It’s an exciting time to be working in the Middle East entrepreneurship ecosystem. 10 years ago uttering the world ‘startup’ may have been met with a quizzical look. Today, there’s a real buzz and excitement from all those working in entrepreneurship (and many outside too) and the explosion in the number of startups is evidence of this.
While the increase in the number of startups across the Middle East has been very welcome, how has this translated to exits? The first ‘big’ exit, and arguably the catalyst for the growth in entrepreneurship in the Middle East, was the sale of Maktoob, the first bilingual Arabic and English email provider, to Yahoo! for $164m in 2009.
It was not until this year that this acquisition was matched in financial terms. First, Rocket Internet acquired Kuwait’s Talabat, the online food delivery service, for $170m in February. Only a few months later though, this was blown out of the water in terms of size with Delivery Hero’s acquisition of Turkey’s Yemeksepti, another online food delivery service. While you may not have heard of Yemeksepti, you are probably a lot more likely to know the name under which it operates in the GCC: Foodonclick.
In the preceding years, there were numerous smaller acquisitions in a variety of sectors, including (but not limited to):
- Tiger Global Management bought Cobone, a daily deals website, for around $40 million
- Thomson Reuters bought Zawya, the business information portal, for an estimated $40 million
- PAYFORT acquired White Payments, an online payments solution, for an undisclosed amount
- SAS Holding acquired Glowork, a Saudi company that connects women with jobs, for $16 million
- OLX bought Dubizzle, the classified listings website, for an undisclosed amount
- Japan’s Cookpad bought Shahiya, an Arabic recipe website, for $13.5 million
What’s interesting to see as well is the number of late-stage startups acquiring other early-stage startups to further expand. For example, Careem acquired Taxiii in Morocco and Souq acquired Sukar. Exits have not been limited to global investment management firms, private equity firms or the like. If anything, Middle East based firms have been more active than non-MENA firms with startup acquisition.
We’re also seeing an increasing number of large and later stage rounds in the region. Just last month, Careem, the car-hailing app, raised a $60 million Series C round. Fetchr was the recipient of New Enterprise Associates’ first investment in the Middle East as part of its $11 million Series A round and last year Souq raised a $75 million round.
So what does this mean for MENA? Well it proves that the entrepreneurship path can lead to big rewards for founders, their employees and investors. There’s a clear uptick in both exits and large rounds across the Middle East and we only see that trend continuing. For angel investors, the trend is particularly welcome news. With greater exit opportunities for startups, the chance of seeing a return on their investment increases.