOs) :)TNOs) :)Media) ) Success breeds success. It s just basic math. (Hana Fadel, chair of the MIT Enterprise Forum of the pan- Arab region) ENTREPRENEURSHIP IN EGYPT 23

24 Youth tech- based entrepreneurship ecosystem in emerging countries Ecosystem) element) Key)points)for)youth)entrepreneurship)in)developing) countries) Agents) ) 5.)Supports) :)Infrastructure,)complementary)assets,)natural) resources)!"natural"habitat"for"developing"business"ideas""!"networking) :)Matching)needs)and)assets)of)incumbents)and) entrepreneurial)ventures) :)Governments) :)Incubators) :)MNEs) :)NGOs) :)TNOs) Incubators are now a global phenomenon, and there isn t a major city in the world where an incubator isn t cropping up. (Sramana Mitra, entrepreneur and founder of One Million by One Million (1M/1M) virtual incubator) You cannot simply have a flourishing entrepreneurship ecosystem without large companies to cul4vate it, inten4onally or otherwise. (Daniel Isenberg, Babson College professor) ENTREPRENEURSHIP IN EGYPT 24

25 Youth tech- based entrepreneurship ecosystem in emerging countries ) Ecosystem) element) 6.)Markets) Key)points)for)youth)entrepreneurship)in)developing) countries)!"utilization"of"ict"and"related"technologies")!"utilization"of"already"existing"infrastructure"" and"logistics"channels"!"access"to"non!local"customers"and"suppliers"" <)Global)markets)are)within)reach) Agents) <)Governments) <)MNEs) ) ) We look to ICT to transform the way we do things in all sectors. Innova4on will con4nue to transform service delivery in agriculture and food produc4on, transporta4on, health, educa4on, security, fiscal and financial management, jus4ce, law and order among other sectors. ICT also enables more people to contribute to development. (Uhuru KenyaIa, President of the Republic of Kenya) ENTREPRENEURSHIP IN EGYPT 25

26 Youth tech- based entrepreneurship ecosystem in emerging countries Key agents 1. Universi-es 2. MNEs 3. Incubators and accelerators ENTREPRENEURSHIP IN EGYPT 26

27 Youth tech- based entrepreneurship ecosystem in emerging countries Universi-es 1. Enhance human capital Build technical knowledge and skills Build business- related skills 2. Support for aspiring entrepreneurs Academic incubators 3. Improve entrepreneurial culture They enjoy respect and trust of local people and are able to influence aptudes of students and shape their personal believes and values, which altogether influence their behaviour Shape aspira-ons for their professional carriers Foster entrepreneurship culture among young people They are able teach students to be more asser-ve, to be ready and confident to take risks, to experiment and try their ideas is essen-al ENTREPRENEURSHIP IN EGYPT 27

28 Youth tech- based entrepreneurship ecosystem in emerging countries MNEs poten-al contribu-on 1. Improve business- related and technical educa-on Stand- alone training programs or with established ins-tu-ons Knowledge spill- over effect 2. Boost networking Engage entrepreneurs in their own (global) supply chain Collaborate to obtain or provide resources Act as distribu-on channels to non- local customers Act as brokers by linking entrepreneurs 3. Provide financially support Corporate venture capital (CVC) Debt issuing or loans 4. Influence culture and inject spirit of entrepreneurship Organising events such as business plan compe--ons, demo days, idea pitches, etc. ENTREPRENEURSHIP IN EGYPT 28

29 Youth tech- based entrepreneurship ecosystem in emerging countries MNEs interests 1. Strategic objec-ves Corporate social responsibility (CSR) programmes Comply with the formal regula-ons and policies of a host country Gain legi-macy in a new market with respect to local stakeholders Improvement of the local context understanding Poten-al reverse knowledge effect, i.e. MNEs can learn from local entrepreneurs Innova-on seeking 2. Profit objec-ves Corporate venture capital (CVC) commonly strives to advance both strategic and financial objec-ves (Chesbrough, 2002) Debt issuing interest rates ENTREPRENEURSHIP IN EGYPT 29

30 Youth tech- based entrepreneurship ecosystem in emerging countries Incubators and accelerators 1. Improve access to finance Provide funding internally (e.g. academic or corporate incubators) Connect entrepreneurs with investors 2. Enhance human capital Trainings programmes Formal and informal mentoring by experts Ideas and experiences sharing between incubated founders Academic incubators (Rothaermel & Thursby, 2005) 3. Supports Infrastructure (e.g. working space) Boost networking with external stakeholders (e.g. investors) and professionals (e.g. legal, accoun-ng, administra-ve and technical) 4. Change culture Legi-mize entrepreneurial ac-vity Promote successful stories Decrease risk of star-ng up a business ENTREPRENEURSHIP IN EGYPT 30

31 Entrepreneurship ecosystem in Egypt ENTREPRENEURSHIP IN EGYPT 31

32 The case of Egypt Youth unemployment issue Large youth popula-on (>50% below 25) 24% youth unemployment rate (ILO, 2013) 70.86% of unemployed Egyp-ans are between the ages of 15 and 29, and of that percentage, 84.5% were high school or university educated (Ci- Founda-on, 2014) Mainly low- quality jobs are available (AfDB, 2012) Poli-cal instability Recent uprising of the youth, protests, Arab spring, etc. ENTREPRENEURSHIP IN EGYPT 32

33 Youth entrepreneurship ecosystem in Egypt Distribu-on of early- stage entrepreneurs by level of completed educa-on, Egypt We should samulate GRADUATES to do it! GEM Egypt Report 2012 (Adult Popula-on Survey) ENTREPRENEURSHIP IN EGYPT 33

34 Youth entrepreneurship ecosystem in Egypt Sector distribu-on of early- stage businesses, Egypt We should samulate PRODUCTIVE entrepreneurship! GEM Egypt Report 2012 (Adult Popula-on Survey) ENTREPRENEURSHIP IN EGYPT 34

35 GETTING CREDIT Youth entrepreneurship Where do the region s economies stand today? ecosystem in Egypt How well do the credit information systems and collateral and bankruptcy laws in economies in the Arab world facilitate access to credit? The global rankings of these economies on the ease of getting Ease of gepng credit Figure 6.1 How economies in the Arab world rank on the ease of getting credit credit suggest an answer (figure 6.1). The average ranking of the region and comparator regions provide a useful benchmark. Access to capital issue The World Source: Doing Bank, Business database. Doing Business 2012, Regional profile: Arab world ENTREPRENEURSHIP IN EGYPT 35

36 PROTECTING INVESTORS But the overall ranking on the strength of investor protection index tells only part of the story. Economies may offer strong protections in some areas but not others. So the scores recorded for economies in the Arab world on the extent of disclosure, extent of director liability and ease of shareholder suits indices may also be revealing (figure 7.2). Higher scores indicate stronger investor protections. Comparing the scores across the region and with averages both for the region and for comparator regions can provide useful insights. Youth entrepreneurship ecosystem in Egypt Figure 7.2 How strong are investor protections in economies in the Arab world? Strength of protection index (0 10) Strength of investors protec-on (0-10) Access to capital issue The World Bank, Doing Business 2012, Regional profile: Arab world ENTREPRENEURSHIP IN EGYPT 36

37 With respect to Government s concrete policies, support in general and the priority given to new and growing firms, experts in all regions perceived this factor as unfavourable to entrepreneurial development and the support is not sufficient in their respective countries (figure 53). Egypt s mean score for this EFC is 2.06, which is the lowest compared to other regions. Government policies (concrete policies, priority and support), by Figure geographic 53 Government region Policies (concrete (0-4) policies, priority and support) By Geographic Region about a week. 5. the amount of taxes is NOT a burden for new and growing firms. 6. taxes and other government regulations are applied to new Youth entrepreneurship ecosystem in Egypt and growing firms in a predictable and consistent way. 7. coping with government bureaucracy, regulations, and licensing requirements is not unduly difficult for new and growing firms Policy issue Source: NES Global GEM Egypt Report 2012 (Na-onal Experts Survey) In terms of government policies; for example, taxes imposed on new and growing firms and bureaucracy, experts viewed them as being constraining to entrepreneurship (Figure 54). Egypt has the lowest mean score of 2.03 reflecting the weakness of this EFC in supporting any entrepreneurial ENTREPRENEURSHIP IN EGYPT 37

38 EFC to the development of entrepreneurship in their respective countries revealed the weakness of this EFC (Figure 56). Egypt ranked 54 on the availability and efficacy of its governmental support programmes for new and growing firms, with a mean score for new and growing firms. 3. there are an adequate number of government programmes for new and growing businesses. 4. the people working for government agencies are competent and effective in supporting new and growing firms. 5. almost anyone who needs help from a government programme for a new or growing business can find what they need. 6. government programmes aimed at supporting new and growing Youth entrepreneurship ecosystem in Egypt firms are effective. of Government programmes for entrepreneurship, by geographic region (0-4) Figure 56 Government Programmes By Geographic Region Policy issue Source: NES Global GEM Egypt Report 2012 (Na-onal Experts Survey) Exploring the national experts views on this EFC reflects the weakness of Government programmes in supporting entrepreneurship in Egypt (Figure 57). The experts ranked the availability of help and assistance from any of the Government programmes designed to support new or growing firms as the ENTREPRENEURSHIP IN EGYPT 38

39 The majority of experts assessed the level of entrepreneurial education at the primary and secondary schools in their countries as a restraining factor. Egypt ranks last with a mean score of 1.28 (Figure 58). 3. teaching in primary and secondary education provides adequate attention to entrepreneurship and new firm creation. 4. colleges and universities provide good and adequate preparation for starting up and growing new firms. 5. the level of business and management education provide good and Youth entrepreneurship ecosystem in Egypt adequate preparation for starting up and growing new firms. 6. the vocational, professional, and continuing education systems provide good and adequate preparation for starting up and growing new firms. Entrepreneurial educa-on at primary and secondary schools, by geographic region (0-4) Figure 58 Entrepreneurial Education at Primary and Secondary Schools By Geographic Region Human capital issue 0.0 Source: NES Global GEM Egypt Report 2012 (Na-onal Experts Survey) Page 51 ENTREPRENEURSHIP IN EGYPT 39

40 Youth entrepreneurship ecosystem in Egypt The experts viewed, as well, the level of entrepreneurial education and training at the university/college or as part of vocational training negatively (Figure 59), with a low mean score (1.82). Both the mean scores are less than "2", implying that education and training is a weak factor in supporting entrepreneurship in the country. Entrepreneurial level of educa-on at college and university level, by geographic region (0-4) Figure 59 Entrepreneurial level of education at Vocational, Professional, College and University By Geographic Region Human capital issue 0.0 Source: NES Global GEM Egypt Report 2012 (Na-onal Experts Survey) Egyptian experts described the level of education, whether at school or university as weak and insufficient to qualify people for the business start-ups (Figure 60). They believed that primary and secondary schools are neither encouraging creativity, self-sufficiency, and personal initiative nor ENTREPRENEURSHIP IN EGYPT 40

41 statements were used to assess this EFC (Box 5). Experts views placed R&D scores below 3 in all the six geographic regions. In Egypt, the experts views ranked the country 68 th with a mean score of 1.83 (Figure 61). and technology as large, established firms. 3. new and growing firms can afford the latest technology. 4. there are adequate government subsidies for new and growing firms to acquire new technology. 5. the science and technology base efficiently supports the creation of world-class new technology-based ventures in at least one area. 6. there is good support available for engineers and scientists to have their ideas commercialised through new and growing firms. Youth entrepreneurship ecosystem in Egypt R&D transfer, by geographic region, by geographic region (0-4) Figure 61 R&D Transfer By Geographic Region Human capital issue 0.0 Source: NES Global GEM Egypt Report 2012 (Na-onal Experts Survey) ENTREPRENEURSHIP IN EGYPT 41 Page 53

42 Youth entrepreneurship ecosystem in Egypt Experts' opinions on the strength of this EFC ranged across regions, yet it was to a certain degree close to neutral (i.e. not a hindering not a supporting factor the development of entrepreneurship), as the Professional mean score was around and 3 (Figure commercial 63 ). Egypt ranked infrastructure 66 with a mean score access, of by geographic region (0-4) Figure 63 Professional and Commercial Infrastructure Access By Geographic Region Supports issue Source: NES Global GEM Egypt Report 2012 (Na-onal Experts Survey) The mean score of this EFC is between ENTREPRENEURSHIP 2 and 3, thus it cannot IN EGYPT be viewed as a supporting factor to 42 entrepreneurship in Egypt. Experts were fairly neutral about the availability of subcontractors, suppliers and consultants to support the new and growing firms; however these firms still cannot afford the cost of

43 seven North African countries. Egypt and Tunisia have the largest proportions of youth who prefer government employment to private sector jobs or self-employment. In Egypt 53% of the young want a government job, but only 18% of those aged have one. In Tunisia, 46% of youth want a government job, but the proportion of the age group with a government job is the same as in Egypt. In both countries, employment in private business seems to have no appeal to young people. This large gap between young people s expectations and the reality of the job market has Youth entrepreneurship ecosystem in Egypt undoubtedly caused much frustration and will continue to do so until expectations have adjusted. The expectations gap also causes higher youth unemployment since young people hold out for the expected public sector job instead of searching for work in the private sector. Creating more public sector employment cannot be a sustainable response to this gap. Public employment rates are already very high in North African countries. Instead efforts must be made to help young people develop realistic expectations and to create a strong private sector, capable of offering attractive jobs. Entrepreneurial aspira-ons Figure 8: Where do you want to work, assuming equal pay and benefits? Egypt Youth 53% 10% 18% 1% Tunisia Youth Djibouti Youth 46% 45% 15% 33% 35% 16% 2% 5% Culture issue Mauritania Youth 44% 17% 23% 4% Sudan Youth 36% 32% 20% 6% Algeria Youth 32% 15% 46% 3% Morocco Youth 26% 20% 41% 4% 0% 100% Government Private business Self-employment Non-profit organisation Source: Silatech (2009), based on Gallup World Poll data. Silatech, 2009 ENTREPRENEURSHIP IN EGYPT 43

44 Youth entrepreneurship ecosystem in Egypt Main barriers: Lack of financial solu-ons Educa-onal system inhibits crea-vity and innova-on Lack of business supports Lack of good pro- entrepreneurship all- round policies Vast and cumbersome bureaucracy Risk aversion culture Corrup-on GEM Egypt Report 2012 (Na-onal Experts Survey) ENTREPRENEURSHIP IN EGYPT 44

45 Youth entrepreneurship ecosystem in Egypt There are encouraging aspects as well: Recently raised awareness of policy makers Entrepreneurial ini-a-ves and events Increasing availability of funds Universi-es offering entrepreneurial educa-on Increasing number of business incubators Expended use of social media Diffusion of new technologies (mainly ICT) par-cularly among youth is growing Internet penetra-on 55%, Mobile penetra-on: 110% GEM Egypt Report 2012 (Na-onal Experts Survey) ENTREPRENEURSHIP IN EGYPT 45

46 Doing Business 2013 STARTING A BUSINESS Egypt, Arab Rep. Equally helpful may be the benchmarks provided by the economies that over time have had the best performance regionally or globally on the procedures, time, cost or paid-in minimum capital required to start a business (figure 2.3). These benchmarks help show Easy of star-ng a business Figure 2.3 Has starting a business become easier over time? Procedures (number) 18 STARTING A BUSINESS Youth entrepreneurship ecosystem in Egypt Equally helpful may be the benchmarks provided by what is possible in making it easier to start a business. the economies that over time have had the best And changes in regional averages can show where performance regionally or globally on the procedures, Egypt, Arab Rep. is keeping up and where it is falling time, cost or paid-in minimum capital required to start behind. a business (figure 2.3). These benchmarks help show what is possible in making it easier to start a business. And changes in regional averages can show where Egypt, Arab Rep. is keeping up and where it Figure is falling 2.3 Has starting a business become easier over time? behind. Procedures (number) Time (days) Time (days) The World Bank, Doing Business 2013, Economy profile: Egypt ENTREPRENEURSHIP IN EGYPT 46

47 STARTING A BUSINESS Where do the region s economies stand today? Youth entrepreneurship ecosystem in Egypt How easy is it for entrepreneurs in economies in the Arab world to start a business? The global rankings of these economies on the ease of starting a business Ease of star-ng a business Figure 2.1 How economies in the Arab world rank on the ease of starting a business suggest an answer (figure 2.1). The average ranking of the region and comparator regions provide a useful benchmark. The World Bank, Doing Business 2013, Regional profile: Arab Source: Doing Business database. The indicators underlying the rankings may be more revealing. Data collected by Doing Business show what it takes to start a business in each economy in the region: the number of procedures, the time, the cost ENTREPRENEURSHIP and IN the EGYPT paid-in minimum capital requirement (figure ). Comparing these indicators across the region and with averages both for the region and for comparator regions can provide useful insights.

48 Youth entrepreneurship ecosystem in Egypt Things to further improve: Reform the (complete) educa-on system Introduce new entrepreneurs- tailored funding mechanisms (government, banks, private sector) Do more with policy to support entrepreneurs Foster entrepreneurship culture (success stories) Beter connect universi-es with the private sector (e.g. through business incubators, TTO, etc.) GEM Egypt Report 2012 (Na-onal Experts Survey) ENTREPRENEURSHIP IN EGYPT 48

49 Business incubators ENTREPRENEURSHIP IN EGYPT 49

50 Incubator definiaon Business incuba4on catalyses the process of star4ng and growing companies, providing entrepreneurs with the exper4se, networks and tools they need to make their ventures successful. Incuba4on programs diversify economies, commercialize technologies, create jobs and build wealth. (Na-onal Business Incubators Associa-on) Incubators are generally characterized by following features: A small management team with core competencies 4 main roles Selec-on: atrac-ng, selec-ng and admipng the most promising entrepreneurs and their business ideas Infrastructure: A managed working space with shared facili-es providing logis-cs support Business support and monitoring: coaching, mentoring, training, financial and innova-on services Media-on and networking: connec-ng entrepreneurs to tangible and intangible resources, which can be internally or externally available ENTREPRENEURSHIP IN EGYPT 50

51 Incubator concept Resources (human capital, technologies, supports, capital, etc.) Entrepreneurs Business Incubators Intermediaries Markets (suppliers, customers, etc.) Incubators have a twofold objec-ve: Business competence development (individual) Entrepreneurial ecosystem development (individual & collec-ve) ENTREPRENEURSHIP IN EGYPT 51

52 Incubator history Rela-vely old concept More that 50 years old Started as a shared spaces for new ventures in 1959 in Batavia, NY (USA) Had three main development phases 1 st genera-on: Infrastructure 2 nd genera-on: Business support 3 rd genera-on: Networking and value chain Business incubators are being slowly overtaken by business accelerators Source: Scaramuzzi, E. (2002). Incubators in Developing Countries: Status and Development Perspec-ves (pp. 1 35). InfoDev. Washington DC. ENTREPRENEURSHIP IN EGYPT 52

53 Incubator history ENTREPRENEURSHIP IN EGYPT 53

54 Impact of incubators In terms of job crea-on, NBIA es-mates that North American incubators have generated about 500,000 jobs since 1980, and every 50 jobs created by an incubator client gene rate another 25 jobs in the community As regards to developing countries, incubatee survival rates can also be very high, and tend to rank above 85 percent in countries with strong support from the government and -ght links with the university system, like for example in Brazil or China ENTREPRENEURSHIP IN EGYPT 54

55 Incubator types Incubator models may vary according to mul-ple dimensions: Mandate For- profit Non- profit Sponsorship Public (governmental, academic, NGO) Private (corporate, investors- supported) Mixed Focus Niche (technology, social) Mixed- use Sector Single Mixed Loca-on Physical Virtual ENTREPRENEURSHIP IN EGYPT 55

56 Accelerator definiaon Sub- type of business incubators Rela-vely recent concept, started in the US Y Combinator (Silicon Valley, US) in 2005 Techstars (Colorado, US) in 2006 A business accelerator is an intensive (usually 3 months), business program which includes mentorship, educa4onal components, networking and aims at growing business rapidly, ending in demo- day. Usually an entrepreneur moves into a shared office space with other new founders for a period of 4me to work under the tutelage of advisors and experts to grow their business rapidly. In exchange for the expert mentoring, exposure to investors/future capital and cash investment that entrepreneurs get from the accelerator, the entrepreneur gives a por4on of his or her company s equity to the partners of the program. ENTREPRENEURSHIP IN EGYPT 56

57 Accelerator definiaon The accelerator programmes consist of five dis-nguishing elements (Chris-ansen, 2009): Funding, typically to the seed level Company founders are small teams with technical backgrounds Each cohort is supported for a defined period of -me Educa-on programme focusing on business advice & product advice Networking programme to meet and/or contact other investors and advisors Programmes may or may not include: Office space, whether free or subsidized A Demo Day for funded companies ENTREPRENEURSHIP IN EGYPT 57

58 Accelerator definiaon NESTA organisa-on defini-on of accelerators (Miller & Bound, 2011): Provision of pre- seed investment, usually in exchange for equity A focus on small teams not individuals Time- limited support comprising programmed events and intensive mentoring An applica-on process that is open yet highly compe--ve Start- ups supported in cohort batches or classes ENTREPRENEURSHIP IN EGYPT 58

59 Accelerator types Similar to incubators Mandate For- profit Non- profit Sponsorship Public (governmental, academic, NGO) Private (corporate, investors- supported) Mixed Focus Niche (technology, social) Mixed- use Sector Single Mixed Loca-on Physical Virtual ENTREPRENEURSHIP IN EGYPT 59

60 Incubators vs. Accelerators Business accelerator usually have a greater focus on companies entering or growing in a na-onal or global market Business accelerators will generally offer all of the services offered by a business incubator The key difference is the level of hands- on involvement by accelerator management which should increase the chances of success Business accelerators are more likely to be financed by private investors (venture capitalist and business angels) looking for an opportunity to finance growth poten-al through defined ac-on plans ENTREPRENEURSHIP IN EGYPT 60

61 Business incubators in Egypt ENTREPRENEURSHIP IN EGYPT 61

62 Incubators in Egypt First ini-a-ves incepted almost 20 years ago (1995) by Social Fund for Development in Egypt (SFD) - htp:// The Egyp-an Incubator Associa-on (EIA) - planning for, and providing assistance in, the crea-on of different types of incubators suited to local condi-ons The Egyp-an incubator programme - development of a sustainable network of incuba-on- related facili-es that would spur the compe--veness and produc-vity of SMEs Number of incubators is increasing in the last couple of years, mainly in Cairo area ENTREPRENEURSHIP IN EGYPT 62

63 Incubators in Egypt Vast of governmental ini-a-ves / projects did not fully succeed (not ac-ve today / no info on the web): Tala Incubator Mansoura University Technology Incubator Benha Technology Incubator Doueika Virtual Incubator Sixth of October City Incubator Assiut Incubator Ain Shams Incubator Aswan Incubator Tenth of Ramadan Incubator Tabbin Ins-tute for Metallurgical Studies Incubator ENTREPRENEURSHIP IN EGYPT 63

64 Incubators in Egypt Overview of ac-ve incubators/accelerators in Egypt AUC Venture Lab Alexandria University Technology Incubator Technology Innova-on and Entrepreneurship Centre (TIEC) Flat6labs GrEEK Campus GESR Incubator Nahdet el Mahrousa JuiceLabs TechWadi Sprint Sustaincubator Ideavelopers Junior Labs ENTREPRENEURSHIP IN EGYPT 64

65 Incubators in Egypt Name Type LocaAon AcAvity Length (months) Seed Funding Amount 1 AUC Venture Lab Incubator Cairo area Tech 5+8 Yes $2.800? 2 Alexandria University Incubator 3 Technology Innova-on and Entrepreneurship Centre 12 GrEEK Campus Co- working ENTREPRENEURSHIP Cairo IN EGYPT Tech - No space Equity Incubator Alexandria Tech???? Incubator & Accelerator Cairo area ICT/Tech 12 No Nahdet el Mahrousa Incubator Cairo Tech/Social 24 No Sustaincubator Incubator Cairo area (4 loca-ons) 6 GESR Incubator Incubator & Accelerator Tech/ Sustainable 3-12 No - - Cairo area Tech/Social 6-12 Yes $25-65k <10% 7 Flat6labs Accelerator Cairo ICT/Tech 4 Yes $10-15k 10-15% 8 JuiceLabs Accelerator Cairo ICT/ Solware 9 TechWadi Sprint Accelerator MENA + Silicon Valley 6 Yes $20k <15% Tech 1 No Ideavelopers Accelerator Cairo ICT/Tech? Yes?? 11 Junior Labs Accelerator Cairo All - No - -

66 Incubators in Egypt AUC Venture Lab htp:// %20Lab.aspx Since 2013, first Egyp-an university incubator Mainly tech- based start- ups 6-10 companies twice per year Mainly ICT Cairo- area 5+8- month incuba-on Services: Funding (US$ 2,800) Workspace and access to AUC facili-es Business trainings, mentoring and coaching from the AUC s extended network Networking events Assistance with professional services including human resources and recruitment, communica-on, marke-ng and legal assistance Access to students for product tes-ng, class projects and interns ENTREPRENEURSHIP IN EGYPT 66

67 Incubators in Egypt Alexandria University Technology Incubator htp://alexandriauniversityinnova-onpark.com/? page_id=30 htp://au.alexu.edu.eg/english/mediacenter/news/pages/ sher- if aspx Since 2015 Mainly tech- based start- ups Alexandria? ENTREPRENEURSHIP IN EGYPT 67

68 Incubators in Egypt Technology InnovaAon and Entrepreneurship Centre (TIEC) incubator htp://-ec.gov.eg/en- us/departments/incuba-on/pages/default.aspx Since 2011 Mainly ICT, but also other tech- based Currently 18 companies, 18 graduates Examples: water and electricity consump-on reduc-on, solar street ligh-ng, improving agriculture produc-on, etc. Cairo- area 1- year incuba-on Services: No seed funding Up to EGP 120K in services only (consultancy services, ICT and marke-ng) Work space and basic (hardware and solware) tools during incuba-on Access to technical, subject- mater advisory, business consul-ng and mentoring Business compe--ons (Start IT) Virtual incuba-on ENTREPRENEURSHIP IN EGYPT 68

69 Incubators in Egypt Technology InnovaAon and Entrepreneurship Centre (TIEC) accelerator htp:// US/Accelerator/Pages/about.aspx Since rounds (5-15 start- ups/round) Mainly ICT, but also other tech- based TIEC Premises (Smart Village, Cairo), Alexandria University (Alexandria), Mansoura University (Mansoura), Assiut University (Assiut) 12 weeks accelera-on Business idea into business plan Services: No seed funding Mentoring and coaching Business plans evalua-on by a panel from TIEC, industry and academia experts The qualified teams will pitch their concepts and prototypes before investors ENTREPRENEURSHIP IN EGYPT 69

70 Incubators in Egypt Nahdet el Mahrousa htp://nahdetelmahrousa.org/ Since 2003, first Egyp-an social enterprise incubator Mainly tech- based social start- ups 40 social enterprises incubated Youth development, educa-on and employment, health services, environment, scien-fic advancement, arts and culture, and iden-ty Cairo- area Up to 24- month incuba-on Services: Capacity building Technical support Infrastructural support Networking and connec-ons ENTREPRENEURSHIP IN EGYPT 70

71 Incubators in Egypt Sustaincubator htp:// Since 2014, incubator Mainly tech- based high- impact start- ups Water, food, renewable energy and IT- enabled solu-ons suppor-ng sustainable causes 4 loca-ons in Egypt, all in Cairo area 6th of October City, Cairo- Alexandria Desert Road, Beni Suef, Maadi (office space) 3- to 12- month incuba-on (for 10-20% of equity) Services: Mentorship Training and events Access to seed investors aler the incuba-on or crowdfunding pla orm Networking Cloud services Demo day ENTREPRENEURSHIP IN EGYPT 71

72 Incubators in Egypt GESR Incubator htp://gesr.net/en/incubator Misr El- Kheir founda-on Since 2011, both accelerator and incubator Mainly tech- based social start- ups Energy, food, water, health and educa-on Cairo- area 6- to 12- month accelera-on/incuba-on Services: Seed funding (EGP k = $25-65k, for <10% of equity) Co- working space Access to GESR lab (high- tech) Networking opportuni-es Entrepreneurship- focused business training and mentorship Technical and administra-ve support ENTREPRENEURSHIP IN EGYPT 72

73 Incubators in Egypt Flat6labs htp:// Since 2011, accelerator Mainly ICT, but also other tech- based Currently 8 companies, 38 graduates Examples: renewable energy solu-ons, solar powered solu-ons, other ICT- based (mobile/ecommerce) firms Cairo- area 4- month accelera-on Services: Seed funding (EGP k = $10-15k, for 10-15% of equity) Strategic mentorship A crea-ve workspace Entrepreneurship- focused business training and mentorship Direct support and exposure through an expansive network of partner en--es, mentors and investors A mul-tude of perks (up to $300k) Demo day ENTREPRENEURSHIP IN EGYPT 73

74 Incubators in Egypt JuiceLabs htp://juicelabs.me/#tagline Since 2013, accelerator Mainly ICT (solware) focused start- ups A couple of start- ups per cycle Cairo 6- month accelera-on Services: Seed funding ($20k for <15% of equity) Mentorship Technical support Infrastructural support Networking and connec-ons for further funding ENTREPRENEURSHIP IN EGYPT 74

75 Incubators in Egypt TechWadi Sprint htp://techwadi.org/programs/accelera-on/ Since 2014, accelerator Mainly tech- based high- impact start- ups 3 in companies in 2015 MENA Silicon Valley connec-on Collabora-on with Google for Entrepreneurs and MIT Compe--on 1- month accelera-on Services: Posi-oning for fundraising with relevant SV investor Coaching Mentorship Networking Cloud services Demo day ENTREPRENEURSHIP IN EGYPT 75

76 Incubators in Egypt Ideavelopers htp:// Since 2004, accelerator (VC- funded) Mainly early stage ICT high- impact start- ups 17 companies (~$25 mil) Cairo area Length unknown Services: Provide capital Mentoring Networking Exposure ENTREPRENEURSHIP IN EGYPT 76

77 Incubators in Egypt The GrEEK Campus htp:// Since 2014, co- working space & future technology hub Mainly tech- based high- impact start- ups 40+ companies currently present Cairo Collabora-on with Flat6Labs and AUC Services: Co- working space Technical support ENTREPRENEURSHIP IN EGYPT 77

78 Incubators in Egypt Junior Labs htps:// tab=overview Since 2014, programme Mainly ICT Cairo area (the Greek Campus) Services: Training Inves-ng Mentoring ENTREPRENEURSHIP IN EGYPT 78

79 Incubator- related research quesaons and there is only a handful of incubators in Egypt, par-cularly outside Cairo ENTREPRENEURSHIP IN EGYPT 79

80 Incubator- related research quesaons What are the best prac-ces among the exis-ng incubators? What is the baseline selec-on criteria and process? What cons-tutes the best por olio of provided services? What are the most important service of incubators? (mentoring, coaching/training, funding, networking, exposure to media, legal/administra-ve support, co- working space)? What are the most important differences for incubator for incuba-ng firms ac-ve in different sectors? What are the most important differences for incubator stemming from different sponsors (i.e. goals/objec-ves)? What length of incuba-on is the most appropriate? And how it differs for different sectors of start- up ac-vity? ENTREPRENEURSHIP IN EGYPT 80

81 Incubator- related research quesaons Is accelera-on more effec-ve model of incuba-on? How can the number of incubators be increased? What are the main barriers? What are the best ways to atract external stakeholders? Entrepreneurs? Mentors? Trainers? Investors? NGOs and interna-onal organisa-ons? ENTREPRENEURSHIP IN EGYPT 81

82 QuesAonnaire Help us beter understand your view on business incubators, their role and poten-al in Egypt Complete a brief survey Summary of the results on Thursday + discussion ENTREPRENEURSHIP IN EGYPT 82