Partners Sherif ElRakabawy and Mohamed Ewis were deep in negotiations with a venture capital firm for funding for their startup, Egyptian online shopping portal Yaoota, when suddenly: Radio silence.
"I was thinking that the deal is at risk (potentially lost), especially as we were in the middle of negotiations, and since back-and-forth communication had been much more frequent," said ElRakabawy by email.
He realized that he'd heard Hani Buttikhi, the investor he'd been talking to from UAE-based KBBO, and Nabeel Abdulrahman, CEO of the firm, were to be at the Egyptian Economic Development Conference in Sharm el Sheikh. (This was back in March.)
"I decided on the morning of the conference to jump into the car, drive six hours straight with no security clearance, which was impossible to obtain, and no hotel booking, with all the hotels overbooked," ElRakabawy said.
He spotted Buttikhi in a crowded hall, amid thousands of attendees, and the two agreed to meet the next day in the lobby of the Hyatt Hotel, where they came to an agreement.
They signed a term sheet that same week. The result, just announced: Yaoota landed a $2.7 million Series A round from KBBO.
With a population of 80 million, Egypt is a king-sized market that is returning to economic growth rate after the political turmoil that followed the Arab Spring in 2011. GDP growth, at 2.2% annually in 2014, is expected to spike to 4.2% this year and to 4.8% in 2017.
Bootstrapped by its founders to this point, Yaoota is a shopping engine, comparable to
Yaoota's traffic has increased to about 100,000 a month since the site's launch in 2014, he said. With a team of 12 people, the site is hiring another three in the next few months and plans to expand first in the Gulf Countries.
Part of what the company wants to do, said ElRakabawy, is to educate Egyptians, who are the majority of users, about online shopping. Its logo includes two "crazy tomatoes" that are a key part of the company's brand and around which Yaoota will create content. "Funny comics that attracts the attention of users," he said. Online shopping is expected to boom in the MENA region in the next few years, as many consumers move online for the first time. Seventy-two percent of Middle East consumers made their first purchases online within the last two years, according to Go-Gulf.
ElRakabawy caught the entrepreneurial bug in the United States, when he was a visiting scholar at Berkeley. He came back to Egypt after studies abroad, worked briefly for Booz & Co., developing the prototype for Yaoota after midnights. He and Ewis had met at school.
They launched the company in 2012. The co-founders spent $200,000 to get Yaoota off the ground; basically their entire savings, ElRakabawy said. During the aftermath of the Arab Spring, he was shot at, by a sniper on top of a mosque who was aiming at pedestrians, and his apartment was broken into. Their company is called Flying Elephant Lab, after an observation New York Times columnist Thomas Friedman made about the revolution -- that it was like watching elephants fly.
And in a detail that will sound familiar to many U.S. yet-to-be-funded founders, he and Ewis forewent chairs to save money and -- a detail that will sound unfamiliar to Americans -- took 12-cent bus rides.
That all might explain that when he perceived the A round to be at risk, he couldn't let it happen. "Everyone thought I was insane to just jump into the car and drive all the way with no ticket / booking / security clearance for roadblocks along the way, and that it wouldn't work at so many levels," he said. "Well - it did work."
