Egypt's Financial Regulatory Authority Issued New Regulations to Make Startup Financing Easier

By Staff Writer, 31 August 2023

The Egyptian Financial Regulatory Authority (FRA) has implemented updated regulations for evaluating startups' financial status, facilitating their access to financing through various channels. These regulations encompass different stages, ranging from early phases before profitability to strategies after investor exits.

Utilizing the venture capital valuation approach is one of the new methods that have been presented. It is a methodical technique for calculating the theoretical value of a startup based on factors including the projected exit value, which is the expected valuation of the company in the near future.

Along with examining a startup's weaknesses and strengths and how closely they follow governance rules, the FRA has also created requirements for startup valuation. These requirements include evaluating a startup's credit trustworthiness as well as its strengths and limitations.

Other requirements were also added, like the assessment of startups' tangible and intangible assets, and their ability to achieve profitability in the future.

"The new rules cater to startups' needs 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.

Egypt has recently taken serious measures to improve its business and investment climate. In July, Egypt's Prime Minister Mostafa Madbouly gave directions for the establishment of a permanent cabinet unit assigned to proposing policies, laws, and regulations that ensure the growth and prosperity of local startups.

The nation has made significant efforts to promote investments and entrepreneurship, and those efforts have been successful. With a total of $45.7 million in startup funding in December, the nation led the Middle East and North Africa (MENA) area.

According to the country's State Ownership Policy Document, the private sector's contribution to the economy should rise from the present 30% to 65%.

Source: Ahram Online


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