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Egypt unveils new regulations to facilitate startup financing

The move is an indication of the country’s major steps to foster investments and entrepreneurship.

Egypt unveils new regulations to facilitate startup financing
[Source photo: Anvita Gupta/Fast Company Middle East]

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Egypt is implementing new measures to improve its business and investment ecosystem.

The nation’s Financial Regulatory Authority has unveiled new regulations designed to facilitate the financial assessment of startups, ensuring their access to funding through diverse channels.

These new regulations enable startups to secure essential funding for their growth, expansion, and overall business development. It encompasses stages of emerging companies, from pre-profitability phases to strategies following investment exits.

One of the new factors that has been introduced is using the venture capital valuation method. With a calculated approach, it estimates a startup’s worth based on parameters such as projected exit value.

The FRA has also introduced stipulations for the valuation of startups. These requirements involve evaluating their strengths and weaknesses, alignment with governance principles, and creditworthiness.

Additional requirements encompass evaluating startups’ tangible and intangible assets and potential for future profitability.

“The new rules cater to startups’ need for securing financing through different means to expand, enter new markets, and add new products, activities, and solutions,” said Mohamed Farid, Chairman of the FRA.

This initiative underscores Egypt’s significant strides to promote investments and entrepreneurship. In July, Prime Minister Mostafa Madbouly directed establishing a permanent cabinet unit tasked with formulating policies, laws, and regulations to facilitate the expansion of the startup ecosystem.

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