Startups: Tech and consumer focus is a winning formula
When it comes to funding rounds in the Middle East and North Africa (MENA), certain startups seem to be in the driver’s seat. The flashiest was the $1.5 billion deal closed by Egyptian firm SWVL and celebrated in Times Square. This was followed by a slew of others: $2.4 million round for Saudi Arabia’s WeDeliver, $15 million for Dubai-based fintech firm Sarwa and a sizable $415 million for cloud kitchen Kitopi.
What’s the big deal with all these deals? Have our phone addictions helped boost the economy?
In a way, yes. Exhibit A: These deals back companies that showcase a consumer-centric focus using tech. Need to get across town in Cairo? SWVL, a ride-sharing startup, utilized tech to solve a mass transit problem in a sprawling urban area with scalable appeal. They took a traditional, public bus transport system and gave consumers the ability to book.
Need to pick up your friend’s laptop in Riyadh? WeDeliver uses artificial intelligence and machine learning to have anything delivered by freelance drivers using a mobile app. Hungry or want to manage your own finances? You get the picture.
“With tech and data analytics, we’ve started seeing a breed of new companies emerging to solve transport problems at scale,” explained Mohammed Absi Halabi, founder and CEO of Swftbox, a Dubai-based tech startup that focuses on delivery and fulfillment.
“So that trend continued. The next logical evolution was around logistics for us.”
Interest in tech is nothing new, but there are two exciting trends underpinning these deals. One is the rising international investor interest in well-managed, innovative and scalable companies in MENA. At business conferences, there were only a handful of deals like these that kept coming up over and over (cough, Souq, cough). But now, the global appetite for regional startups no longer feels occasional.
“It is a super interesting time: Kitopi and SWVL have created the region’s third and fourth tech unicorns in the space of a single month,” said Abdulla Mutawi, partner and head of corporate commercial at Al Tamimi & Co., whose venture capital team represented the SPAC company behind SWVL’s deal, as well as legally representing Softbank in the Kitopi deal.
“The next 18 to 24 months will show the tech and venture investing ecosystem in our region now moving into a new league as a result of these deals.”
The second key trend is boldness in the private sector. The SWVL deal in particular highlights the fact that traditionally state-provided services can be supplemented — or even replaced — by private sector operators who will be forced to remain competitive.
“In the long run, this will ensure that state-owned operators will also have to be competitive, quality focused, less bureaucratic and more resistant to corruption — and these are all great catalysts for economic development in any market,” said Mutawi.
“This phenomenon will replicate itself across any number of social infrastructure applications and is another factor that will ensure it appeals to any investor interested in emerging markets.”
With tech startups gaining momentum, it’s an exciting time to be an entrepreneur; particularly if your business allows people to get what they need with a few clicks on their phones.