By Mohamed Alaa El-Din
A15 is considering pumping new investments worth $3m, as part of its regional expansion plans. The company is also studying investment in four local companies, while considering exiting others. A final decision on the matter will be made by the end of October.
CEO of A15 Fadi Antaki told Daily News Egypt in an interview, that the company’s business worth amounted to about $100m per year.
How do you view the current investment climate in the Egyptian market?
The investment climate is doing well during the current period compared to the past three years. It looks like it will move forward during the coming period. It is currently considered a promising opportunity for companies investing in the field of entrepreneurship and start-up companies, a sector which has recently witnessed good activity since it is easy for foreign companies and funds to invest in the Egyptian market and contract with Egyptian companies.
All this reflects the improvement of the investment climate of the country, as well as the importance of investment opportunities in emerging companies sector and entrepreneurship.
What is the story behind turning OTVentures into A15?
The brand name was changed when the investment fund Accelero Capital acquired Orascom Ventures, which is known as OTVentures, in a deal worth EGP 140m in December 2014. The deal included more than 14 subsidiary companies of OTVentures.
What are your plans for the Egyptian market in the upcoming period?
A15 includes about 16 subsidiary companies all working in the field to provide various technological services. Perhaps the most prominent feature of our strategy is to focus on supporting our affiliates and provide the appropriate environment for them to expand with their activities in both local and foreign markets.
We also focus on expanding with our investment in emerging companies, particularly companies that have reached a certain stage in the sector which they operate in. We call this stage the growth stage, where an emerging company will have exceeded the idea stage and was able to provide certain services or products that have revenues. At that stage, companies need more investment to support their growth rates to drive a better profit margin.
We are following a new strategy within the company to work, support, and invest in creative ideas emanating from the company’s employees, to turn some of these ideas into companies. This happened recently with a number of ideas we had here. We held an internal competition among subsidiary companies, where a number of ideas were turned into functioning companies, such as El3ab, which provides gaming services on social networking websites. This company is expected to enter the fast growth stage very soon.
We now have 16 subsidiary companies, some of which are owned by us such as, YallaKora, Connect Ads, Arbu Plus, LDC, Link Development, and Arab Finance. There are some other companies that we invested in and own some of their shares, including Mazzika, E7gezly, TPay, Otlob, El3ab, Perfomly, Dish Dino, and Wuzzuf.
What is the expected size of investments you will pump in the upcoming period?
We aim to pump about $3m in emerging companies in the upcoming period. We will ensure those investments will be pumped in regional markets, as they come within the company’s regional expansion plans. Our total annual business size is estimated at $100m, with a growth rate of 40%. We have 1,000 employees working for us in different companies and we provide services for over 200 million users via 600,000 digital platforms in 20 countries in the Middle East and Africa.
At a local level, how many companies will you invest in?
We are currently considering investing in four local companies working in the different fields of communications and information technology. We should finish those investment deals by the end of this year or the beginning of the next, according to study results.
What are the most important key points that you look for in companies you invest in?
Interdependence and integration between the company’s work team. This is the nucleus that indicates the extent of the continuity and growth of the company. The second most important thing is the work plan, in terms of several aspects, including the mechanism for profit making, timeline towards revenues, marketing methods, profit margin ratio, sales plans, and other important financial plans.
How do you view the entrepreneurship sector’s leadership in Egypt now?
There has been increasing activity in the sector. More creative ideas are emerging and more companies are forming. There has been increasing interest, investment, and funding from foreign companies and funds for local emerging companies. You can see this in many examples, such as the recent deals of the Egyptian search engine Yaoota, which has received investment from an Emirati investment fund. Wuzzuf received funding from a Dutch investment fund and Jobzella was funded by a Saudi company.
In addition, there have been more conferences and workshops for entrepreneurship and start-up companies. They help encourage companies and at the same time reflect the attraction that sector has been seeing.
Is there cooperation with government agencies in the entrepreneurship sector?
We already have cooperation with the Technology, Innovation and Entrepreneurship Center within their incubator project that targets attracting innovative ideas, supporting them, and presenting them to investors for financing.
Does A15 stipulate acquisition of a controlling stake in companies that it invests in?
We used to do so to ensure matching the companies’ work plans to that of the mother company. However, it has changed now and we no longer stipulate any stakes in companies we invest in.
What is the investment value that A15 pumps into emerging companies?
We start at about $100,000 and go up to $1m, depending on the company itself and the anticipated growth rates.
Are you considering exiting any company right now?
Exiting companies is vital to direct investments to other companies. Indicators point to exiting emerging companies after five years of pumping investment to restore the value of the investments, in addition to a profit margin and re-pump these investments in other companies.
We have already been studying exiting a number of companies and we will announce that by the end of October if we reach a final decision.
What are your plans to expand regionally?
We are focusing on expanding externally, particularly towards Africa. We plan on doing that through one of our affiliate company, which offers its services there in the software development in cooperation with Microsoft.