Investor bets Egypt’s Swvl will hit $1bn in revenue by 2023

Will Egypt’s Swvl the next big thing to come out of Africa? Maybe.

Swedish venture capital (VC) fund Vostok New Ventures is betting on the Egyptian startup turning a revenue of $1-billion by 2023.

In June the Cairo-based transportation startup announced that it had raised $42-million from investors that included BECO Capital, Endeavor Catalyst, MSA and Vostok New Ventures (see this story).

Vostok invested $16-million in the round for a 10.2% stake in the startup. This puts the valuation of the Egyptian startup at a whopping $156.86-million.

The startup’s app — already in use in Egypt and Kenya — connects commuters to a bus line through an app. Last month MenaBytes reported in an article that the startup had expanded to Pakistan.

In its financial report for the second quarter and the first six months of 2019, Vostok New Ventures said it remained optimistic about the performance of a company whose June deal was likely the biggest for a tech startup (a software company no older than seven years) in Africa so far this year.

Sweden’s Vostok New Ventures betting on Egyptian startup Swvl turning a revenue of $1-billion by 2023

“We believe the overall target of $1-billion in GMV (gross merchandise value) by 2023 is achievable and that Egypt alone could become worth at least $500-million and, if successful in Lahore, Karachi, Nairobi, Lagos and Johannesburg, this upside obviously multiplies,” the investor wrote.

The startup was founded in 2017 by CEO Mostafa Kandil (pictured above), Ahmed Sabbah and Mahmoud Nouh. It allows users in Egypt and Kenya book fixed rate affordable rides on its network of vans and buses through its app.

In June US business publication Bloomberg reported in an article that Kandil said the startup plans to enter “two or three more” African cities by the end of the year. Kandil told the publication that Lagos would most likely be its next market.

Said Vostok in its latest financial report: “We have studied this opportunity for a few years but only invested now as Swvl has proven that there is real demand and that the economics work”.

‘Entrepreneur of high quality’

It said the overall total addressable market in emerging markets is estimated at about $150-billion.

“Looking at Swvl’s cohorts and bus lines in Cairo where bus utilisation is over 60% you see a clear path to gross margins close to 30% over time, higher than taxi hailing at roughly 20%, likely warranting also higher multiples for this type of business,” it said.

The investor referred to the startup’s CEO Kandil as an entrepreneur of “very high quality”. “Previously at Rocket and Careem, Mostafa Kandil has built a team that executes well and at high speed.

“In fact, I believe that Mostafa may be the first Arab tech entrepreneur that builds a global product. All the other successes coming out of the Arab world have been either built by foreigners or have been solely focused on the local region,” it said.

Read more: Egypt’s Swvl raises $42-million on a reported $156m valuation [Updated]
Read more: Egypt’s Swvl closes BECO Capital led Series-B round in the ‘tens of millions’
Read more: Are these the 10 biggest disclosed African tech startup deals of 2018? [Updated]

Featured image: Swvl co-founder and CEO Mostafa Kandil (Facebook)