The economic fallout of the Russia-Ukraine war has left Egypt with soaring inflation, a higher import bill, declining foreign currency reserves and a depreciating pound.
At the same time, global macroeconomic challenges have placed a strain on start-up funding and deal levels worldwide.
Funding for start-ups in the Middle East and North Africa remained relatively flat in 2022, recording a total of $3.1 billion compared to $2.9 billion in 2021.
Egyptian start-ups raised $517 million last year, compared to $501 million in 2021. Egypt led the Mena region with 160 deals, but that is still a 3 per cent decline from 2021.
However, FinTech captured 29 per cent of funding in Mena, more than the transport and logistics and e-commerce sectors combined.
Invia’s founders all have a finance background and held senior roles at Beltone SME, a subsidiary of investment bank Beltone Financial that was set up in April 2020 to offer revenue-based financing for small and medium enterprises.
The Central Bank of Egypt has made financing micro, small and medium-sized enterprises, or MSMEs, a priority since 2016, when it issued a directive obligating banks to allocate 20 per cent of their credit portfolio towards such entities within four years. In 2021, the central bank increased that requirement to 25 per cent.
Invia is hoping to attract the financial institutions and banks that have the SME mandate by helping businesses reach the “investable” level.
It is dealing with three difficult variables at once — the global economic crunch and a declining economic situation in Egypt, as well as layoffs and spending cuts in the venture capital and start-ups space.
However, the depreciation of the Egyptian pound, which has halved in value to the dollar over the last year, may have an upside.