Hard Times for Egypt's Entrepreneurs
What's it like to be a business owner in Egypt?
For starters, you're drowning in red tape. You're struggling to raise capital in a culture that doesn't embrace risk. And now, as thousands of protestors clash with police on the streets of Cairo, you're making do without your BlackBerry.
Reuters this week shed light on the business climate in the world's most populous Arab country:
Entrepreneurs willing to put up with Egypt's snarled and dangerous roads say they struggle to find the talent they need in a creaking education system, face mounds of paperwork and must bribe bureaucrats to keep businesses afloat.
The same can be said for India, South Africa and many other developing nations. But the unrest in Egypt—fueled by frustrations over government corruption, economic stagnation and a lack of political freedom—is casting a shadow over recent efforts to kick-start growth within the country's fledgling start-up community. President Obama's Global Entrepreneurship Program chose Egypt as its pilot country and sent delegates there just a few weeks ago.
Angel investors Seth Godin and Christopher M. Shroeder took part in the delegation. They liken Egypt's start-ups to those in the United States before the dot-com heyday—raw, unglamorous, but hopeful and determined as hell. Here's what they took away from the trip:
"There are a variety of reasons why Egypt could fail in its attempt to become a start-up mecca: poverty, political instability, poor education, lack of rule of law, difficulty to raise capital and cultural norms that do not embrace risk. For example, it takes two days to form a new company in Egypt, but takes two years to dissolve one, which is problematic because without bankruptcy reform, it is impossible for entrepreneurs to 'fail fast' and move on to their next venture.
"Despite these risks, there are a number of advantages that Egypt has in its favor: innovation is real, valuations are reasonable, engineering talent is available, real estate is cheap, and the government is motivated to help foster entrepreneurial success stories as a means of inspiring its disaffected youth. Egypt represents a market of more than 80mm people, and is the gateway to the broader MENA market of 320mm people (larger than US, Brazil or Russia). The region's growth rates of mobile penetration and Internet usage are among the highest in the world."