Technopolitan bullish on Saudi Arabia filling revenue gap
In 2020, the founders of Egyptian start-up Technopolitan saw an opportunity in the global rise in demand for remote working due to the Covid-19 pandemic.
That led them to set up the property technology start-up, which has transformed underutilised spaces in Cairo, such as club houses and restaurants, into flexible work environments that can produce recurring revenue and footfall.
Technopolitan is also building its own longer term co-working spaces, under the Copolitan brand, and offering technology services to companies through a third line of business, Spaceware.
However, the start-up ran into unexpected challenges over the past year as it scaled up.
The economic fallout of the Russia-Ukraine war hit Egypt hard, resulting in supply chain challenges, record inflation and a weakening of its currency after several devaluations.
“From the real estate side … every devaluation that has happened [since last year], there is a struggle to finish the construction work and fit-out,” Technopolitan co-founder and managing partner Mohamed Ashraf tells The National.
Undeterred, the founders ramped up plans to expand to Saudi Arabia, the Arab world’s largest economy, and expect to open an office there next month.
“We’re always optimistic,” Mr Ashraf says. “We’re very flexible to change our direction when we find problems happening.”
The global PropTech market, referring to the use of technology and innovation in the real estate industry, is set to grow to $86.5 billion in 2032, from $18.2 billion last year, according to Future Market Insights.
In Egypt, there are still relatively few players in the co-working space. MQR, formerly AlMaqarr, was ahead of the curve when it was founded in 2012. It now has 11 locations in malls, universities and business parks. Co-55, founded in 2019, has two large locations
in malls in east Cairo. The Consoleya co-working space in Cairo’s city centre opened its doors a couple of years ago.
Technopolitan’s five founders – Mr Ashraf, Ahmed Shakib, Fatma Ashraf, Hesham Enan and Mohamed Dessouki – have a background in technology.
“We’re a technology set-up that serves the real estate sector,” Mr Ashraf says.
“We know the pain that comes out of the commercial and real estate industry in general and we wanted to create an all-inone platform that manages the landlord in any space and the tenant using the space.”
Its Moca app allows people to book a workspace or meeting room by the hour or day. A day pass starts from 200 Egyptian pounds ($6.50).
“The new generation in general doesn’t want to work in the way we worked. They don’t want to work in closed offices with a Polycom … They want to have their earphones, they use Zoom, they want to sit in the sun and natural light. They don’t want to come into the office five days –
they want to come two or three days,” Mr Ashraf says.
The current Moca locations include the upscale Palm Hills Club in the 6th of October suburb west of Cairo’s city centre, U Bistro in the island district of Zamalek and Fuel Up in east Cairo. A fourth location is planned in the 1920s Boutique Hotel and Restaurants.
For its contractual Copolitan brand, the start-up is creating office space in the Palm Hills compound and fitting out a 1905 Heliopolis building constructed by Belgian industrialist
Baron Empain. The focus for Spaceware is exclusively Saudi Arabia and, potentially, other Gulf countries.
“On the tech piece, we see the path coming from the Gulf more, whether on funding opportunities or solid business opportunities,” Mr Ashraf says. “Tech on its own – Egyptians put it in the drawer.”
Mr Shakib, head of research and development and innovation, says “PropTech always rings a bell when you talk to any Saudi investor”.
Spaceware was part of the King Abdullah University of Science and Technology’s Taqadam six-month accelerator programme that ended in March. The team was also awarded a $40,000 grant.
Overall, Technopolitan has secured $200,000 in working capital from the founders and partners, as well as another $250,000 in seed funding.
The start-up is planning a series A round but not before the first quarter of 2024.
“We’re trying to increase our valuation, to have more locations
operative, to validate better the technology and to have two or three awarded businesses in Saudi [Arabia],” Mr Ashraf says.
The three-year plan is to build 5,000 square metres for Moca and 25,000 square metres for Copolitan, and have 100,000 square metres in Saudi Arabia operated by technology.
So far, about 800,000 square metres in the kingdom are in the pipeline, which means closing only 20 per cent would surpass their goal.
“That’s why Saudi [Arabia] looks fruitful,” he says.
“If these come in, I won’t need funding. I would only need funding to scale.”
The founders hope that they will be able to start breaking even by mid-2024 and be profitable by the end of next year.
They could look to other markets but the UAE, for example, is already saturated and smaller, Mr Ashraf says.
“Saudi [Arabia] gives you both. The market is not yet crowded and even if it gets crowded, it’s still huge,” he says.
From the real estate side … every devaluation that has happened, there is a struggle to finish the construction work MOHAMED ASHRAF Managing partner at Technopolitan