Faculty of Economics and Political Science

Cairo University

Entrepreneurship and its Effect on Egypt’s Economic System

Group Members

MennaTallah Mohamed Gamee

Mohamed Abd- elnour
Mohamed Khorish
Mostafa Rageb
Sondos Ahmed Ali

Section. No: B1
First Year
Instructor: Dr. Nevert Abd El Ghani
Year: 2017-2018
Thesis: This is Research presents the topic of Entrepreneurship which has
become a common word between us in Egypt at the last few years, the
research’s primary focus is Economists’ views of Entrepreneurship in addition
to Egyptians’ perspectives towards it. We hope to challenge the reader to look
at the importance of understanding how it works.

I. Entrepreneurship concept

A. The core meaning of Entrepreneurship

B. IDE VS. SMEs
C. Problems and obstacles on Entrepreneur path

II. The Innovation theory

A. What is innovation?
B. How do people misdefine it? ( Egypt as a case study )
C. Business innovation and the use of ICT
D. Can we teach people to be innovative

III. Investment in Startup’s Sectors in Egypt

A. Provide funding and sustainability

B. How do startups influence Economic Growth
C. Government responsibility towards Entrepreneurs
D. Projects that have an Economic and a social impact in Egypt
 Contents

Introduction 1
1- Entrepreneurship concept 2
The core meaning of Entrepreneurship 2
Process of entrepreneurship 2
IDE VS SMEs 5
Small and Medium Enterprise 5
Innovation-Driven Enterprise
Problems and obstacles on Entrepreneur path 7
Functions of entrepreneurship 7
Barriers to entrepreneurship 7
2- The Innovation Theory 10
What is Innovation? 10
How do people misdefine entrepreneurship? 11
Business Innovation and the Use of ICT 14
Can we teach people to be innovative? 16
3- Investment in Startup’s Sectors in Egypt 21
Provide funding and sustainability 21
Sustainability 23
Accelerators Programs 24
Incubator programs 24
How do startups influence Economic Growth? 25
McDonalds “This will go anyplace. Anyplace!” 26
Forces for and against Entrepreneurship 27
 Government responsibility towards Entrepreneurs 28

Projects that have an economic and social impact in Egypt 29

Conclusion 31

Bibliography 32
 Introduction:

Entrepreneurship plays a fundamental role in a capitalistic economy,

entrepreneurship is the fuel for economic growth and expansion. The
difficulties in defining “who entrepreneurs are?” entrepreneurship is an
economic Change agent with knowledge, skills, initiative, drive and spirit of
innovation to achieve goals. It identifies and sizes opportunities for economic
benefits.
Nature of entrepreneurship is creation of an enterprise, it involves creation
and an operation of an enterprise.
Chapter 1- we need to think together about the real meaning of the
entrepreneur, for being this person that required many things to do instead of
talking, it is not a game but it is business.

Chapter 2- The Innovation is the result of brainstorming in your mind, in this

part you can set off your inspiration and imagine your idea can be true. Many
people dream and create ideas but not all of them begin. If you want to
achieve your goals, you must create your innovation system with a right
business modeling.

Chapter 3- Here we review the entrepreneurial statue in Egypt, this part is

based on researching for economic theories and many examples for Firms
and startup could catch a high cash flow.

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 Chapter 1

Entrepreneurship concept

 Editors :
MennaTallah Mohamed Gamee
1- The core meaning of Entrepreneurship
2- Problems and obstacles on Entrepreneur path
Sondos Ahmed Ali
1- IDE VS SMEs
A. The core meaning of Entrepreneurship:

Entrepreneurship is process of creating something new with value by

devoting the necessary time and effort, assuming financial, psychic and
social risks and receiving the resulting reward. It is also defined as the
dynamic process of creating incremental wealth.
It is the ability to create and build a vision from practically nothing.
In all the definitions of entrepreneurship we are talking about a kind
behavior that includes:-

1-initiative taking
2-organizing and reorganizing of social and economic mechanism to
run resources.
3-the acceptance of risks of failure.

Process of entrepreneurship:

A- identify an opportunity :
An Entrepreneur senses opportunities and visualizes a market since
they are creative and open to new ideas and seek challenges. They
look for needs, wants, problems and challenges that are not dealt
effectively .since their ideas are innovative they gain first movers
advantage which provides product identification and higher
credibility in the market.

B- Establishing a vision :
It involves generation of ideas using past experience and creativity to
develop new and innovative ways to solve a problem, or satisfy a need.
Out of many the most feasible and profitable are chosen and narrowed
to one best idea. He evaluates different opportunities and the business
environment to assess
(I) Real and perceived value of the product service
(II) Risks and rewards associated with the project
(III) Differential advantage in its competitive environment.

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C- Persuade others :
He forms a clever team which consists of a group of individuals
who work together to run his vision in to reality. They be partners,
financials or family members, etc.

D- Gathering resources:
It involves using a business plan to attract investors, venture capitalists,
partners, financial institutions, promoters, etc.
The main task to research and identify the main resources that are
needed to run the ideation to a viable venture.
Resources can be categorized into:

 financial resources:
Personal savings, retained capital, banks, government
institutions, family, friends, partnerships, venture capital, public
issue.

 operating resources :
They can be tangible or intangible,
Tangible - (a) machines (b) raw materials (c) land and building
(d) Office equipment (an entrepreneur has to make a decision to
buy, rent or hire them).
Intangible resources - (a) company image (b) operating
procedures (c) transportation (d) management.

 Human -temporary /permanent employees:

Amount of man power needed, recruitment, selection and
training of staff, compensation, organization culture.

 Information: An efficient Management information system is

needed in order to have timely info about customers, markets,
competitors and external environment. All the data is networked
on real time basis to speed up actions based on information

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E- Create new venture:
When all the resources have been arranged, the next step is
creation and establishment of a new venture and running the
business venture successfully. It requires a lot of enthusiasm and
persuasion to gather optimum resources and it requires a lot of
perseverance and passion to believe in self.

F- Change/adapt with time :

It is necessary to monitor and upgrade the organization with
changing market conditions .it requires availability of funds to
make changes and the adaptability of human resources towards
changed environment.

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B. IDE VS SMEs :

There are Two Distinct Types of Entrepreneurship,

entrepreneurship has dramatically different objectives and needs.

Small and Medium Enterprise (SME) Entrepreneurship:

The first type of entrepreneurship is small and medium enterprise.

This is the type of business that is likely started by one person to
serve a local market and grows to be a small or medium-size
business. It is most often closely held, likely a family business.

Business is important. The business “rewards” for these founders

are primarily in the form of personal independence and cash flow
from the business.
These businesses generally do not need to raise as much money, so
when money is injected into these businesses, the resultant increase
in revenue and jobs created is relatively rapid, such enterprises can
be geographically dispersed and the jobs they create are for the
most part “non-tradable” in that they cannot be outsourced to
someplace else to reduce costs. Frequently these businesses are
service businesses or retailers of other companies’ products. The
key distinguishing factor is their focus on local markets.

Innovation-Driven Enterprise (IDE) Entrepreneurship:

It is the more risky and more ambitious of the two. IDE

entrepreneurs are aspiring to serve Markets that go well beyond the
local market. They are looking to sell their offering at a global or at
least at a regional level.
These entrepreneurs usually work in teams where they build their
business off some technology, process, business model, or other
innovation that will give them a significant competitive advantage
as compared to existing companies.

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They are interested in creating wealth more than they are interested
in control, and they often have to sell equity in their company to
support their ambitious growth plans.
While they are often slower to start, IDE entrepreneurs tend to have
more impressive exponential growth when they do get customer
traction.
The company starts by losing money, but if successful will have
exponential growth. Requires investment.
When you put money into the company, the revenue/cash flow/jobs
numbers do not respond quickly.

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 C. Problems and obstacles on Entrepreneur path

Functions of entrepreneurship:-
(A) Primary functions:
Planning
Organizing
Decision making
Managing
Innovating
Risk bearing

(B) Secondary functions:

Diversification of production.
Expansion of enterprise.
Maintain cordial employer and employee relations.
Tackling labor problem.
Co-ordination and communicating with third parties.

(B) Other functions:

Managing of scarce resources
Dealing with public bureaucracy
Identifying parallel opportunities
Building strong customer relations.

Barriers to entrepreneurship:
(A) Environmental Barriers :

(I)Raw material: non availability of raw materials required for

production during speak seasons .it leads to increase in price of raw
materials due to competition.

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 (II)Labor:
Lack of skilled labor
Lack of committed and loyal employee
Quality and Quantity of labor
(III) Machinery:
Machines are necessary but they are also costly and due to rapid
change in technology they become obsolete and require
replacement which requires cash in hand.it becomes very different
for small business organization to keep updating its production
process

(IV)Land and building:

Acquisition of land and construction of building at
a prime location require heavy expenditure. If the land is taken
on rent, it becomes a fixed cost and a constant concern for the
entrepreneur.

(V)Infrastructure support:
Adequacy of power, proper roads, water and drainage facilities
etc. There is less support from development authorities due to red-
tapism and corruption.

(B) Financial Barrier:

Availability of funds is a major concern. A delay in source of
finance results in delay of starting or running business.
(C) personal Barrier :
They are caused by emotional blocks of an individual they cause a
mental obstruction, they are:

1- Lack of confidence:-they think they will never find a successful

business idea and would be unable to attract necessary resources.
Therefore, they dismiss the thought of being self-employed.
2- Lack of Dependability on others:

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They aim to gain their additional expertise through trial and error and
experience, rather than seeking further development or personal
assistance from others.
3- Lack of motivation:
Lose interest and motivation when ideas don't work.
4- Lack of patience:
When desire to achieve success in first attempt or to become rich
instantly are confronted with business challenges /problems they lose
interest, they give up at during initial losses.

5- Inability to dream:
Sometimes they are short of vision or satisfied with what they have
achieved and lose interest in further expansion of business.
6- Sense of pride/Embarrassed to take help.

(D) Societal Barrier:-

 Socio-cultural norms and values degree of approval or
disapproval of entrepreneurial behavior.
 Financial stability and family background.
 Caste and religious affiliation.

(E) Political Barrier:-

 Government incentives and concessions.
 Facilitating socio-economic setting.
 Interest in economic development of society.

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 Chapter 2

The Innovation Theory

 Editors :

Mohamed Abd- elnour

Mohamed Khorish
Mostafa Rageb
A. What is Innovation?
Innovation is one of the most bandied about terms in global business
today, but exactly what it means can be nebulous. Generally, it refers to
changing processes or creating more effective processes, products and ideas.
For businesses, this could mean implementing new ideas, creating dynamic
products or improving your existing services. Innovation can be a catalyst for
the growth and success of your business, and help you to adapt and grow in
the marketplace. Innovation can be described in different ways, through:
Words: Original, unexpected, never been thought of before, never been
seen before, creative, new, useful.

Reaction: “Isn’t that clever?”, “What a great idea!”, and “Why didn’t
anyone ever think of doing it before?”
Descriptions: Challenging conventional notions of how things have
been done before, and bringing ideas from one industry to another, or from
one geographic region to another.

 Descriptions: Challenging conventional notions of how things

have been done before, and bringing ideas from one industry to
another, or from one geographic region to another

 Strategic Criteria such as creating meaningful points of

difference for products and services vs. current alternatives.
Fulfilling unmet consumer needs, by offering new ways to accomplish goals,
or make lives or jobs easier, better, happier, more exciting, satisfying, or
more productive, enabling brands to compete in incremental new markets or
category segments. Innovation can increase the likelihood of your business
succeeding. Businesses that innovate create more efficient work processes
and have better productivity and performance.

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B. How do people misdefine entrepreneurship? (As case study
in Egypt)

Egyptian society’s perception of entrepreneurship is particularly high and

continues to grow. More than 73 percent of Egyptians think entrepreneurship
is a good career choice. While more than 30 percent of Egyptians shy away
from starting a new business due to fear of failure, 46 percent of Egypt’s
adult population is actually able to recognize good market opportunities for
new businesses, perhaps suggesting that more people have the capability and
knowledge to be entrepreneurs.

These findings are part of the recently produced Global Entrepreneurship

Monitor (GEM) Egypt National Report, which shows that entrepreneurship
and entrepreneurial ventures have encountered increasing popularity and
improved regard in recent decades throughout Egypt. Despite this growing
trend, however, serious obstacles remain for Egyptians to start a new
business.

"Entrepreneurship is a key driver of economic growth for Egypt and around

the world,” said Ayman Ismail ’, assistant professor of management, the
Abdul Latif Jameel Endowed Chair of Entrepreneurship and one of the
authors of the report. “This is exactly why the GEM study is so important; it
provides evidence-based analysis of entrepreneurship in Egypt.”

AUC’s School of Business joined forces with the GEM consortium to

produce the report. The AUC team was led by Ismail and Ahmed Tolba,
associate professor of marketing and associate provost for strategic
enrollment management, along with AUC Alumna Shima Barakat , head of
entrepreneurial learning programmers and engagement at the
Entrepreneurship Centre at the University of Cambridge Judge Business
School. This report provides an in-depth, detailed analysis on the current
state of entrepreneurship in Egypt and is the fourth report of its kind to be
published.

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"Entrepreneurship is a key component of economic growth in Egypt," said
Tolba. "AUC has been a hub for entrepreneurship and will undoubtedly
continue to be one by supporting economic strength and innovation in
Egypt."

Utilizing the Adult Population Survey, a sample of more than 2,500

individuals, this report analyzes both general attitudes toward
entrepreneurship and characteristics of early-stage enterprises, as well as the
broader eco-system and environment for entrepreneurship in Egypt. Notably,
the report examines how attitudes and behaviors toward entrepreneurship
have changed in recent years.

“While much progress has been made in Egypt's entrepreneurial ecosystem

over the past few years, it remains at the infancy stage,” said Ismail. “The
GEM report offers policymakers, development agencies and even individual
entrepreneurs important advice and resources to move forward.”

Broadly, the GEM report reached the conclusion that there are about half as
many “early-stage entrepreneurs” in Egypt as the global average. Total early-
stage entrepreneurial activity (TEA) is the overall metric used in the report's
measurements, and the TEA rate in Egypt is 7.4 percent, while the global
average is 13 percent. While this rate can signal many things, the report’s
authors note that it likely indicates a national workforce that is highly
dependent on more traditional employment, rather than entrepreneurship.

However, during the same period of measurement (2010-2015), the report

also states a notable increase in interest for undertaking an entrepreneurial
venture, even if fewer are acting on such an interest. The study also reports a
significant rise in the number of individuals engaged in the process of starting
a new business, while the number of people who have fully created a new
business has decreased.

Explaining the reasons why Egyptians might choose to start a new venture,
the report states that more than 42 percent of early-stage entrepreneurs are
"necessity entrepreneurs," meaning they started a new venture due to a lack
of other employment opportunities.

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One of the report’s important findings is that only one out of every four
entrepreneurs in Egypt is a woman, which is significantly lower than the
global average. Young adults between the ages of 25-34 are also the group
most likely to undertake an entrepreneurial venture.

Despite the economic challenges present in Egypt and the world today, the
report notes the important role that entrepreneurship can and should have in
economic recovery. As more and more people become interested in pursuing
entrepreneurship and entrepreneurs become regarded with higher status, the
potential for a strong economy only grows.

“Over the past decade, Egypt has witnessed an entrepreneurial revolution,

with a growing number of support organizations, emerging policy focus, and
numerous government and donor support programs,” said the authors of the
report. “However, despite our progress as an ecosystem over the past decade,
a lot remains to be done.”

While Egypt’s entrepreneurial system ranks in the bottom quartile globally,

the report shows particular strength in Egypt’s physical infrastructure and
internal market dynamics -- two crucial components of a healthy
entrepreneurial eco-system. Although the report displayed a decline in
several other areas -- such as finance and education -- it also displayed
particular improvement in cultural or social norms supporting
entrepreneurship, as well as market entry barriers for those wishing to start a
new business.

Beyond simply reporting the current state of Egypt’s entrepreneurial

environment, the report also provides various policy recommendations. First,
it urges government to recognize entrepreneurship as a priority. Second, both
international and local donor organizations, as well as well-established
companies, should better research the field of entrepreneurship to more
accurately and effectively target long-term development. Lastly, the report
recognizes the vital need for specifically targeted campaigns that support
women entrepreneurs, business education, internationalization of local firms
and the use of technology, and that improve the image of entrepreneurship
more broadly.

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“There is visible need for more rigorous research to understand the behavior
of individual entrepreneurs, the dynamics inside the startup firm, the culture
at the national level, and the policy and regulatory framework at the
government level,” the authors noted.

C. Business Innovation and the Use of ICT

Business innovation and the use of ICT Information and communication
technology in developing nations is becoming a necessity for socioeconomic
development .In 2011, the ABS released a research paper – Business
Innovation and the Use of Information and Communications Technology, by
Jessica Todhunter and Ruel Abello – investigating the relationship between
Information and Communication Technology (ICT) use by businesses and
innovation activity. This paper replicates that study using more recent firm
level data from the ABS Business Longitudinal Database (BLD) and the
Business Characteristics Survey (BCS).

A similar approach to the 2011 study was used to summarize the diverse
types of ICT usage (broadband internet connection, business web presence,
use of e-commerce) into a single ordered categorical variable, to determine a
measure of a firm’s intensity of ICT use. This ICT intensity ‘index’ reflects
the business’ highest degree of ICT sophistication and is used in the analysis
to determine its relationship to innovation. The results of this analysis again
show businesses which use ICT more intensely are more likely to undertake:
innovation of all types, more types of innovation, more novel innovations;
and are more likely to develop their innovations in-house.
The relationship between ICT entrepreneurship and small business
innovation has accelerated research concern in entrepreneurship
development, and in particular, the concept ICT entrepreneurship has
attracted a huge research interest over a decade. A number of researchers in
business domain has argued the possibility that entrepreneurship
development contributes to small business innovation through the
competencies it helps to develop in the organization (Morgan and Sanchez
2008 in Amue et al 2013; Timil and Bartus 2006).

14
 In fact, ensuring organizations’ success can be considered the ultimate goal
of small business innovation efforts in entrepreneurial firms. Much work on
the relationship between ICT entrepreneurship development and small
business innovation are far from being fully explained. The work of Migisha
(2011) posit that ICT is a tool for development, but will only flourish if small
tech start-up companies grow and generates new jobs through innovations
and that technology is not the only issue, rather, it’s about entrepreneurship.
The views of Migisha (2011) in particular, meets very mixed findings and
arguments in the literature (e.g. Adewale Adeniyi-kie 2004; Jackson and
Markfish 2010; Marchese and Polter 2010). Again, Kola-Ogunlade (2014)
argue that the internet will fundamentally change the way people discover
and access opportunities.
Supporting the work of Kola-Ogunlade (2014), ICT entrepreneurs are
almost taking over from the traditional entrepreneurs, the evidence of ICT
entrepreneurship development can be seen from the successful entrepreneurs
at Western countries like United States. The successful ICT entrepreneurs in
the United States can be traceable to Google.com, Yahoo.com, Amazon.com
and eBay.com. Eduardo (2006) argue that google.com is one of the
successful stories of young entrepreneurs who use ICT knowledge. Kofi and
Anns (2010) posit that the diffusion and adoption of ICT entrepreneurship in
Western business organizations can be regarded as relatively more mature
and developed, while its likely impacts on less developed countries’ business
networks still need to be properly stimulated, re-engineered and re-evaluated.
The purpose of this study therefore examines ICT entrepreneurship
development and small business innovation in the context of Nigeria.

15
During the period 1985-1995, a government-private sector partnership had a
remarkable impact on the build-up of Egypt’s information (info structure)
infrastructure and during that period, hundreds of informatics projects and
centers were established in various government, public and private sector
organizations targeting socioeconomic development. These projects included
human, technology and financial infrastructure development had invaluable
inputs in building a growing information technology literate society capable
of leading Egypt into the 21st century from an information perspective. Such
elements represented the major building blocks necessary to establish a full-
Fledged information infrastructure capable of keeping pace with the
developments taking place globally.

During WSIS in Geneva (2003), the President of Egypt highlighted the

importance the current administration is giving to ICT diffusion and its role
in development reflecting the commitment of all constituencies of the
collaborative efforts set to introduce and diffuse ICT in the nation. The
examples demonstrated included initiatives that aimed at preparing the
community for the information society such as free-Internet model, PC for
every home, establishment of IT clubs, and the introduction of broadband
services in addition to projects relating to key sectors such as education,
health, banking, and public administration amongst others. These projects
have helped improve the digital demographics of the community at large
especially when the infrastructure was diffused to reach communities in the
remote and unprivileged areas.

D. Can we teach people to be innovative?

When we think about an innovative person, our focus is often on their
achievements: How they’ve changed their industry, how their big idea is
disrupting the landscape that they’re operating in, or the scale and impact of
their innovative practices.

What we don’t normally consider is the thought process they went

through. We hear a lot about why we need to innovate, but not how we can
actually do it

16
 Victor Poirier, a professor at the Institute of Advanced Discovery &
Innovation at the University of South Florida, recently published a research
paper in collaboration with nine of his colleagues that looks at the thought
process behind innovation. The paper argues that innovation is a series of
steps, and that innovators possess certain characteristics. Every individual
possesses some of those characteristics—though to varying degree—and
Poirier’s work looks at what those characteristics are, and how we can
“awaken” them in order to unleash our own innovative genius.

Inspiration can strike systematically or spontaneously, but it often occurs

after someone has already thought about whatever it is that inspires them. For
example, you might be having trouble finding a solution to a problem you’re
facing at work. Say you’re responsible for organizing the monthly meeting
for your big team, but you find yourself spending a lot of time flicking
between calendars, because there’s always a last-minute scheduling
conflict. You talk to your colleagues, and then a few days later you realize
that the best solution would be to get your whole team to download the Slack
scheduling bot that automatically syncs everyone’s calendars and schedules
meetings for you.

This solution didn’t appear out of nowhere—you let your brain “brew”
the information and thoughts and then were able to tap into your creativity
and arrive at a solution. In the paper, creativity is defined as “the ability to
think about the world in new ways, to think from a clear, open perspective,
and to be unencumbered by existing knowledge.” Sometimes a little bit of
time is needed to have this perspective, because being too close to the
problem can prevent identifying obvious solutions.

In education, we spend a lot of time addressing the question: What

innovative technologies can children use to learn?

But what if we flip the question on its head? Instead, what if we ask,
“How can children learn to be innovators, not just users, oftechnology? How
could technology promote student curiosity and innovation?”

17
 These are the questions that drive Pittsburgh Public School kindergarten
teacher Melissa Butler and Clarion University of PA professor and CREATE
Lab resident artist Jeremy Boyle. Founders and co-directors of
the Children’s Innovation Project, Melissa and Jeremy are noticing and
learning ways for children to innovate by approaching technology as raw
material.

“The way children play with crayons, paper or clay is the way we have them
explore with technology,” explained Melissa in a conversation with my team.
“If you think about mathematics, we always want children to get into the
depth of mathematics. With technology, it has been the opposite. Almost all
the uses of technology distance human beings from its form and function. It
has made it hard for people to think technologically— to understand the
technological logic, think about the unknowns, imagine how parts are
working inside these devises. The raw components and the fundamental logic
of technology don’t change. If you think about that, the computational logic
that is the basis of the digital system is still there. We need to play with that
and give all children access to that thinking.”

In the classroom, Melissa and Jeremy have translated their ideas into hands-
on exploration and design for students. Children explore and learn about
electricity and simple circuits by working with specially designed circuit
blocks and other raw materials. They then connect their learning to their
world by imagining the internal components of electronic toys, opening the
toys to observe and identify the parts, and then repurposing and reconfiguring
their internal components into their own invention.
“We focus on habits of mind,” says Melissa. “Technology is a vehicle
through which we develop the habits of mind to notice, wonder and persist.
Struggling, loving your struggle, failing, and reflecting on how it felt to fail.
Our work is very much embedded in the process of learning, naming the
learning and reflecting on it.”

18
 Children’s Innovation Project learning experiences also emphasize the
importance of slowing down and noticing. For example, children slow down
to notice one small object, such as a screw, or spend time examining one
small part of something that is new to them. Through drawing, students are
asked to observe and capture the smallest details of line, shape, size and
texture of an object and to keep turning and looking at the object from
different perspectives. Students then use their drawings to talk more about
what they wonder. Says Jeremy, “Innovation is not about making something,

it is about finding something new inside something known.” Melissa and

Jeremy are trying to shift the conversation about what constitutes innovation
in order to honor children’s small discoveries and support children’s thinking
about themselves in relation to the materials they explore.

Finland’s Aalto University is not a traditional university, and nor does it want
to be. Launched in 2010 as part of a radical rethink of education in Finland, it
brings together students of economics, technology, and art and design. By
stimulating interdisciplinary collaboration and removing traditional barriers,
the university aims to provide the right environment for its students to
innovate, think creatively and tackle challenges in new ways.

“Promoting entrepreneurship and supporting start-up companies are essential

facets of Aalto University’s societal impact,” says the university’s president,
Tuula Teeri. “Creating an entrepreneurial spirit and culture also forms an
inherent element of Aalto University’s research and teaching activities.”

For Marja Makarow, who was vice-chairwoman of the university’s board

when it was being set up, Aalto is a great example of what can be achieved in
education. “You cannot teach innovation, but you can teach a mindset that is
receptive to new ideas and provide an enabling environment that breeds
innovation,” said Makarow, now vice-president of research at the Academy
of Finland.

Many would argue that encouraging an innovative mindset needs to start

much earlier, with creativity nurtured more at primary and secondary school.

19
In the most widely watched TED talk online, British author and education
expert Ken Robinson explains how he thinks schools should place greater
value on children’s creativity and their capacity for innovation. “We don’t
grow into creativity, we grow out of it. Or rather we are educated out of it,”
he says in the 2006 TED talk. He calls for creativity to be given the same
Status in education as literacy. “We have to rethink the fundamental
principles on which we are educating our children.”
The same could be said of higher education. In Makarow’s opinion “there’s a
lot more innovative talent around than the current procedures and educational
establishments are able to realise. Europe needs to renovate the university
system to be prepared to meet the challenges of today’s society.”

20
 Chapter 3

Investment in Startup’s Sectors in Egypt

 Editor:
Sondos Ahmed Ali
A. Provide funding and sustainability

There are a few different ways that you can go about funding a startup,
but not all are created equal. You may have a wonderful business idea
that you have perfected, but it won't mean much if you don't have the
funding in place to not only make your business happen, but allow it to
succeed.

1. Crowdfunding.
Anyone can contribute money toward helping a business that they
really believe in. An entrepreneur will put up a detailed description
of the business on a platform such as goals of the business, future
financial strategies for turning a profit, the target audience, how
much funding this business needs and for what reasons, and then
consumers can read about the business and give money if they
choose.
This concept is happening nearly every day in Egypt, people give a
part of their money to some one because of believing that they will
get high cash flow from this partition.

2. Venture Capitalist.
A venture capitalist investor is essentially a professional group that
looks specifically for startups to fund. This option has a lot of money
available to offer to startups and plenty of resources to actually help
your business succeed. For many, a venture capitalist would be the
ideal funding situation.
The company would need a strong team of people and an even few
million dollars .Entrepreneur should be flexible with your business
and sometimes give up a little bit more control, so if he or she is not
interested in mentorship or compromise, this might not be the best
option.

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 3. Angel Investor.
Angel investors work similarly to venture capitalists except they are
much smaller operation, sometimes only one person. They
oftentimes want a large portion of your company, meaning when you
make money, they also make money.
For Example, places to meet Angel Investors include the Small
Business Development Centers, Gust.

4. Small Business Loans.

Oftentimes the first place that entrepreneurs go when thinking about
funding is the bank. They ask for Microloans, but the obstacle is
finding through such a tough lending period. When you go into the
bank, you have to have to be able to present how every penny of the
loan will be spent, and even then sometimes a first-time business
owner seems too risky to the bank.
5. Credit Cards.
If you have an excellent credit history, you may be able to use that to
help you use a line of credit to fund your startup. There are specific
credit cards designed for entrepreneurs, so visit your bank and talk
about some of your options. This is definitely the riskiest way, it
maybe work and get the best results.

Definitely, it is a good thing to read about funding your business, you

can create an idea and work on it, but when you take areal step with
injecting your business with money, you should consider a basic
principles.
• About 8 out of 10 entrepreneurs crash within the first 16-18
months of starting their venture, which makes up for 80% of all startups
that fail, mainly due to cash paucity.
• Over 50% of small businesses that commenced in 2011 failed
within the first four years, and only 3% were able to get into the fifth
year.
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• Only about 30% of all small businesses can break even while
another 30% end up losing money almost continually.

Sustainability:

“Starting a new business venture with an extensive ecological

orientation is not easy and often is even more difficult than starting a
conventional business enterprise. Only the firm convictions of the
entrepreneurial individual leads to this kind of endeavor.
As the individual is the most important factor in creating a sustainable
new venture, Starting points for intervention are limited. In turn, it might
be promising to encourage and support those ecologically minded
individuals to convert their convictions into Sustainable start-ups.
Economic dedicated start-ups take higher risks and face more market
Resistance than do conventional start-ups; therefore, they are in need of
special advisory and financial support “Hildegard Schick.

Sustainable development is often defined (1987) as “the development

that meets the needs of the present without compromising the ability of
future generations to meet their own needs”.
Sustainable entrepreneurship includes a positive societal and
environmental change. It doesn’t surprise that the number of
sustainability-oriented start-ups increases by the year. However, little is
known about what kind of support would be of most benefit and what
kind of start-up accelerator can boost their development most
effectively.

Sustainability-oriented start-ups need different kinds of support what

they all have in common is that they tackle environmental or social
problems. And those are often enough in a highly-regulated space. Legal
issues are therefore a great obstacle for sustainability-oriented start-ups.

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For more sustainability and launching a startups with a great green
business and a social impact to pass the ideation and innovation stat to
Implementation stat .Some organizations offer such as Accelerator
programs or Incubator.

Accelerators Programs:

Startup accelerators support early-stage, growth-driven companies

through education, mentorship, and financing. Startups enter
accelerators for a fixed-period of time. The accelerator experience is a
process of intense, rapid, and immersive education aimed at accelerating
the life cycle of young innovative companies.

Incubator programs:

Business incubators aim to assist new entrepreneurs with business start-

up. The business incubator helps to fill a gap which is found in many
areas. Not everyone is able to spend the time or money necessary to
attend college and obtain a business administration degree. Further, not
everyone has access to resources that can fund a new business effort
until it becomes profitable. Incubator programs help to fill the gap by
providing rudimentary training to entrepreneurs, a space to launch the
business, and in some cases contacts between the new business owner
with others who are in a position to invest in the future of the company.
Business incubators in a region is the nature of their interaction with
institutions of higher education. The support of start-up firms –
particularly high-technology firms – around university centers are cases
in this point.

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B. How do startups influence Economic Growth?

Despite the fact that entrepreneurship is what fuels our capitalistic

economic system, many economists simply assume a way or discount
entrepreneurs in their economic models.
The economist joseph Schumpeter has said that entrepreneurship
involves any form of innovation that has a bearing on the welfare of the
firm .Thus, an entrepreneur can be someone who starts his or her own
firm, or someone who engages in innovation within an existing
enterprise. The key issue is that entrepreneurship, whether in old or new
firm, is what allows business to survive and prosper in an ever-changing
economic environment. Entrepreneurship is continuous process. As new
opportunities arise in the economy, they are quickly exploited.

For example, IBM has made a major change in its business by pursuing
another opportunity in the market place-personal computer .IBMs
entrepreneurial decisions and actions have had a tremendous impact on
the economic growth.

25
Entrepreneurship and aggregate economic growth, Zacharakis (2000)
assign differences in entrepreneurship rates a crucial role for economic
growth. They claim that about one–third to half of the differences in
national growth rates are explained by variations in entrepreneurial
activity and there is a lack of studies. Data on economic growth
measured by, for example, GDP is of course readily available for most
researchers.
Blanchflower (2000) studies the relationship between self-employment
and economic growth for 23 OECD countries during 30 years and finds
a negative relationship. However, it should be noted that this study was
criticized due to that fact that it used non-harmonized OECD data.
Van Stel (2005) determined to distinguish between the effects of
entrepreneurship on growth for countries that have reached different
levels of development. In countries regarded as relatively rich, they find
a positive relationship between entrepreneurship and economic growth,
while the relationship was negative in less developed countries.
An extensive study, using World Bank data from 84 countries, by
Klapper. (2007) finds a positive relationship between self-employment
rates and economic growth.

McDonalds “This will go anyplace. Anyplace!”

McDonald’s was established as a typical drive-in restaurant in 1940 by

Dick and Mac in San Bernardino, California. The original restaurant was
not very profitable, so the brothers decided to redesign it. In 1948, it was
with a new and innovative concept based on speedy service, low prices
and big volume.
What the brothers did in practice was to end service in the cars and
substitute it with self-service at the counter. Thereby they reduced labor
cost by reducing their demand for waiter services. Customers still
received more value for their money.
McDonald’s also slashed prices far below the level of their competitors
to increase sales volumes. Furthermore, they reduced the number of
items on the menu to mere 9 items.

26
 The McDonald’s chain experienced an extraordinary growth, first
domestically, but then also globally. June 1st 1967 saw the opening of
the first McDonald’s franchise abroad in Richmond, British Colombia,
and the introduction in a host of other countries followed suit.
Today McDonald’s operates in over 110 countries .The
internationalization of McDonald’s has had large effects both in the
global economy and in each country where the concept has been
introduced over the past 40 years. First and foremost it has opened a
global market for low-priced.
According to research and markets.com the global market for fast food
passed $100 billion in 2006. McDonald’s brand, “the Golden Arches”,
potential competitors can copy or adapt to the chains business concept
as they wish and this is indeed also what has happened in most markets.

In conclusion we see that the basic innovation that occurred in the small
hamburger have opened a $100 billion global market for low-priced
food services that is currently employing hundreds of thousands of
workers worldwide. McDonald’s success story and subsequent
internationalization have trigged a broad range of competitors of many
nationalities and has also triggered innovations in other related
industries.

Forces for and against Entrepreneurship in Economic system

Kent has identified several factors influencing the entrepreneurial activity in

economy:

Demand for final outputs: Is demand strong and growing up in the economy?

Availability of inputs: Are resources available and affordable to make new venture
possible?

Inflation: Is inflation making debt too expensive to fund new venture development?

Taxation: Are there tax considerations that favor or hurt the new venture?

Political stability: Is political policy favorable to long-term investment needed for new
venture?

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C. Government responsibility towards Entrepreneurs
Government policy plays an important role in creating conditions in which "
businesses thrive – as long as the policies are fit for purpose . "So what
policies does modern entrepreneurship need in order to flourish?

According to Ayman Ismail, Assistant Professor and Abdul Latif Jameel

Endowed Chair of Entrepreneurship and Director of the American University
in Cairo’s Venture Lab “There are two types of interventions by the
government: one is doing things themselves and the other is creating the
environment to help people start doing things. I believe that the government
should be a catalyst for more private accelerators and incubators by
supporting them and creating a conducive environment for startups,” he said.

Cairo-27 September 2017: The ministry “sahar nasr “launched the "Your Idea
for Your Company" initiative and dedicated a bus in front of the ministry's
headquarters in Salah Salem to receive youth ideas. It is an innovative
initiative to encourage entrepreneurship and enhance the entrepreneurial
environment in Egypt.

The initiative is an integrated program to stimulate entrepreneurship in

Egypt. The initiative has so far received more than 2500 ideas, and ideas will
be received by September 30, pointing out that young people represent about
50% Of the population of Egypt is considered the most powerful country And
youth in the region.

On the other hand, the media has become more interested in entrepreneurship
and its impact , for the second time , the Youth Entrepreneur Competition in
"Here is the Capital" program, which is presented on CBC screen, a weekly
competition for young entrepreneurs, each competitor presents his / her
project or product.

Each week, several projects compete. At the end of the competition, they will
announce the name of the project, which will qualify for the race at the end of
the month. At the end of the month, the best three projects selected to win
one project will receive an incentive prize of LE 100,000.

28
D. Projects that have an economic and social impact in Egypt
In this part we will show some of startups that have an economic and social
impact in Egypt, you may not hear about them but it’s a good point for
discussion and light the entrepreneurship path to you.

Egyptian FinTech startup Vapulus

The investment comes right after Vapulus announced it had doubled its
valuation just in a year, having developed the first mobile payment solution
enabling users to make one-touch payments, without requirement special
hardware or from technologies like NFC and QR code. “We are
revolutionizing the mobile payment technology scene, especially in stores,"
says Abdelrahman Elsharawy, co-founder and CEO.

Eventtus Startup

In 2012 Mai Medhat and Nihal Fares, who scaled to Dubai and have recently
raised a $2 million investment by 500 Startups and Algebra Ventures.the
startup has worked with over 9,000 events, including some of the region's
most prominent, such as Dubai Expo 2020, DMG Events, Emirates
Foundation and ArabNet. The startup had previously raised $175,000 from
Cairo Angels and Vodafone Ventures. After their regional expansion and the
opening of a second office in Dubai in 2013, Medhat raised another round of
investment for $450,000.

kngine startup :

In 2009 Haytham and Ashraf ElFadeel have founded Kngine is “an

intelligent engine that understands, answers questions and performs actions
and can be used to automate customer service, power voice interfaces and
drive enterprise search .

29
Samsung has acquired Kngine, an Egyptian artificial intelligence startup, to
improve its virtual assistant Bixby. The startup had raised its first investment
from Cairo-based Sawari Ventures. The total disclosed investment raised by
the startup amounted to $775,000.

Riseup summit:

The startup works on Connecting entrepreneurs & innovators to the most

relevant resources. It started in 2013 to bring the MENA region's
entrepreneurship ecosystem together.

Karmsolar:

The Egyptian Solar energy startup Karmasolar is now the first in Egypt to be
officially licensed to sell electricity to private consumers away from the
national grid .karmasolar has many Projects like Solar Water Pumping 50kW
Solar Water Pumping Solution Pilot Project in Bahareya Oasis.

30
 Conclusion

This research has reviewed the empirical evidence on the relationship

between entrepreneurship and economic growth. Entrepreneurship is a big
issue that can make a great change especially in the development countries,
Egypt is influenced by it, in a few years it could generate a new ideas and our
youth became an innovators. We see in many previous studies and many
Business stories that entrepreneurship is really true.

If the country encourage the new ideas with the right business modeling in
addition to providing a satisfy policies and environment for all parts that will
feed our economic system with money, ideas, employment, investment ……

The specific job of entrepreneurship is to make today’s business capable of

making the future and remain the success.

Entrepreneurs--and entrepreneurial organization --always operate at the edge

of their competence, focusing more of their resources and attention on what
they do not yet know than controlling what they already know. They measure
themselves not by the standards of the past but by visions of the future. And
they don't allow the past to serve as a restraint on the future ', the mere fact
that something has not worked in the past does not mean that it should
remain.

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Books:
V. Bradshaw,Maria. Entrepreneurship and its Economic
Significance, Behavior and Effects. New York: Nova Science
Publisher, Inc, 2009.Print.
Cornwall,Jeffrey R. Organizational Entrepreneurship. United
States: IRWIN, INC, 2000.print.
Aulet,Bill. Disciplined Entrepreneurship .New Jersey: Johan
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Amue, Gonewa John. Department of Marketing, University of
Port HarcourtN: Nigeria.2012.print.

Periodicals:
Schick,Hildegard. “Sustainability Issues for Start-up Entrepreneurs. “GMI
38.Summer 2002.Print.

Lesáková ,Ľubica .” The Role of Business Incubators in Supporting the

SME Start-up.” Matej Bel University, Faculty of Economics.2012.Print.

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http://www.youm7.com/story/2017/9/27/%D8%B3%D8%AD%D8
%B1-%D9%86%D8%B5%D8%B1-
%D9%85%D8%A8%D8%A7%D8%AF%D8%B1%D8%A9-
%D9%81%D9%83%D8%B1%D8%AA%D9%83-
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