Covid has been a boon for Egypt’s startups, but there’s still much to be done by way of legislative and regulatory changes to bring in more investment. That was the key takeaway from a webinar on entrepreneurship and venture capital in MENA, hosted by the Columbia Entrepreneurs Organization.

Tech startups in particular have been having their day in the sun over the past year, with the pandemic pushing them “out of their comfort zones” to come up with innovative services and solutions when other businesses were faced with covid-related limitations, HOF Capital Managing Partner Onsi Naguib Sawiris said. This innovation push helped young businesses to better position themselves for investment from the local and regional venture capital market, Sawiris said.

The numbers don’t lie: Our super-high-tech internal trackers tell us that fintech and e-commerce startups accounted for the lion’s share of VC investment landed by startups last year (by volume, at least), with 12 and 11 transactions apiece. And tech-related firms together accounted for another six investments, putting the tech space as a whole way ahead of other sectors. Overall, our data suggests that Egyptian startups raised substantially more in 2020 than they did the year before: USD 100 mn, compared to over USD 88 mn in 2019, with the average transaction being about 2x larger than the previous year.

And while we’re on the topic of innovation, a word of advice for budding entrepreneurs: Don’t blindly mirror a business that found success in a western market. Startups are most successful when they cater to specific local or regional needs and have a deep understanding of our neck of the woods, AUC Venture Lab founder and director Ayman Ismail said.

With a “hot venture capital market and strong talent,” we have the market fundamentals. But there’s a catch, says Global Ventures Managing Director Amal Enan: Startups need to navigate a maze of regulatory unknowns, which are challenging enough for more established businesses. “You need to get your hands dirty to do it right,” she says. Reworking Egypt’s legislative and regulatory landscape for startups and venture capital funding would go a long way in putting Egypt ahead of the rest of the region in terms of attracting investments, Sawiris says.

Even though it is picking up steam in Egypt, we don’t have a “sophisticated” venture capital market, says AAF Management General Partner and CFO Omar Darwazah. In a more advanced VC market, we would see more corporate venture capital (outfits like CIB’s CVentures), angel investors, pre-IPO investors, and fewer seed accelerators or incubators. Egypt isn’t at that stage yet in large part because of an ambiguous regulatory environment, Darwazah said.