In the early days of Egypt’s startup boom, Cairo was heralded as the new Silicon Valley of the Middle East, buzzing with entrepreneurs eager to tackle local and regional challenges. Fast forward a few years, and a growing trend is emerging: many of these same Egyptian startups, having initially set out to serve the local market, are now shifting their headquarters abroad. One of the first—and perhaps most symbolic—examples of this migration was SWVL, a mass transit startup founded in Cairo. In 2019, SWVL rebranded itself as a Dubai-based company, and the floodgates opened. Since then, other Egyptian startups have followed suit, making the UAE and Saudi Arabia new homes for businesses once proudly rooted in Egypt.
Most recently, WellPal, an e-commerce platform specializing in health and wellness products, announced its move to Saudi Arabia. Founded in 2019 by Mohamed Ali and Mohamed Tantawy, WellPal initially gained traction in Egypt by offering a curated selection of fitness and wellness products through a dropshipping model. This business model, which connects consumers with suppliers without holding inventory, allowed the startup to grow rapidly. But in September 2024, following an undisclosed investment round from an angel investor, WellPal relocated to Saudi Arabia, citing alignment with the Kingdom’s Vision 2030 as a key motivation. “We are proud to support Saudi Vision 2030,” said Mohamed Ali, WellPal’s CEO, “and look forward to helping citizens make smarter and healthier lifestyle choices with our AI-powered platform.”
WellPal is far from alone in making the move abroad. FlapKap, a fintech startup offering revenue-based financing solutions, shifted its base from Egypt to Abu Dhabi earlier this year. The company recently raised $34 million in a pre-Series A funding round, with contributions from Dubai-based BECO Capital, among other regional investors. DXwand, an AI-driven conversational platform, also relocated its headquarters to Dubai after securing $4 million in Series A funding led by Abu Dhabi’s Shorooq Partners. These companies join an ever-expanding list of Egyptian startups that have re-headquartered abroad, including Khazna, Paymob, Taager, Capiter, Intella, and Sideup.
This migration is not just a matter of convenience. Many of these companies were originally focused on solving local problems in Egypt, the most populous country in the Arab world. The decision to move their operations abroad reflects deeper structural issues in Egypt’s startup ecosystem.
Economic Pressures at Home
The reasons for this exodus are multifaceted, but Egypt’s increasingly challenging economic environment is at the forefront. Currency devaluation, high inflation, and rising interest rates have put substantial pressure on local businesses, especially startups. Egypt’s currency has been devalued multiple times since early 2023, with the Egyptian pound losing nearly 40% of its value in January 2023 and dropping further after a float in March 2024, when it fell to just $0.02 per pound. Inflation has soared to 35.5% annually, significantly raising the cost of goods and services, while interest rates have surged to 27.25%, making borrowing prohibitively expensive for many startups.
The global economic context has also played a role in Egypt’s domestic woes. The war between Russia and Ukraine has had ripple effects on Egypt, particularly in its key service sectors. Revenues from the Suez Canal, a vital source of foreign currency, plummeted by 51% in the first two months of 2024. Egyptian remittances, another critical lifeline for the economy, fell by nearly 30% during the first quarter of the 2023–2024 fiscal year. As a result, Egyptian startups are finding it harder to survive, let alone thrive, in the current environment, prompting them to consider oversea headquarters.
Regulatory and Legislative Roadblocks
Another major factor driving Egyptian startups to set up headquarters abroad is the lack of a cohesive and supportive regulatory framework. Unlike North African neighbors like Algeria and Tunisia, which have introduced startup-specific legislation, Egypt’s startup ecosystem is governed by a complex web of laws. Startups must navigate multiple overlapping frameworks, including the Egyptian Companies Law №159 / 1981, the Intellectual Property Law №82 / 2002, the Egyptian Labor Law №12 / 2003, and the Investment Law №72 / 2017. This legal fragmentation has created confusion for entrepreneurs, many of whom find it difficult to navigate bureaucratic processes without running into legal challenges.
While the Egyptian government has made some efforts to streamline regulations, such as launching the Entrepreneurship and Startup Companies Unit in 2023 under the General Authority for Investment and Free Zones (GAFI), these initiatives have yet to deliver the comprehensive changes that many in the startup community are calling for. In November 2023, the Egyptian Tax Authority (ETA) introduced a new lump-sum tax regime aimed at simplifying tax payments for small businesses and startups, with tax rates ranging from EGP 1,000 to EGP 10,000 depending on annual turnover. However, despite these changes, experts have raised concerns that the country still lacks a unified legal system tailored to startups, putting Egypt at a competitive disadvantage compared to its neighbors.
Competitive Pressure from the Gulf
While Egypt grapples with economic and regulatory challenges, neighboring countries like the UAE and Saudi Arabia have created more attractive environments for startups. The UAE offers a corporate-friendly tax regime, with a 9% tax rate only applying to companies earning more than $102,000 annually. Businesses below this threshold are exempt. Additionally, the UAE’s free zones allow for 100% foreign ownership and provide exemptions from import, export, and corporate taxes. This allows startups to focus on scaling their businesses without worrying about heavy regulatory burdens.
Saudi Arabia has implemented similarly attractive policies. As part of its Vision 2030 initiative, the Kingdom has launched a program to encourage businesses to relocate their headquarters to Saudi Arabia. This program offers financial incentives that range from SAR 1.2–3.6 million ($300,000–$900,000), as well as grants and subsidies for office space and other operational costs. Importantly, Saudi regulations mandate that companies must have a physical headquarters within the country if they wish to conduct internal operations there, further incentivizing startups to establish a local presence.
Looking Ahead: Will Egypt Retain Its Startups?
While Egypt has long been a key player in the MENA region’s startup ecosystem, the country is at a crossroads. The Egyptian government has shown an awareness of the challenges facing startups, with new initiatives aimed at simplifying the regulatory environment and improving access to capital. But without more aggressive reforms, Egypt risks losing its most innovative startups to more business-friendly jurisdictions in the Gulf.
For Egyptian startups, moving headquarters abroad may seem like the only viable option for long-term growth, particularly as Gulf states continue to offer compelling incentives for relocation. Unless Egypt can create a more competitive and supportive environment for startups — through both regulatory reforms and economic stabilization — this trend of relocation is likely to continue. For now, the allure of Dubai, Abu Dhabi, and Riyadh remains strong, with many Egyptian startups choosing to grow and scale their operations far from their home country.