Dominika Malhas | Arzan Venture Capital

these 18 startups could go public in the next few years

by Dominika Malhas | Oct 13, 2024 | Newsletter

What’s next?

If you’re a fund manager, your What’s next? sounds like “How can I complete the fund cycle?”.

If you’re a startup founder who has taken his/her startup through a good amount of funding rounds, it sounds more like “If I want my company to go public in the future, what are my options in the region?”.

And if you’re like me, you’d also be thinking “Which startups could go public in the next few years and how can we help them get there?”

These 18 startups could go public in the next few years

Over the last 3 years, we’ve seen the number of exits in the region shrink in front of our eyes. 2022 witnessed at least 81 exits of MENA-based startups, 2023 witnessed at least 45 (most of which were in UAE, followed by KSA), but overall it was almost half less than in 2022. And 2024, so far, stands somewhere at 25, a third of which were fintech exits. The overall trend is downwards since the Covid peak yet the market consolidation goes on.

Not enough exits has many negative implications including:
1. VCs who cannot generate returns for their LPs
2. LPs who hesitate on investing in VC funds
3. VCs who hesitate on new investments

Tomorrow I’ll be at SuperReturn in Dubai moderating a panel on “VC exits: creating, not waiting” with 3 gentlemen: Pascal Thomys (Target Global; Investor Relations & Fundraising), Ashish Fafadia (Blume Ventures; Partner) and Venkatesh Peddi (Chiratae Ventures; Managing Director & Partner). (P.S. Our diversity will make the 30-min session pretty insightful.)

But today I want to focus on one kind of exits in specific: IPOs.

I wrote above that exits are down but I also believe that GCC is about to witness more tech IPOs in the next few years – and the region must get ready for them. In KSA itself, as per SVC, more than 13 Saudi startups are preparing to go public in the coming two years.

The article didn’t mention which startups, so I put together a list of 18 potential tech IPOs from our region based on parameters such as maturity level, recent fundraising history and participation in programs like Saudi Unicorns Program (in fact about half of the companies). I focused solely on KSA and UAE startups.

Diverse industries and of course multiple fintechs but there’s also logistics, retail SaaS, food delivery and agritech.

So we can safely assume that there are quite a few good candidates for near-future tech IPOs. The bigger question though is: In practice, where in the region can they go public? Only these 3 options come to my mind: KSA, Kuwait and UAE.

KSA has witnessed 2 startup IPOs:
1. Jahez listed on Nomu in 2022, but in July 2024 they applied for a move to Tadawul (TASI), the primary Saudi stock exchange. Its share price dropped by -57.46% since the listing (data as of October 9).
2. Rasan went public on Tadawul in June 2024 and its $224m IPO was oversubscribed 129x. Its share price grew by 24.74% since the listing (data as of October 9).

Kuwait hasn’t witnessed any startup IPOs yet… but Boursa Kuwait’s historical track record speaks for itself and I can easily imagine startups from the region making successful debuts on Boursa.

And although UAE did rake $6.07 billion from 8 IPOs in 2023, we keep hearing how their tough IPO rules deter startups from listing. Few weeks ago I took part in a closed meeting with Her Excellency Alia Abdulla Almazrouei, UAE’s Minister of Entrepreneurship. Theme: entrepreneurial environment in the country. I pitched an idea of one unified stock market for all of GCC, which is a long term vision but, if executed right, it could help the GCC startup ecosystem while increasing exits out of the region.

Your thoughts?

P.S. Our target is to invest in 3 more early-stage startups before the end of this year… awaiting your decks.

TL;DR (too long; didn’t read)

I believe that GCC is about to witness more tech IPOs in the next few years, so I reviewed potential IPO candidates based on parameters such as maturity level, recent fundraising history and participation in programs like Saudi Unicorns Program. Turns out UAE and KSA could jointly provide at least 18 tech IPOs, including Unifonic, TruKKer, Tabby, Zid, Salla, Pure Harvest and Foodics. I also discuss where these startups could possibly list.

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