Egypt’s startups are making a dash for the exit, charting courses over 600 nautical miles away to Riyadh, the sprawling Saudi Arabian capital, a city now shimmering with IPOs, sky bridge towers piercing the skyline, and unexpectedly lush green spaces spilling across the landscape. Just last month, a seasoned observer, keenly attuned to the subtle shifts in the African startup ecosystem, could discern the trajectory of Widebot. This Cairo-based artificial intelligence startup, once celebrated in 2019 as an “Egyptian success story” for securing a six-figure investment, has now subtly signaled what might be a gradually definitive farewell to Egypt, the very soil that nurtured its founder, Mohammed Nabil.
Widebot’s freshly secured $3 million pre-Series A round, announced in mid-February, was led by Keheilan Asset Management II, backed by Saudi investment powerhouse Wafra. The investment also saw participation from a host of Africa-focused investors: Enza Capital, DisrupTech Ventures, LoftyInc Capital, Den VC, and SparkLabs Ventures. The announcement strongly hints that the nine-year-old company might now be focusing less on Egypt and more on its Saudi market. Bolstered by this new financial injection, Widebot’s gaze is now fixed on accelerating the evolution of “AQL Mind,” a generative AI model crafted to meet the nuances of the Arabic language. Crucially, the investment will allow Widebot to anchor its digital infrastructure within Saudi-based cloud fortresses.
In lockstep with this strategic redirection, another startup, Taager, an e-commerce platform for social commerce launched in Egypt, is tracing a similar path. Taager recently secured a substantial $6.75 million in a pre-Series B funding round, a testament to its rapidly growing potential. The round was led by Norrsken22, a tech growth fund focused on the African continent, with returning investors including BECO Capital, 4DX Ventures, RAED Ventures, and Breyer Capital. Fresh infusions also came from Endeavor Catalyst and Beltone VC. Since its inception in 2019, Taager has carved a niche by empowering individuals to build and scale their own online businesses, managing product sourcing, warehousing, shipping logistics, and seamless payment collection. Currently spanning Saudi Arabia, Egypt, and the UAE, Taager recently expanded into Iraq, boasting a network of over 45,000 merchants and millions of transactions.
Last October, Swvl Holdings Corp, a mobility solutions company born in Cairo but headquartered in Dubai, and notably Nasdaq-listed, echoed this migratory pattern. The company unveiled the inauguration of its regional headquarters (RHQ) in Riyadh, Saudi Arabia, a move laden with strategic implications.
“Our decision to plant a regional headquarters in Riyadh marks a pivotal juncture in our growth narrative,” declared Mostafa Kandil, CEO of Swvl, acknowledging the Saudi government’s ambitious Regional Headquarters Program. This initiative, designed to attract multinational corporations and invigorate local economic activity, offers enticing incentives for foreign firms to establish regional hubs in Saudi Arabia, cementing the Kingdom’s status as a premier business destination in the Middle East.
By establishing a firm foothold in Riyadh, Swvl aims to harness these advantages to fuel its long-term expansion across the GCC region, particularly as it eyes forthcoming government contract opportunities in Saudi Arabia’s mobility sector. Last September, the mobility innovator, whose US listing has ironically led to a less-than-upward trajectory, announced multiple new contracts secured in Saudi Arabia, contributing a significant $2.6 million in incremental annual contract value.
“We stand proud to actively contribute to Saudi Arabia’s Vision 2030 goals,” Kandil said. “Through our technology-driven mobility solutions, we aspire to fundamentally reshape transportation within the Kingdom, empowering businesses and communities to flourish in tandem.”
Perhaps the most symbolically significant migration is that of Simplex, the deep-tech startup that recently revealed plans to establish a substantial $13 million factory in Riyadh, Saudi Arabia, dedicated to manufacturing computer numerical control (CNC) machines. This bold stride follows the company’s successful securing of $13 million in funding and the formalizing of a memorandum of understanding (MoU) with the Saudi National Center for Industrial Development (NCID).
Simplex’s inaugural Saudi factory, a landmark venture, will span a 20,000-square-meter site in the Saudi capital and is projected to commence operations in the first quarter of 2026, according to company statements. The MoU signing ceremony was a notable affair, attended by Eng. Khalil bin Salama, Saudi Deputy Minister of Industry and Mineral Resources for Industry Affairs, and Eng. Ahmed Shaaban, Simplex’s chairman, underscoring the significance of this industrial alignment.
CNC machines, the silent workhorses of modern manufacturing, employ pre-programmed software to orchestrate the operation of machine tools, making them indispensable for contemporary production processes. They are crucial for precision manufacturing, shaping and refining materials with meticulous accuracy. The Riyadh-based factory is strategically positioned to address the growing demand for these machines within Saudi Arabia and the broader region, poised to become a cornerstone of the Kingdom’s industrial ambitions.
“We deeply appreciate the unwavering support extended by the Saudi National Industrial Development Center,” affirmed Shaaban. “This factory represents a crucial leap in our broader strategy to penetrate regional and global markets, anchoring ourselves firmly within the evolving industrial landscape.”
However, for Shaaban, this momentous move sparked a reaction that was more prickly than celebratory. Venting on his social media platform, he recounted sharp criticisms aimed at the company following its Saudi-bound announcement. “I just want to clarify that we have not closed our factory in Egypt, nor are we thinking about doing so,” Shaaban insisted.
“[It is just that] we have requested the adjacent piece of land for more than nine months now, and still, it’s as if we are stuck in the same place with no progress or any new developments,” he said.
“If we were to compare our experience in Saudi Arabia with that in Egypt,” Shaaban continued, “it would be an unfair comparison. In Saudi Arabia, we agreed upon, obtained an industrial registration, and chose the land all within fifteen minutes while sitting there. Everything was accessible and available.”
A constellation of other startups has since followed this rapidly expanding route. Most recently, WellPal, an e-commerce platform curating health and wellness products, announced its migration to Saudi Arabia. Founded in 2019 by Mohamed Ali and Mohamed Tantawy, WellPal initially gained traction within Egypt, offering a carefully vetted assortment of fitness and wellness essentials via a dropshipping model.
“We are proud to champion Saudi Vision 2030,” Mohamed Ali, WellPal’s CEO, said, “and eagerly anticipate empowering citizens to embrace smarter and healthier lifestyle choices through our AI-powered platform, guiding them towards holistic well-being.”
This startup exodus transcends mere expediency. Many of these ventures were initially conceived and nurtured to solve pressing local challenges within Egypt, the Arab world’s most populous nation. The decision to shift their operational epicenters abroad speaks volumes about the deeper structural fissures in Egypt’s startup ecosystem, hinting at systemic pressures pushing innovation outward.
Economic Pressures at Home
Egypt’s economic turmoil is the primary driver of startup migration. Multiple currency devaluations have battered the Egyptian pound, which lost nearly 40% of its value in early 2023 before collapsing further after a mandated float in March 2024, reaching just $0.02 per pound. High inflation and soaring interest rates have compounded financial strain on local businesses, especially startups.
Regulatory and Legislative Roadblocks
Egypt’s startup ecosystem faces an unfriendly regulatory landscape. Unlike Algeria and Tunisia, which have startup-specific legislation, Egypt’s fragmented laws — ranging from the outdated Companies Law №159/1981 to the broad Investment Law №72/2017 — create legal uncertainty. Entrepreneurs must navigate overlapping frameworks that hinder business operations. While the government has taken steps, such as launching the Entrepreneurship and Startup Companies Unit in 2023 and forming a Ministerial Group for Entrepreneurship, meaningful regulatory relief remains elusive.
A proposed five-year tax exemption for startups, championed by President Abdel Fattah El-Sisi, was widely celebrated but ultimately excluded from the final legislation, which instead favored SMEs. This setback reinforced concerns about the government’s commitment to fostering innovation.
Competitive Pressure from the Gulf
Meanwhile, Gulf nations have crafted attractive startup ecosystems. The UAE offers a low 9% corporate tax rate, with businesses earning under $102,000 exempt. Its free zones provide 100% foreign ownership and tax exemptions, reducing operational costs. Saudi Arabia’s Vision 2030 initiative further incentivizes startup relocation with financial grants of up to $900,000 and subsidized office spaces. Companies seeking to operate in Saudi Arabia must establish a local headquarters, ensuring long-term economic contributions.
With economic instability and regulatory challenges at home, Egypt risks losing its brightest entrepreneurs to more supportive environments in the Gulf.
Looking Ahead: Will Egypt Retain Its Startups?
According to a report by The Big Deal, Egypt, along with Kenya, Nigeria, and South Africa, is a leading recipient of tech startup funding in Africa. While these countries were the top three for funding in 2024, Egyptian startups secured the third largest amount, attracting over $400 million in VC investments. However, despite its strong position in the MENA startup ecosystem, Egypt faces a critical juncture. Many fear that unless the government enacts significant regulatory reforms and achieves economic stability, Egyptian startups may increasingly relocate their headquarters abroad for long-term growth, especially given the attractive incentives offered by Gulf states. This trend is already evident, as Dubai, Abu Dhabi, and Riyadh become increasingly appealing destinations for Egyptian startups to scale their businesses, further from their home country.
“We still aspire to expand further in Egypt, but is there anyone responding? I truly hope so, God willing,” Ahmed Shaaban added.
