Becoming an entrepreneur does not always mean starting a multi-million peso company; sometimes it could be as simple as starting a business in the garage of your parents' house. This is just what Mostafa Hemdan did to start up Recyclobekia, an electronic waste recycling company that now sells around 360 tons of e-waste per year.
The 26-year-old founder of Recyclobekia, along with 19 other engineering students from his university, set up the firm in the garage of Hemdan's parents' house in Tanta back in 2011. The young engineer was inspired to bring an idea to life after he watched a documentary about how a new company built a business separating precious metals from discarded computers, and selling both the metals and scrap materials to separate recyclers. At that very moment, Recyclobekia was born.
Hemdan watched this documentary over and over again and showed it to his closest friends as he recognized the clear gap in the Egyptian market, Metwally Maddy, Recyclobekia's marketing manager told Egypt Independent.
The idea stemmed from the fact that Egypt has overlooked the need for an e-waste management system to protect the environment.
“E-waste consists of toxic and hazardous metals, which rot gradually and – eventually – dissolve into the soil which then leads to contaminated water and food, or even worse, some are burned causing pollutant air emissions," he said, explaining the disadvantages of piling up electronic disposal in landfill sites.
"We knew nothing about recycling back then but it was clear no one else really knew either but [Hemdan] found great potential in extracting metals like gold, silver, copper and platinum from mother boards " Maddy said.
Hemdan introduced the idea to his colleagues and soon got ready to enter an entrepreneurship competition, Injaz Egypt, to help further develop their start-up idea. With a first place prize of US$10,000 up for grabs, they developed a business plan and won the competition. Currently Hemdan hires more than 30 people across various warehouses, and sells US$2.4m of electronic waste per year – but not without overcoming some hurdles.
When the Egyptian engineers started the business in 2011, three months after the January 25 Revolution, they peddled for trade by putting an ad on a global e-commerce website that connects businesses to other businesses.
Hemdan wrote a post: "I have old computers to sell if there are any green buyers." Almost immediately, he was contacted by buyers from China, the United States and England who were interested to know the price. Not knowing market ranges, Hemdan went again on to the website pretending to be a buyer to get an estimate of how much to ask for.
Settling on a client from Hong Kong, who ordered 6,000 hard drives, Hemdan figured that he needed to raise US$15,000, but this was before he won the Injaz Egypt competition. They hurriedly researched on how to ship materials and set up safe online banking. They then partnered up with a local scrap dealer to separate the parts of old computers they were able to collect from schools and local businesses. Finally, they shipped the hard drives, and received their first US$1000 capital the day the shipment was made – four months after their first order.
"Funnily enough, we even asked for a loan from one of our doctors at university to be able to buy the hard drives in exchange for 40 percent of the profits from our first sale, and he was down," Maddy said.
Within the first year of operations, Recylobekia won several local awards and raised US$150,000 in additional capital. Seeking recyclable materials, Hemdan later moved to Cairo, whose 17 million residents yield around 15,000 tons of trash per day.
Cairo's waste management is operated via an informal system that depends on the "Zaballeen" – a Christian community of rubbish collectors who manually sort through trash to resell the plastics, paper and metal. However, the Zaballeen do not collect e-waste, and this is where Recylobekia's work came in handy to collect products like old computers and printers from companies.
When Recylobekia then moved to Cairo for their expansion plans, they realized that the amount they discarded was much lower than what they had expected.
"We had no business background whatsoever, so we tried to learn more about the market to rectify the situation and alter our business model, but soon after in 2013, we were on the verge of going bankrupt due to the political upheavals in the country…we had lost most of the investment we'd received," Maddy told Egypt Independent.
The economic and political turmoil, along with the fluctuations in the price of gold had brought Recyclobekia to the brink of a breakdown, but the entrepreneurs sailed through it by seeking alternative partners across the Atlantic, where Wisconsin-based Dynamic Recycling offered better payment terms.
"Through workshops we attended, we were able to gather a precious circle of networks that were able to support us through an industry that is very cash intensive," Maddy said, describing how the company was able stand on steady grounds again.
Recyclobekia is now working with companies like General Electirc, Orange, Intel, Oracle, and ExxonMobil whom sell their e-waste for recycling to Recyclobekia.
Maddy said the company is trying to find a way to introduce the idea of refining – the third phase of recycling – locally, but not before they build up their own pool of collection networks.
"When we open up our own factory, we want it to be sufficient enough to serve the entire MENA region," Maddy said.