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10 April 2022

ITIDA Signs Cooperation Protocol to Boost Investment in Startups

The Information Technology Industry Development Agency (ITIDA) has signed a cooperation protocol with the General Authority for Investment and Free Zones (GAFI) and the Financial Regulatory Authority (FRA). The protocol has been signed to create an attractive legislative and procedural environment for investment; find innovative solutions to suit the work nature of startups and facilitate their transactions; and create a thriving work environment for entrepreneurs to attract local and international investors to establish partnerships and finance startups in Egypt.

The protocol is part of Egypt’s efforts to create an investment climate and a strong, balanced and diversified competitive economy based on innovation and knowledge. Startups have become one of the most significant pillars of investment and job creation in Egypt. The startup sector has witnessed remarkable prosperity and steady growth in the volume of investments over the past years and is expected to witness further growth.

The protocol provides for encouraging investment in Egyptian startups, attracting capital and fund, and fostering more local, regional and international partnerships. This contributes to increasing the added value of the Egyptian economy, making Egypt a regional and international hub for innovation and entrepreneurship-based technology.

According to the protocol, GAFI will prepare a unified form for the shareholders’ agreement to incorporate startups, verify the validity of the initial evaluation of startups by estimating the investment required to start and run the business, and determine the appropriate timing and method for injecting capital through public offerings, mergers, or acquisitions.

FRA will establish regulations facilitating the transfer of ownership of companies and entities that engage in venture capital activity by investing in startups through financing tools that can be converted into shares. It will also set procedures for transferring ownership of shares in startups to ensure the implementation of ownership transfers in the stock exchange.

Meanwhile, ITIDA will provide more protection for minority investors in startups through new mechanisms, such as including appropriate clauses in shareholders’ agreements. In addition, ITIDA will support the creation of venture capital funds, and carry out training and professional programs to create a talent pool to serve startups.

ITIDA, in cooperation with Deloitte, has forged a comprehensive five-year strategy, funded by the United States Agency for International Development (USAID). The strategy stands on four main pillars: boosting and advancing the startup ecosystem, facilitating the access of startups to funds and investments, developing technological skills and increasing the number of professionals while creating an environment conducive to entrepreneurship and creative thinking, and facilitating penetration into global markets through a plan for promotion and marketing on a global scale.

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