CAIRO: The US State Department’s Global Entrepreneurship Program (GEP) business competition will conclude during the second week of Jan. 2011, in which one or two innovative start-up firms will receive a cash prize in order to jettison their ambitions.
The US government believes — along with many industry insiders and commentators — that Egypt and the Middle East as a whole are poised to become centers of entrepreneurship and robust economic growth.
The GEP’s launch also comes at a critical juncture in Egypt, where there are major, ongoing roadblocks toward cooperation between small- and medium-sized enterprises (SMEs), as well as between investment banks and private equity firms.
SMEs have been relentlessly pleading for funding from investment firms, funding that they cannot succeed without, and have accused firms of strictly catering to larger companies that present little (if any) risk.
While such criticisms carry weight, investment firms point to opaque financial data and inept managerial skills often found in the bulk of local smaller-sized firms.
As a result, for investment banks and private equity firms, Egyptian SMEs often pose too high of an investment risk.
In the face of such obstacles, the GEP initiative was launched in 2010 in order to bolster the region’s private sector potential and accelerate the process of economic growth — not to mention enhance private sector cooperation between US and Middle Eastern businesses.
In fact, according to the US State Department, US investors are eager to direct their capital toward local SMEs, which the GEP — acting as a platform — allows.
The program also fits within the wider framework of the US’ objective of promoting market-oriented economic reform throughout the region by way of investment.
Besides the US State Department’s involvement, the Egyptian Ministry of Communication and Information Technology (MCIT) is co-sponsoring the initiative; the GEP includes a myriad of partners, such as the Nile and American Universities, Google, the American Chamber of Commerce, Ernst and Young, and venture capital firm Sawari Ventures.
While the two monetary awards are modest ($25,000 and $50,000, which have yet to be confirmed officially), GEP Senior Advisor and Director Steven Koltai explained via video conference that the award sum is simply a gesture to reward and highlight important start-up investments to local and foreign investors.
Upon receiving such recognition, it is hoped that angel investors will snatch up the opportunity to partner up with hopeful start-ups to ensure that the young firm gets off the ground and that investors get a return on their investment.
While the competition is open to firms that operate in every sector of the economy, and must demonstrate a clear vision for a new and innovative process, product or service, Koltai noted that — given MCIT’s strong involvement — ICT-oriented firms will likely be paid particular attention.
Koltai is confident that the US State Department’s initiative will bear fruit.
Citing delegation visits by prominent American investors to both Jordan and Lebanon in June of this year, Koltai highlighted that two different angel investors — one of whom works for Google — decided to inject $50,000 into two local start-up firms.
In Lebanon, a firm that specializes in 3-D marketing for 3-D movies at the cinema caught the eye of one angel investor, while an ICT firm in Jordan piqued the interest of another.
For Koltai, these two illustrations are testimony of the likelihood that the GEP program will be a success in Egypt.
In fact, he and the rest of the GEP program are so certain about the entrepreneurial spirit in the Middle East that GEP is already being expanded within and beyond Egypt’s borders.
For example, in Egypt, GEP will open offices based in Cairo and Alexandria in order to push all aspects of the entrepreneurship program forward.
Several areas of activities have been outlined: identifying opportunities, training, connecting investors and start-ups, sustaining new start-up firms, opening channels to funding, and enabling policy decisions.
The offices have been allotted $1 million in funding for 2011–12 through USAID, a US government development program.
During the close of the competition in Cairo, which will take place between Jan. 9 and 12, the office’s head will be announced to the public.
