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Egypt's booming tech sector: Is it a bubble?

  1. Egypt‟s booming tech sector: Is it a bubble? Mohammed Al-Ayouti @ayouti 12 September 2012 1
  2. There are 3 billion Internet users around the world. There are 5 billion mobile subscribers. @ayouti
  3. Mobile apps approached 8 billion downloads globally in 2010, 30 billion in 2011, and are expected to reach 200 billion by 2016! @ayouti
  4. MEA smartphone market will witness 39% CAGR until 2014. For tablets, we’re at the tip of the iceberg! ayouti 4 @ayouti
  5. There’s clearly a rising opportunity for local entrepreneurs! ayouti 5 @ayouti
  6. But is it a bubble? 6 @ayouti
  7. First, what is a bubble? • An unsustainable market rise, attributed to increased speculation in stocks. • It is highlighted by high valuations and rapid share price growth. • New metrics are used to justify these stock prices, and fundamentals as a whole tend to take a backseat to rosy forecasts and blind speculation. • A bubble may end with a crash, or may simply deflate as investors slowly lose interest and sales pressure pushes stock valuations back to normalized levels. ayouti 7 @ayouti
  8. Impact of a bubble • When a bubble bursts: –Value is shredded –Companies go bankrupt, and jobs are lost –Investments and people‟s savings are wiped out –Confidence in a sector (or the whole economy) is lost • On a positive note, a bubble that introduces new commercial & consumer infrastructure has some lasting advantages: – New business models – New standards – Infrastructure investments ayouti 8 @ayouti
  9. Do we have a bubble? 9 @ayouti
  10. “You don’t know it’s a bubble until the bubble ends” – Eric Schmidt ayouti 10 @ayouti
  11. The mobile internet market continues to grow, driven by: •Rising internet penetration –Accelerated by a post-revolution Egypt •Smartphones growth –Driven primarily by low-cost Androids •Falling data costs –Cheap monthly plans & ubiquitous WiFi ayouti 11 @ayouti
  12. The mobile industry continues to evolve Content & Voice Messaging Data Services ayouti 12 @ayouti
  13. The ecosystem has seen a lot of activity over the last two years • Startups are springing up • Funds are growing and are becoming more visible/accessible • Incubators seek to bridge the gap between startups and funds • Competitions are regularly taking place to discover new talent … and there’s a lot of surrounding hype ayouti 13 @ayouti
  14. But don‟t worry about the hype (yet) Hype Cycle: ayouti 14 @ayouti
  15. Worry if startups start to cross the “Valley of Death” without actually overcoming it Startup financing cycle: ayouti 15 @ayouti
  16. Worry if demand for startups to invest in is higher than the supply of startups Egypt Demand Supply USA ayouti 16 @ayouti
  17. Don‟t worry when startups start shutting down •There will always be a stream of businesses that fail. That‟s a fact of entrepreneurship: –30-40% of startups liquidate –70-80% fail to see the projected ROI ayouti 17 @ayouti
  18. Thank you Questions? @ayouti DISCLAIMER: This material is published by, and solely reflects the personal views of, the author in his individual capacity, and it does not necessarily represent the views, positions, strategies or opinions of his employer. The author will not be held responsible for any misfacts. 18
  19. References Worldwide and U.S. Mobile Applications Download and Revenue 2012–2016 Forecast: The Appification of Everything Goes Global Definition of „Tech Bubble‟ The positive side of „Dot com bubble‟… The Benefits of a Bubble, Even When Burst Eric Schmidt: You Don‟t Know It‟s A Bubble Until The Bubble Ends Hype cycle Startup company Missing: references for slides 4, 17 ayouti 19 @ayouti

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