Jibrel: May Update
Jibrel saw great progress on the Android version of Jwallet this month. Further, the company has been making strides on partnerships and blockchain pilots — including digital bonds and sukuk, and especially equities.
Overall Project Status
Earlier in May, the tech team was pleased to release the 2.0 version of the Android Jwallet, which focuses on user interface and user experience. This full re-design includes improved transaction functionalities, support for 7 different languages, and more. Following the 2.0 launch, the team released additional minor updates focused on addressing bug fixes and enhancing performance for the 2.X series. Finally, the team continues to make progress on Jwallet web, Jwallet iOS 2.0 and Jibrel Search 1.0, which are slated for release in the second half of 2019.
In terms of marketing, Jibrel is working on a number of key fronts — which include refining its approach to acquiring Jwallet customers (especially on Android), and deepening the company’s relationships with its Asian community (and with the Asian market overall).
On the business development side, Jibrel continues to test, learn, and reiterate our B2B offerings based on market & regulatory feedback, enabling us to optimize efforts across different use cases. Particular priority areas include debt (digital bonds and sukuk) and equity in the Middle East. Since Ramadan is a slow month for the region, the team has primarily made progress on the equity tokenization front, collaborating with the Jibrel tech team and with regulators on finding use cases and solutions within that realm.
Achievements, Challenges & Limitations
Regulation and Collaboration
As discussed in the deep dive portion of our Jibrel April Update, federal regulation can often be a challenge for tokenized collaboration with regulated financial institutions. In contrast to the overall challenges of the landscape, however, Jibrel is pleased to continue a relationship with ADGM. This collaboration represents the most relevant legal and regulatory framework for the specific needs of Jibrel’s UAE-focused crypto and blockchain projects.
While SEED Group was one framework Jibrel could have worked under, there are more suitable regulators for this context, and we continue to work directly with those regulators. Collaborations like these will allow us to implement our solutions, in a manner similar to what we had planned with SEED — all while having an even clearer crypto asset framework. In fact, we have already been using the ADGM sandbox for the Hilal Bank sukuk implementation.
Although SEED was an extremely exciting initiative for us to explore, various roadblocks prevented us from materializing our vision when we started to work with them. We remain thankful for our past interactions with them.
Ultimately, we continue to pursue other prospective partnership avenues in the Middle East and around the world. Jibrel’s alliances in the Middle East include the FinTech Hive of the DIFC (Dubai International Financial Centre), as well as the GBSA (Gulf Bond and Sukuk Association).
New Talent: Latest Hires
Jibrel continues to selectively hire in key areas, with an eye toward bridging specialized skill-gaps. This month, we’re pleased to announce that Vladimir Demin has joined our tech team.
Vladimir is an expert in system administration and DevOps, and will help supercharge Jibrel’s expanding infrastructure needs.
Monthly Deep-Dive
The State of Startup Funding Models in the Middle East
What is the Startup Environment in MENA?
Home to a population of more than 430 million people and with a GDP of USD $2.8 trillion, the MENA region is one of the most digitally connected in the world. Yet, while almost $3 trillion was created by the global startup economy between 2016 and 2018, MENA startups have been falling behind the global pack. With over 70 exits over the past 5 years and more than $3 billion in disclosed exits, MENA has been mostly untapped.
In 2018, VC investments in the Middle East totaled a mere $893 million (up by 31% from 2017), compared to $130.9 billion in the U.S. and $22.3 billion in Europe during the same year.
Despite greater awareness of the region from global investors (primarily due to the acquisitions of Talabat, Souq and Careem), it still ranks far below major startup ecosystems in terms of investor interest in startups.
Recent Crowdfunding Traction
In 2016, Title III of the JOBS Act was put into effected by the SEC (Securities and Exchange Commission) in the United States. This opened the door for retail investors (who were previously excluded from startup investing) to fund the companies they believe in. While there are still certain limitations, such as accredited investor requirements, crowdfunding investment platforms have gained a lot of traction all over the world.
Inefficiencies of Existing Finance Models
Although venture capital is the means of financing that is most in line with the needs of growth-stage tech startups, their model primarily works just as it did when it was designed in the 1970s. This model is riddled with inefficiencies such as:
High Entry Barriers and Continued Disparity: The level and breadth of venture investment continues to recalibrate to reflect a concentration of capital in the hands of fewer institutional investors. The industry is getting even smaller and top performances are concentrated in a few (mostly US-based) firms only.
Imbalance Between Demand and Supply: The total financing gap for MSMEs in MENA is estimated at $210-$240 billion, of which formal MSME finance gap is estimated at $160-$180 billion. This imbalance has put venture capital firms in a favorable position with endless lines of entrepreneurs waiting and begging for them to invest in their startups.
Limited Liquidity and Long Lockup Periods: The current market standard 2% management fee and 20% profit-sharing structure (“2 and 20”) pays VCs more for raising bigger funds, and allows them to lock in high levels of fee-based personal income regardless of fund performance. Allocation decisions by LPs are not based on a rigorous methodology and are largely relationship-driven.
Misalignment of Limited Partner / Managing Partner Incentives: Moreover, a “2 and 20” model over 10 years breeds a rent-seeking behavior and fails to create good structures that align short-term incentives with long-term innovation. This makes it nearly impossible for a traditional VC fund to truly think long-term.
Largely Manual Processes and Lack of Effective Software Tools: The investment process often takes weeks or months ,with multiple intermediaries involved. It is costly and time-consuming, with plenty of room for optimization.
Inability to Add Value: VCs, for the most part, consistently fail to provide their portfolio companies with relevant value-adding services despite active efforts and initiatives.
Jibrel’s Role in the Ecosystem
Over the coming months, we look forward to sharing more information about Jibrel’s role in democratizing access to investment opportunities and nurturing the MENA (Middle Eastern and North African) startup ecosystem!
Conclusion
Key Takeaways
- Jwallet Android 2.0 represents significant user experience and functionality improvements over the previous 1.X series
- Stay tuned for updates to Jwallet web, as well as for Jwallet iOS 2.0 and Jibrel Search 1.0
- The company is upping the ante on its marketing efforts and will provide additional information soon
- Jibrel’s memberships, partnerships, and pending tech implementations continue to support progress in digital bonds and sukuk as well as equity
The Jwallet is the easiest, fastest and most secure mobile crypto wallet for Ethereum & ERC-20 tokens. Download on iOS | Download on Android | Register on Web
