How startups should play governance and 4 balances to keep in mind

What a tedious topic… Right. It may not be exciting, but it will keep your startup exciting in the eyes of your investors.

Startups need governance.

Imagine governance as a tidy, well-organized pantry. If you don’t keep it tidy and organized, its contents will start falling on your head next time you step inside and look for something. Or you won’t find that jar of zaatar at all. What are you going to tell the labneh? You better avoid such emergencies.

No matter how small your firm is, there’s no way you won’t benefit from having good governance. Think of better decision-making, good brand name and reputation, more high-quality talent, funding opportunities and lower risks for investors.

Don’t wait for a Pre-Series A, start today. Because when a bigger round comes and your paperwork is not in shape, an agreement missing here, a signature missing there, your investors may back off from the deal… It’s too late to lament that messy pantry at that point.

You may think that right now your resources are scarce and your team doesn’t have the time and experience to implement good governance practices. But putting systems and controls in place while the structure is small is definitely a better approach than doing so at later, when the structure and team have grown.

As per Luc Sterckx (INSEAD alumnus), governance plays a role in creating balance within a startup:

1/ A balance between the short-term tasks and long-term goals. Don’t allow urgent “fires” that need to be put out cost you the long-term vision and strategy of your startup. Having governance in place will help you.
2/ A balance between founders/managers and external shareholders. Governance shouldn’t hinder the founders’/team’s growth, creativity and freedom.
3/ A financial balance that allows for future stability. Long-term projects should always be financed by long-term capital (equity and/or long-term loans) rather than short-term solutions.
4/ A fine balance between entrepreneurial spirit and atmosphere and control instruments like budgets and reports. Sterckx mentions the idea of “creativity with a purpose”. That’s creativity that aligns with meaningful goals and outcomes.

Governance doesn’t kill creativity. It won’t kill your mission. On the contrary.

So where should you begin?

You have most probably already begun. See the list below.

I believe there are at least 10 things that founders need to always keep in check:

1/ Leadership transparency because it leads to trust
2/ Clear division of roles and responsibilities
3/ Statutory and regulatory compliance
4/ Risk management processes
5/ A solid board of directors, periodical meetings
6/ Ethical guidelines and a comprehensive code of conduct
7/ Well-documented accounting policies and their consistent application
8/ A regularly reviewed and updated budget
9/ A clean data room, updated cap table and regular reporting
10/ A will to continuously improve – governance is a process

And, lastly, who plays a role in startup governance? Everyone who’s incentivized to growth the startup value and securing a great exit. As investors, we should ensure that every startup in our portfolio is as balanced on the inside as possible. If we fail to assist founders and their teams in achieving that balance, it can cost us all dearly one day.

Good literature to get you started:

– Corporate Governance 101 for Startups by Riyad Abou Jaoudeh (link)
– Corporate Governance for Startups: Avoiding Pitfalls and Building Resilience (link)
– Start-Up Governance Playbook by IVCA and Deloitte (link)
– Corporate Governance for Early-Stage Innovative Companies (link)
– A startup governance journey (link)

P.S. I got inspired to talk about governance thanks to “Governance for every phase” panel at last month’s Step Dubai.

$26 million for Klaim and 1,300,000 claims accelerated globally

TruKKer ranked #5 in Logistics Power 25

200+ corporate partners (Money Fellows^^)

Milaf Cola goes international thanks to Zid

Merit’s Julie Barbier-Leblan in a conversation with NYSE

Repzo took part in a training program for pharmacy grads

Competency-based logistics curricula with Khazenly’s input

• HR Systems & Reporting Manager at Hala (Riyadh)
• Financial Internal Audit Manager at Hala (Riyadh)
• Manager, Revenue Performance & Process Optimization at Zid (Riyadh)
• Tax Manager at TruKKer (Dubai)
• Senior Analyst Corporate Finance at TruKKer (Dubai)
• Financial Controller at Zid (Riyadh)
• Platform Infrastructure Engineer at Money Fellows (Cairo)
• Sales (Lead Generation) at Hulexo (KSA)
• Junior Client Relations at The Luxury Closet (Dubai)
• Customer Happiness Specialist at Gameball (remote)

See you in April and Eid Mubarak in advance,

Hasan

This preference is supported by the history of Arzan VC investments: out of the 47 investments we made in the last 10 years, 49% were startups with two founders.

Looking at Pre-Seed deals concluded last year, I’m exploring whether the same trend holds.

In 2024, two-founder startups dominated the Pre-Seed landscape, constituting 45% of all startups in terms of deal count. However, when it comes to capital allocation, two-founder startups did not lead the pack.

67% of last year’s Pre-Seed money went to solo founders

Solo-founded startups (with and without VC funding) became more common in the US in the last 10 years; they doubled to 35% of all startups formed on Carta in 2024.

But, according to Carta’s Founder Ownership Report 2025, VCs continue to prefer funding startups with 2 founders (34%) and 3 founders (25%) over a solo founder (note: US data only).

Is it the story similar for the Middle Eastern founders?

If you’ve come across a general database that tracks the creation of startups on a yearly basis, I’m all ears.

Many deals are announced without a “stage label,” so to keep things simple and effective, my focus today is solely on Pre-Seed deals announced in the media last year. I want to analyze which founding team size was most prevalent and whether it aligns with Carta’s findings for 2024.

One more accurate approach would be to focus only on startups founded in 2024 that received some form of VC funding in the same year. However, I expect that process to involve a lot of missing data, as those startups typically have a limited online presence.

Let’s see the findings.

The region witnessed 50 Pre-Seed rounds in 2024, of which 39 were fully documented. (11 had either undisclosed values, or were described as “six figures” or “seven figures” or they have no online footprint so no further info.)

Funding surpassed $83 million.

In terms of deal count: 2-founder startups dominated the Pre-Seed landscape last year and they represented 45% of all startups. This supports Carta’s findings.

Here’s today’s second-biggest surprise: solo-founder startups surpassed 3-founder teams. 37% of all startups that raised a Pre-Seed round last year were led by solo founders—18 startups in total.

However… How about the capital allocations?

Let’s consider the fully disclosed 39 deals. Solo founders raised $55.8 million, representing 67% of the overall allocation to Pre-Seed in 2024. The “culprit”: Tumodo, a B2B travel platform founded in 2022 by Vladimir Kokorin, secured $35 million. 2-founder startups raised $17 million (20%), while $8 million (10%) went to 3-founder startups.

The 5 largest Pre-Seed deals of last year were: Tumodo (UAE), Mala (KSA), Bokra (EGY), Madfu (KSA) and Octa (UAE). The last 4 are fintechs.

Founding year analysis: Although startups founded in 2024 became more prevalent across the headlines starting Q2 2024, majority of startups that closed a Pre-Seed round last year were established in 2023. About 14% were founded in 2021 or earlier, including one startup as far back as 2017.

While screening, I also took note of the founders’ gender and, of course, ticket sizes (available for 40 deals). See below.

Tumodo’s $35 million round is an anomaly, with the next largest ticket at $7 million. The average ticket size drops to ~$1,240,000 when we exclude Tumodo.

As for the founder gender breakdown, there are no surprises here. Startups founded by males bagged at least $77 million in Pre-Seed funding, representing 43 deals. Mixed-gender startups raised $4.6 million.

Thoughts:

We can conclude that, yes, 2-founder teams had the most success in raising Pre-Seed in 2024. While Carta didn’t disclose the breakdown in terms of capital allocation, my gut feeling is that solo founders didn’t come out on top unlike their MENA counterparts.

The appeal of larger teams over solo founders seems obvious: startups with 2 or more founders remain more stable, even if one co-founder decides to leave. They can share responsibilities and lighten the workload (though I doubt their stress levels are reduced). Multiple founders can be compared to a springboard, fostering better idea-brainstorming and decision-making. Fundraising can also become easier.

The fact that most $ was raised by solo founders signals a contrarian trend in our local VC ecosystem. Are these solo founders solo by choice? While it’s true that a solo founder won’t have arguments with co-founders and their startup vision won’t be easily jeopardized, I’m pretty sure that during negotiations with the existing founder, participating investors would have voiced their preference for adding a co-founder in the near future. This requirement is likely already outlined in black and white.

Out of the 47 investments that Arzan VC made in the last 10 years, 23 were startups with 2 founders (49%), 5 of which had mixed-gender founding teams. In comparison, we invested in 12 startups with 3 founders (26%).

So, in a nutshell, we prefer startups with at least 2 founders, ideally a tech/non-tech mix. But this is a world of exceptions and that’s why we did end up investing in some amazing solo founders – 11 of them in total! cc Zeid Husban, Abdullah AlDayel, Sara Chemmaa, Ahmed Wadi, Ahmad Fuad AlObaid

Let’s see what the team size of our next investee will be ^^

Merit raised $28 million in Series B and unveiled a new logo

Swvl brings private placement to $6.7 million

Hulexo won the Sharjah Entrepreneurship Festival pitch competition!

TruKKer recognized as Annual Vendor of the Year

Mastercard prepaid card by Money Fellows (+ Banque Misr)

Visa card by Lucky ONE

Zid + Abwab.ai

Khazenly + Torod

Hala + Oracle

Gameball explains the concept of loyalty

• Product Manager – App Marketplace & Developer Experience at Zid (Riyadh)
• Product Manager at Hala (Riyadh)
• AML CTF officer at Hala (Riyadh)
• Scrum Master at Hala (Riyadh)
• SW Quality Engineer at Hala (Riyadh)
• Sr Treasury Specialist at Money Fellows (Cairo)
• Financial Analyst at Money Fellows (Cairo)
• Sr Site Reliability Engineer at Qoyod (Egypt, remote)
• Staff SW Engineer at Qoyod (Egypt, remote)
• Financial Planning and Analysis Specialist at TruKKer (Dubai)
• Implementation Engineer at Gameball (remote)
• Sr Implementation Engineer at Gameball (remote)

مبارك عليكم الشهر

Hasan

Today I will explore all the Series B rounds of the region that were raised between 2020 and 2024 (inclusive).

5 of them belong to Arzan VC Family 😉

44 startups raised Series B in the last 5 years

Only 1 out of the 44 MENA-based startups was launched in 2020 (Tamara), the rest is older. (The oldest was born in 2006.)

The variations described below are pretty profound. Well, blame it on 2021 and 2022. 28 Series B rounds happened during those 2 years. (As well as 6 Series Cs and 1 Series D.)

From launch to Series B

– Average time: The average time it took these 44 startups to raise Series B after their launch is 5.5 years. (If we consider only startups founded in 2018 or later, the average is less than 4 years.)
– 2 to 15 years until B: Startups took anywhere from 2 years (e.g., Tamara, Tabby & Kitopi) to 14-15 years after launching (e.g., Altibbi & Unifonic).

Persistence & strategic scaling:

– Startups with longer paths to B: 4 startups took 10 or more years to reach Series B: Unifonic, Altibbi, HyperPay and Noon (the edtech), indicating persistence and strategic scaling over time.
– Tamatem, Salla, Foodics, Eat App and Paymob reached Series B in 7-8 years since launching.

From Series A to Series B:

– Most startups took around 2 years to reach Series B after raising Series A.
– 13 startups raised Series A in 2021 and 77% of them raised Series B over the next 2 years.
– 4 startups raised Series A in 2022 and all of them raised a B round over the next 2 years.
– Quick jumps: 14 companies bagged Series B in the year following their As (or earlier). That’s approximately one third of all. Pyypl bagged Series A and Series B in the same year (2022!).
– Sloooowww jumps: Altibbi took 5 years to hit B (note: they launched in 2008, raised A in 2017 and then B in 2022).

12x Series C & 2x Series D:

– 12 out of the 45 startups that raised Series B in 2020-2024 have already moved on to Series C. Among them: TruKKer, Foodics, Tamara, Tabby… And 2 Cs happened last year: Syarah & Eyewa.
– 2 startups made it all the way to D: Pure Harvest & Tabby.

Sectors:

– Fintech is the leading sector, with a large number of startups focused on areas like payments, lending and financial services (e.g., Hala, Lendo, Tamara, Rain, Money Fellows). Many of these companies raised Series B relatively quickly, often in just 1-2 years after Series A.
– E-commerce
– Foodtech/Cloud Kitchens
– Logistics and SaaS

Tamara and Tabby are the only two startups out of the 44 that stuck to a 1-year timeframe. Both managed to raise Series A in the year following their launch and secured Series B in the year after their A. Both of them raised Series C in 2023 and Tabby is already at D stage.

Calo’s B round made it to our list; it was announced on December 30, 2024.

Conversely, MaxAB didn’t make it to the list – they raised Pre-Series B in 2022 but never got to B. Instead, they merged with Wasoko in 2024. (Eon Dental also didn’t make it – we couldn’t find solid data on their Series A.)

2024 witnessed an uptick in B rounds and I believe this trend will continue in 2025. Some Bs are already being cooked. Plus a few of those 18 startups that could go public in the next few years are in the Pre-B stage.

Your bets?

Data sources: Digital Digest weekly reports, Crunchbase, Pitchbook

Money Fellows Prepaid Card

Watch Zid’s Annual Product Event “Ripple 2024”

Repzo celebrated 8 years in business

Gameball held its first Customer Advisory Board

HAYA Magazine wrote about Citron’s Feeding collection

Klaim revealed its new identity

• Swvl is hiring 10 engineers
• Head of Product Design at Hala (Riyadh)
• Sr Backend Software Engineer (.NET) at Money Fellows (Cairo)
• Frontend Software Engineer (Angular) at Money Fellows (Cairo)
• Scrum Master at Khazenly (Cairo)
• Sr Accountant at Zid (Riyadh)
• Onboarding Engineer at Gameball (remote)
• Part-time Videographer at Citron (Dubai)

I’ll be at Taqadam Investor Showcase (Jeddah) next week. Really looking forward to it!

Hasan

We prepared our usual Wrapped rollercoaster to look back at the past 12 months… Let’s unwrap.

Here’s to new seed deals, non-dilutive capital… and peace in 2025.

Before we step into January (make sure it’s your right foot!), let’s reminisce together about the past 12 months and remember the small and big victories of Arzan VC Family.

So… here’s to new seed deals for our Fund III, more non-dilutive capital for the region’s tech startups through our Revenya Capital and lasting peace for all.

Happy 2025!

Swvl released a newly updated Swvl Rider App

Nearpay got their NSP Certificate.

Healthy meal subscription in Riyadh? Check out FittiEat by FittiCoin!

Zid launched ZidHub

Klaim + Wio Bank

Merit’s logo all over NYSE

Repzo Family is getting bigger

• Senior Product Manager at Hala (Riyadh)
• Corporate Governance Manager at Hala (Riyadh)
• Talent Acquisition Partner at Zid (Riyadh)
• Senior Frontend Engineer at Khazenly (Egypt)
• Sales Professionals at Swvl (Saudi Arabia)
• Reels Creator at Money Fellows (Cairo)

See you next year.

Hasan

We’ve been cooking this project for some time and now that there’s an office, a website, a legal structure, partners ready to get us into deals and a highly capable team in place… it’s time to let the cat out of the bag.

Say Hi to Revenya Capital. A revenue-based funding firm from the region, for the region.

Revenya Capital, an RBF firm for your startup needs

Nearly a decade ago, Ahmad Takatkah used to be an integral part of Arzan VC team. Then he left to the US, worked for Carta for 3 years, then KingsCrowd (another fintech), then KC Capital. As a founder, Ahmad founded 3 startups and he hosts a couple of podcasts. He has an immense passion for data and, most importantly, he is back in the Middle East.

So here’s what we have cooked together.

Earlier this year, Arzan VC forged a strategic partnership with Ahmad to launch Revenya Capital, a groundbreaking revenue-based financing (RBF) firm focused on empowering tech startups in the MENA region.

Building on a decade of VC experience, Arzan VC is branching out to a relatively niche and nascent field in the region: RBF.

And the reason is simple: While leveraging advanced AI and machine learning technologies, Revenya Capital was founded to fill the growing demand for non-dilutive financing options in the region.

Perhaps you’re not so familiar with RBF yet. Let me do a quick intro.

What is RBF?
Revenue-based financing is an essential funding model for startups that prefer non-dilutive capital to fuel their growth without sacrificing equity.

Why is RBF from Revenya Capital so attractive for startups?
No dilution.
No warrants.
No conversions.
No personal guarantees.
No pitch decks.
No data rooms.
No business plans.
No financial projections.

How can Revenya Capital support your startup?

You can use this short-term financing for various needs such as marketing, inventory, events, equipment and seasonal requirements.

If you are a high-growth startups with predictable revenues, Revenya Capital may offer you short-term loans from 3 to 9 months, ranging from $50,000 to $500,000 with a fixed monthly fee of 1.5%-2.5% and repayment rates of 5%-20% of monthly revenue.

Sounds just like what your startup needs right now? Reply to this email and I will link you up with Ahmad.

Merit on stage at FII8

Swvl >>> Riyadh.

Zid’s bold moves

Nearpay got their MPoC certification

Subsbase + Moyasar

DevOps Graduate Program at Gameball

• Head of Strategy at Hala (Riyadh)
• Marketing Manager at Nearpay (Riyadh)
• EHS Manager at Khazenly (Cairo)
• Sales Manager (SaaS & PaaS) at Cartlow (Dubai)
• Senior Sales Executive at TruKKer (Riyadh)
• Marketing Assistant at Citron (Dubai)

See you next week at #MoneyTech Kuwait.
I’ll be speaking on the first panel “The 100 Dollar Question: Where Would You Deploy 100 Dollars Today?”

Hasan