Egypt: Farid outlines financing tools to promote innovation, expand startups growth

Egypt's Ministry of Investment and Foreign Trade unveiled a package of financing tools to boost innovation and scale the country's startup ecosystem at the launch of the Startup Egypt event. Minister Mohamed Farid said the ministry, working with the General Authority for Investment and Free Zones (GAFI) and in cooperation with the Sovereign Fund of Egypt (TSFE), will pursue a mix of regulatory and funding measures including the use of convertible notes and the establishment of a venture capital (VC) company to be listed on the Egyptian Exchange (EGX). The measures are intended to mobilise institutional capital from insurance companies, pension funds and banks into the digital economy.

"Entrepreneurship highly contributes to driving global economic growth by offering job opportunities, stimulating innovation, and providing new solutions to economic and development challenges," Farid said, framing the policy push as both economic and social in scope.

The ministry and GAFI have already collaborated to develop the legislative and regulatory frameworks aimed at simplifying business procedures and improving the investment climate for startups. As part of that effort, officials indicated they will diversify financing mechanisms and explicitly cited expandable instruments such as convertible notes—securities that convert into equity under predefined conditions—as a priority to attract venture capital into earlier-stage companies.

Regulatory alignment will lean on existing standards, with officials noting the Financial Regulatory Authority (FRA) will provide benchmarks for market conduct and investor protection. In parallel, the planned VC vehicle supported by TSFE is designed to be listed on the EGX, creating a publicly traded channel for institutional investors to gain indirect exposure to startup returns while managing liquidity and governance concerns.

Implementation details and institutional roles

• Ministry of Investment and Foreign Trade: Leading policy and coordination with other state bodies.
• GAFI (General Authority for Investment and Free Zones): Developing legislative and regulatory frameworks to facilitate startups and streamline procedures.
• TSFE (Sovereign Fund of Egypt): Partnering to establish a VC company to be listed on the EGX, aimed at crowding in institutional capital.
• FRA (Financial Regulatory Authority): Expected to provide standards for financial instruments and investor protections, referenced by planners.
• Major financial institutions targeted: Insurance companies, pension funds and banks encouraged to increase indirect investments in startups.

At the same event, Basel Rahmy, CEO of the Micro, Small, and Medium Enterprises Development Agency (MSMEDA), provided a snapshot of agency-level support: "The agency has supported more than 209 startups," he said, underlining the number of ventures already reached by public support programmes.

Officials framed the VC listing on the EGX as a mechanism to broaden the investor base and mitigate the risk-return profile that typically deters large institutional allocators from direct startup investments. By converting early-stage venture exposure into a regulated, exchange-listed product, policymakers expect to make startup allocations more palatable to conservative balance-sheet investors such as insurers and pension funds.

Outlook: With the regulatory adjustments, convertible note adoption and a state-supported VC vehicle in the pipeline, Egyptian authorities anticipate stronger flows of capital into the digital economy. Success will depend on timely enactment of the legal frameworks developed with GAFI, clarity from the FRA on applicable standards, and the ability of the TSFE-backed VC to attract sufficient scale from institutional participants to meaningfully expand funding for startups nationwide.