Where are all the exits?
By Amir Farha
Potential investors in our funds always ask this question. They struggle to see the light that we all believe in and know is coming at the end of a very long and dark tunnel. It’s one of the hardest things to answer, since it’s a numbers game, and we need more exits and bigger ones for the venture capital industry to thrive. A lot has changed since we started investing almost 6 years ago. The most notable milestones have been the biggest acquisition in the MENA region with Amazon buying Souq, the creation of the first $1bn technology company with Careem, and the launch of Noon.com. These are critical moments in the growth of our ecosystem.
Last year, one of our portfolio companies, JadoPado, got acquired by Noon.com. Noon was looking to enhance its product and team given its delayed launch, and this made total sense for both parties. JadoPado gets a soft landing into Noon, and Noon gets an experienced team and solid product to accelerate its rollout and strengthen its offering. This was under the radar, but a milestone acquisition in a very competitive space.
More recently, another one of our portfolio companies, Roundmenu, has been acquired by Careem as Careem looks to launch its own food delivery platform. The story with Roundmenu is a unique one, as most startup experiences are. Zaid Jawad and Ali Sinai partnered together to begin their journey into the food tech space in 2012. Ali, previously at Bayt.com, was very close to my partner Dany, and is an awesome human being with strong track record in sales and business development. Zaid, previously the co-founder and CTO of Zawya and the visionary behind the idea of Roundmenu, had strong experience in both product and technology. We saw it as a perfect match, and so we invested.
In 2012, the team went about the challenge of building a discovery platform for restaurants. They offered users exclusive promotions and generated leads for restaurants. It worked for a while, and they then explored launching delivery and reservations but competition came to market much faster than anticipated. Food tech, specifically delivery and dining offerings were popping up everywhere. Talabat, which was acquired by Rocket Internet in 2015, was fast becoming a leader in delivery, and ReserveOut launched its reservation platform in Jordan (and soon after, UAE). Entertainer launched their mobile app and raised funding from Abraaj, and Zomato entered the UAE after raising a massive round in India. The sector heated up quickly and the Roundmenu team had to battle across all fronts in order to continue growing. They tackled a lot of the problems throughout this journey and managed to continue gaining traction across most of their KPIs despite the mounting challenges they faced. The team leveraged technology to their advantage, building out one of the largest indexes of restaurants in UAE, KSA and Egypt to help drive traffic, as well as partnering with delivery and reservation platforms to help drive bookings and transactions across their restaurants.
Fast forward, Careem raises a large round from Rakuten and others, and forms a Corporate Development Team led by Zachary Finklestein, who was tasked to build and buy new business lines that were strategic for the company. Careem didn’t have a food vertical, and Uber Eats and Deliveroo were already present in the UAE so they took the opportunity to get the journey started with a platform and team they could learn from. We are so excited for both Careem and Roundmenu, and for the founders that made this magic happen. This is a moment to remember, and one that will happen more often in the future.
Today, companies like Careem, Noon and Propertyfinder have reached significant size and while competition in the industry continues to grow, these companies (and more like them) will continue to emerge as acquirers for the smaller startups in our ecosystem. The impact of these exits are already resulting in capital being recycled back into the ecosystem, while creating role models for future entrepreneurs (e.g. Mohammed Jaffar starting Faith Capital, Samih Toukan running Jabbar and Omar Kassim starting Esanjo). These are the catalysts that will drive more M&A activity, and will get the larger traditional conglomerates to participate in this activity. As we head into 2018, I only see more exits coming both from local players as well as international companies wanting to come to the region. It’s happening. To those that question where are the exits, I say they’re here and growing, so why don’t you jump in and help us get there faster?
