Apply, accelerate, grow – three little words sum up the process of Egypt’s startup accelerator Flat6Labs. Originally founded by Sawari Ventures and the American University in Cairo, Flat6Labs opened its doors in 2011, and hosted 46 startups so far, providing them with funding, office space, mentorship, training, legal support and networking. Egypt Business Directory sits down with its Managing Director Ramez Mohamed, a graduate of the Faculty of Computer Science at Alexandria University and the former Head of Mobile App Department in Sarmady.
Accelerator vs Incubator – What is the difference?
Accelerators emerged in 2005 in the United States and since then, they grew rapidly. The main difference – in our opinion – is that accelerators are definite programs that get repeated every year and have a funding angle, besides providing office-space to startups. It also includes an educational part with mentors and trainings. It makes things faster and pushes entrepreneurs to succeed.
On the other hand, Incubators also have training, some legal and commercial services, but they go over a much longer period of time than accelerators. Incubators surround the startups and protect them, without definite entry and exit timings.
What are Flat6Labs' targets?
Our main responsibility and mission is to support entrepreneurs to build sustainable businesses.
As part of our regional targets, we opened three accelerators (Egypt, Saudi Arabia, Abu Dhabi) and we are planning to open up more in the region – maybe Lebanon, Turkey and North Africa. But the focus of 2015 will mainly be on Abu Dhabi.
From a local perspective, we are planning a new fund to accompany startups after they graduate. There is a huge gap in the market between the accelerator-stage and the Venture Capital stage. A fund in between will support our startups during this gap. We are also looking at launching a sector-specific accelerator in the market, such as hardware or content or ecommerce. We have been developing this concept and some partners are really interested in taking the idea a step further.
Competition between startups – Is it good or bad?
I really cannot see any competition between startups in Egypt, because there are barely more than three startups that target the same customer segment. Maybe there are more similar startups in the social entrepreneurship sector, and in that case I must say “The More, The Merrier”. For me, Egypt is a large market of 90 million people and there are so many challenges that no one is tackling the right way. Even if you take the solar energy market: we can have hundreds of startups in that field and the energy problem would still not be solved. However, competition from a commercial perspective is healthy for the market and the business. The good ones will stand, the bad ones will fall.
Corporates vs startups – Why would corporates support startups?
There are three types of corporates: First, we have the smart ones, who understand the startup culture, the new economy and were a startup themselves someday. Then we have those who do it as part of Corporate Social Responsibility (CSR). And last but not least, we find the companies who do not care and do not see potential there. And that is fine - not all the corporates in the world are expected to work with startups.
But I must say that most of the corporates we reach out to feel open about getting involved with entrepreneurs – and we pride ourselves in providing networking possibilities to our startups. And the trend is developing.
What impact does the startup scene have on the economy?
It is a tiny, but bright spot. I cannot talk about the huge impact we have had on society, but what I can say is that we have created an environment for entrepreneurs who have ideas and do not know where to start. This did not exist before Flat6Labs. Once we have a successful exit – which we will have soon – we can talk about how effective we were. Additionally, we have facilitated more than 350 high-impact job opportunities through 46 startups. And of course, we highly contribute to the ecosystem as a whole by reaching out to educational facilities and corporates.
What is missing from the ecosystem?
We need more capital. We have Venture Capitalists, accelerators, Angel Investors, non-profits, universities – and each one of them would tell you that they need more money. We need more accelerator ideas, more Venture Capital and more Angel Investors etc.
Do you need the government?
No and yes. We do not need the government to compete with us – we need it to facilitate and start promoting entrepreneurship in universities. It does not do anyone any good if the government opens up an accelerator. We are lucky that since the revolution, the private sector took matters into their own hands and started working on the ecosystem. We would not mind getting support from the government, but the ecosystem should be built by the private sector.