Cairo Angels' Hossam Allam on Democratising Investing and Their Gamechanging New Syndicate Fund
Cairo Angels has announced a $3M fund, bringing a decade of investing experience to the wider community - but it's just the tip of a much bigger iceberg, as founder Hossam Allam writes.
Is it me or has angel investing suddenly become all the rage across the Middle East? I attended a Saudi business angel summit last month and found scores of active or prospective angels and maybe a dozen up-and-coming regional angel networks. Sophisticated and knowledgeable investors seeing a real opportunity in the startup asset class.
Our region has closed some 500 transactions in the past two years, half of which came from Egypt alone. With successful exits in Careem and Souq, and a unicorn in Fawry, the ecosystem is well on its way to achieving great things.
Angel networks and clubs are popular because they concentrate money and experience in one place driving better deal flow and investment decisions. But where angel networks like ours struggle is that our members have day jobs. It’s hard for them to find time to study each opportunity rigorously.
An angel fund serves these people, and others in the community who also want exposure to the asset class at the usual angel ticket of average USD 20,000 per deal, but without the 10 hours of work.
Our intention is to take startup investing further to the left of the market, and in the process also return an element of flexibility and integrity, which we believe startups are asking for.
After ten years in the market and USD 3 million deployed in almost 30 companies, Cairo Angels is not only the leading angel network in Africa and the Middle East, but also a credible and trusted destination for early-stage ventures. We receive 300 applications per year, and with an average 25% pitch-to-close rate, we’re probably the most active investor in the region. A third of our portfolio has gone on to raise post-Series A rounds of funding, proving the collective wisdom inherent to angel networks.
While our members invest for premium returns, the Cairo Angels has never operated for profit, seeing itself more as an ecosystem builder by way of match-making supply and demand. This ethos will not change with the launch of a fund. That’s why we are waiving a fixed management fee entirely and will compensate our board and investment committee members only with ‘carry’: a share of returns on investment. When our investors make money, our committees make money. And any fixed costs will be borne by Cairo Angels and its board as part of our commitment to strengthening the ecosystem.
Our intention is to take startup investing further to the left of the market, and in the process also return an element of flexibility and integrity, which we believe startups are asking for.
The market is ready for a more democratic approach to startup investing and Cairo Angels is
ideally positioned to deliver it.
The Cairo Angels Syndicate Fund will be able to deploy capital faster than the club model can. And while it necessarily needs to operate independently of the Cairo Angels membership, to avoid conflicts of interest, it still benefits from that membership’s collective wisdom and Cairo Angels’ deal acquisition machine, driven in no small part by our in-house MINT incubator.
We are offering something unique. Our investors can choose which deals to access through the fund, and which they want direct, additional exposure to. Which deals they want to help study, and which they would rather leave to the experts. We bring the fun-factor of angel investing without the time commitment.
We have always been, and remain, sector agnostic, seeking to build a diversified portfolio for our investors. Between our investment committee members, our angel membership base and our partner networks, we have enough sectoral reach to evaluate opportunities as they arise. That being said, we do like pre-Series A transactions that are tech-enabled because they usually are lower cost to access and have higher scalability than the more terrestrial opportunities.
I believe that it falls to us to find new and unconventional ways to exit investments. The typical Silicon Valley model may not always apply, but we are uniquely positioned to market our pipeline widely to institutional investors and acquirers. Our intimate familiarity with all regional venture capital funds, our chairmanship of the Middle East Angel Investor Network, our cooperation with Microsoft in the ‘4Africa’ initiative, all place us at the junction of pre and post-Series A/B financing, which is exactly where we can deliver returns for our investors.
The market is ready for a more democratic approach to startup investing and Cairo Angels is ideally positioned to deliver it.
Learn more about Cairo Angels’ Syndicate Fund here.
