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Why Are Investors Rushing After North Africa’s Fashion Startups?

No region of Africa has seen as much investment in its fashion e-shops as North Africa, and particularly Egypt. In 2020 alone, about seven major deals were closed on fashion startups in the region, at least six of them in Egypt. This trend is uncommon in the startup ecosystems of Sub-saharan Africa. In fact, apart from Afrikrea, an Ivory Coast-based startup, whose ecommerce platform has a fashion section, and which recently raised $1 million in funding, it is very rare to see a startup exclusively built for fashion raise investments from venture capital firms as well as other types of investors in other parts of Africa. What, therefore, explains these funding trends? Below are some hints:

S/NNAME OF STARTUPBASE COUNTRY OF OPERATIONSAMOUNT OF INVESTMENTYEAR OF INVESTMENTINVESTORS
1BrantuEgypt$1 million (Series A)2O20Sawari Ventures
2La ReinaEgyptUndisclosed (6-figure);
$1 million
2020;
2018
500 Startups; Algebra Ventures and a host of other angels.
3DabchyTunisia$300,0002020500 Startups; Flat6Labs; Saudi Venture Capital Company (SVC);  Khobar-based Vision Ventures; Daal; a group of angel investors.
4JilateeEgyptBetween $31,000 and $46,0002020Flat6Labs
5DresscodeEgyptUndisclosed (6 figure)2020Egypt Ventures
6Garment IOEgypt$450,0002020Egypt Ventures; 500 Startups (Via 500 Falcons Fund)
7GlameraEgypt$250k Undisclosed;
(6-figure seed)
2019;
2020
Unnamed Saudi Investor; Dual Gate Investment Holding

What Is Common To All These Investments So Far? 

Fashion is the underlying motive, but looking under the layers, there are strands of insights to be gleaned from the investments, the most striking of which is that virtually all of the startups are focused on women’s fashion needs. One strong example in this direction is the startup Brantu which pivoted away from Elprices in 2018 following the latter’s failure in that year. Elprices, before its failure, was mostly an ecommerce platform. However, while Brantu displays fashion brands for outright purchase on its platform, and another Egyptian fashion startup La Reina combines both outright sales and rental, both target Egyptian women. Dresscode, another Egyptian fashion startup, also sells exclusively to women. Even Tunisia’s Dabchy sells exclusively to women and kids. 

Another insight is that the startups’ core product offerings revolve around clothing and beauty. Other additional offerings such as health, salons, spas, gyms, diet, etc may be on display on the platforms, but the startups’ major stocks in trade are clothing and beauty. This is particularly true for Glamera. Apart from facilitating appointment bookings for beauty and health services, the startup also extends such services to salons, spas, gyms, and diet and dental clinics. 

Lastly, the greatest point of intersection of interests for most of the startups seems to be that they focus on connecting local brands with end users. Egypt’s textile industry is culturally rich and unique. This is, perhaps, where the startups derive their strengths from, in the face of the harmful effects of globalisation, especially the increasing infiltration and preference for foreign brands over local brands in most African countries. This point was particularly noted by Ali Zakaria, Managing Partner and co-founder at Dresscode during the startup’s last fundraise in August this year. 

“We have managed to reach 9000 monthly recurring users without any funding,” Zakaria was quoted as saying. 

“For many years [Egyptian] consumers lacked affordable, durable products to depend on rather than imported products, that are usually expensive and not the best quality,” he added. 

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Why Is North Africa’s Women Fashion, Therefore, So Attractive To Investors? 

Perhaps one memorable way to digest the continuing rise of the women fashion startup ecosystem in Egypt is by remembering the success story of Okhtein, a women-led startup which is purportedly the personal brands of Egypt’s First Lady Entesar el-Sisi and popular singer Beyonce. So successful is the Okhein brand that it is now a strong match for popular Italian bag brands. 

“It feels very empowering [after] many people told us at the very beginning that Made in Egypt products won’t stand a chance next to high-end fashion Italian brands, and that if we want retailers and people to trust our products, it needs the Made in Italy label,” Okhein’s founders Mounaz and Aya Abdel Raoul told Al Arabiya English.

“Four years later, we managed to prove them wrong and have our products displayed on the same shelf as the Italian designers brands,” they said. 

This is, therefore, what fashion startups in Egypt are capitalising on. In other words, apart from collating locally made clothing for local consumers, the fashion startups are also helping to shoot North Africa’s rich textile craftsmanship to the world. 

“We’re pleased to back the team behind Dabchy and make this our first investment into the Tunisian market, ” says Hasan Haider, a partner with 500 Startups, during Dabchy’s last fundraise. “What the team have managed to achieve so far has been amazing, and we look forward to Dabchy continuing to lead the way for used fashion online in North Africa. There is a significant market need and demand for the product, and that has already been demonstrated by their traction so far.”

According to the Ready-made Garments Export Council, Egypt’s apparel industry, for instance, contributes 3 percent to the country’s gross domestic product, represents 15 percent of non-oil exports, and employs 33 percent of the industrial labor force. Egypt also has more than 2,500 apparel factories and it is considered to be the first sector in terms of the labour force, which recorded 1.5 million workers, 50 % of which are women. With about $1.6 billion exports in 2018, the apparel sector is the country’s most important industrial sector. 

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