Our Unexpected Scoot Across the Middle East
As investors in the new mobility future, we have watched two trends with particular interest in recent years. First, increasing urbanization globally, as young people choose to live in denser clusters, with access to the amenities of large cities (notwithstanding the COVID-driven reversal over the last year). Second, the proliferation of digital tools that make it possible to build shared platforms, providing easy access to a variety of vehicle types and service offerings.
A decade ago, ride-hail apps became an overnight sensation, intensifying urban congestion and leading to increasingly slower intracity travel. It was the frustration of these journeys that led micromobility pioneers to tap into the impulse many felt as they inched along in the backseat of someone else’s sedan — to hop out and take control of their own destiny. Thus micromobility was born, marked by the sudden appearance of docked and free-floating bikes, kick-scooters, e-bikes, and e-mopeds, such as those from the US-based Revel (in which Maniv invested in 2018) in cities around the world. Such vehicles are not only largely impervious to traffic, but they are also much less expensive per mile traveled, making urban movement more accessible for all. On top of that, most users find micromobility vehicles to be a whole lot of fun.
The digitization of mobility offers consumers more choice. Depending on the length of the trip, the purpose of a trip, the weather, the terrain, the number of people traveling, and more, the right choice could be any number of modes. And certain geographies lend themselves more to some forms than others.
Right outside our Tel Aviv offices, it is common to see dozens of kick scooters from three suppliers, parked and waiting for riders, with a nearby bike lane accommodating a constant flow of scooters, bikes, and e-bikes. Tel Aviv is a dense, relatively flat city with a young population and well over 300 days a year of sun. And so it makes sense that scooters have become the transportation mode of choice for thousands of its residents.
It turns out there are lots of cities that share these attributes with Tel Aviv right here in the Middle East. Cities like Dubai, Abu Dhabi, and Doha are also crowded, relatively flat, with large numbers of young, tech-savvy residents. We just didn’t know this until 2020 when the Abraham Accords brought Israel relations with the United Arab Emirates, Bahrain, and other countries in the region. Weeks after the announcement of normalized ties, even before the White House signing ceremony, we heard from the Dubai-based e-scooter operator, Fenix. Our close familiarity with the business, and the experience and character of the founders, quickly gave us a lot of enthusiasm for the company’s prospects.
In November, we were proud to become the first Israel-based fund to invest in a UAE-based technology startup.
Micromobility, and kick scooters, in particular, have not been without their share of challenges. Early players focused on a “growth at all costs” approach, as a race to capture territory, and sacrificing profitability for sheer numbers of scooters in the most possible cities. This practice was not only extremely costly, but it did not consider the vicissitudes of vastly different urban characteristics, and what’s more, the sudden appearance of thousands of scooters on city sidewalks created a nuisance, engendering frustration among officials in many cities, and among their constituents.
The pandemic brought some of the problems with the land-grab approach to micromobility into sharp relief. Lockdowns caused serious cash flow problems for well-funded but overextended incumbents with significant physical assets and high fixed costs, forcing some players to pause service in their most profitable markets. But the pandemic has been a tailwind to the industry in other respects. At a time when the need for social distancing has made mass transit impractical for many, there has been an increased openness to shared, open-air small-form vehicles among the public and policymakers.
Against this backdrop, we are thrilled to have invested in Fenix. Fenix is building a leading micromobility platform tailored to the needs and opportunities across the Gulf region. And, given the characteristics the region shares with Tel Aviv, as well as some of its own unique quirks, we are confident that there is a big market to be served there. The GCC, having proven itself an early adopter in adjacent mobility spaces such as delivery, is a surprisingly promising incubator for a young micromobility operator.
Together, the UAE, Saudi Arabia, Oman, Kuwait, Qatar, and Bahrain comprise a market of roughly 58 million people. Despite its relatively small population size, the demographics of the region are quite favorable: approximately 86 percent of the GCC population is urban, and 75 percent of the population is working age, leaving an addressable population of over 38 million. For the sake of comparison, the addressable US urban working-age population is of the same order of magnitude, at approximately 57 million, given the US’s age distribution and very large suburban/exurban/rural population.
Fenix has the most seasoned management team anyone is going to find in an industry barely three years old. In fact, Jaideep Dhanoa and IQ Sayed already have experience launching scooter operations — for Circ in 2019 — and they grew the business quickly while maintaining remarkable unit economics before Circ was acquired by Bird. Not only do they have a very well-formed vision and strategy for building Fenix, but they also have the technical know-how to get it right, and, very much like the founders of Revel, are skilled at working constructively and collaboratively with local officials to build the type of partnerships that will make Fenix welcome in communities over the long haul.
What could be better than demonstrating some of what is possible in a world with a strong bilateral relationship between Israel and the UAE at the same time as supporting two terrific founders pursuing the vision Maniv set out years ago: to support companies building safer, cleaner, more affordable and more accessible mobility options for the 21st century.
Since launching in November, Fenix has already deployed scooters in five markets across the Gulf — quickly establishing a regional leadership position. Whether at Circ, Bird, and now Fenix, Jaideep and IQ have been the first to introduce free-floating scooter sharing to many of these markets, a great opportunity that comes with equally large responsibilities. Of course — we shouldn’t be surprised that the Fenix team is willing to move quickly and fearlessly; as recently as mid-2020, they wouldn’t have been able to arrange a simple phone call between our Tel Aviv offices to theirs in Dubai!
— Meir Dardashti (@meirdardashti) and Lauren Luz (@laurenluz) contributed to this piece.
