Food security has become the region’s top priority and there hasn’t been a better time to look into the region’s agritech and its potential. Get your shovels ready 👨‍🌾

Farming is the new kid on the block (or the oldest?)

Globally, agritech funding has so far reached $4.1 billion in 2020 and it is poised to reach a new volume high. Agriculture is our future and it should be among the top funded sectors because its sustainability dictates our survival. The pandemic only further highlighted the region’s food insecurity and over-reliance on food imports. Why shouldn’t we be able to source the tomatoes for tonight’s fattouch from a farm few kilometers away rather than from another continent?

While the region possesses only 1% of the world’s fresh water, agritech offers a wide pallet of solutions to tackle to local climate and conditions. Many institutions around the region have already recognized that securing domestic food production is a must: UAE created a post of the Minister of State for Food Security back in 2017, Kuwait’s KFAS is welcoming farm-to-table digital solutions, Bahrain wants to boost their hydroponic farming… Qatar’s local production of fruits and veggies reached almost 30% (up from 10% three years ago). Lebanon operates an agri-innovation hub Agrytech, Jordan has its HASSAD and Morocco recently launched Green Generation 2020-30 strategy. The region is getting pretty busy.

2020 saw the largest ever investment in an agritech company in the Middle East: Wafra’s $100 million commitment to Pure Harvest. The latter also recently secured a $35 million deal with Kuwait’s The Sultan Center to build a high-tech farm in Kuwait.

But Pure Harvest is only a seed in the MENA’s agritech field. Scroll down for an overview of our major agritech startups. They fall under diverse verticals, including controlled environment agriculture (CEA), organic fertilizers, drone planting and workforce management.

Egypt and UAE are currently the largest agritech markets of the region. UAE’s Madar Farms is set to build the world’s first commercial-scale indoor tomato farm using only LED lights. Falcon Eyes Drones Services (FEDS) has successfully demonstrated large-scale drone planting. 

In Egypt, Bea Mahsolk offers a platform for farmers to sell their produce. Schaduf is specialized in urban farming and green solutions. Baramoda helps farmers to maximize the efficiency of agricultural waste.

On the other shore of the Red Sea, Jordan’s Nestrom aids digitization of farm operations. Turtleponics designs aquaponic systems for homes. And Mushroom Box, as its name indicates, provides smart incubators for growing mushrooms with self-control. 

In Saudi Arabia, Desert Agriculture and Green Mast have the answer to the region’s climate and limited water resources: hydroponic farming tech. Red Sea Farms attempts to reduce the carbon and water footprint of the local food sector.

Tunisia’s MooMe collects data on dairy cows. Smart Bee has solutions for hive monitoring and so does Lebanon’s TheBeeHouse. LUXEED Robotics endeavors to develop a robot that would kill weeds in onion and lettuce lands.

In Bahrain, Nakheel tackles palm tree infestation with IoT. Qatar’s Agrico has developed sophisticated hydroponics systems. In Palestine, Agriotec offers precision farming systems and chemical-free production for small farmers..

TL;DR (too long; didn’t read)

Food insecurity and over-reliance on exports have prompted the region to look for home-grown agritech solutions that tackle the local conditions while delivering high quality produce at fair prices. Agritech is certainly becoming a popular investment. Most of the region remains underdeveloped and there is an immense potential in boosting the local-for-local food production.

Family Postcard

$2 million
Cartlow secured $2 million Pre-Series A Funding from Arzan VC, Vision Ventures and other investors. The company also launched a B2B model VASCART for retailers, brands and distributors.

Starring in Forbes again
Swvl, Trukker, Ikcon and Crowd Analyzer were listed in the Forbes’ 50 most funded startups of the Middle East. And Ikcon landed the cover of October 2020 issue.

Snapped
Snap released a case study on Tamatem’s efficient growth and LTV.

5 years
Mejuri’s Noura Sakkijha reflects on the five years in, future and brand loyalty.

12 interns
Read about Gameball’s Summer Internship 2020, in which 12 undergrad students took part.
 

Latest Jobs @ArzanVC Family

• HR Director at  iKcon (Saudi Arabia)
• Global Market Launcher at Swvl (Dubai)
• Senior R&D Engineer I at Swvl (Cairo)
• Customer Success Manager at Crowd Analyzer (Riyadh, Cairo)
• Software Engineer at POSRocket (Amman)

We can only wish.

Hasan

 Is it June or July already? It’s getting harder to keep track of time…

Corona, go… and from this line until the end of the newsletter, we are going to discuss the business as usual. It’s not ignorance, it’s overcoming the present moment. Even more; it’s imagining the future. Our team put their heads together to share with you MENA’s M&A of tomorrow and the day after—maybe realistic, maybe not. If you can dream it…

 Will 2020 give MENA its first super app?

Having a dry-powder in your hands is definitely a wildcard in the current times. And while some valuations are dropping, this is a unique chance for some swift M&A deals for those who spot the right opportunity out there. So, perhaps, it doesn’t come as a surprise that the tech M&A activity reached the highest levels since 2015. We are not even halfway into 2020 and the ‘Big Five’ (i.e. Alphabet, Amazon, Apple, Facebook and Microsoft) has already announced 19 M&A deals, out of which 5 belong to Apple alone. The competition in the tech sector is definitely weighty.

 Where does ArzanVC’s Team see the biggest potential for M&A? Remember that we don’t attempt to imply here that companies within the below sectors need some sort of saving. After all, 2020 is already poised for M&A and we see it as a good tool in general.

While we are witnessing more vertical M&A in MENA, Eyad argues it’s yet too early for such moves. He thinks that it still makes more sense to have horizontal rather than vertical deals. The first step could be an in-country M&A that would gradually consolidate smaller players into one bigger platform. Many MENA startups—no matter how big—do need more global scale to make themselves attractive enough to international investors. Laith, on the other hand, suggests that this may be the right time for ride-hailing companies to enter new verticals. And Hasan thinks that COVID-19 made startups realize their weak points, hence M&A activity might be used to elevate those weak points and emerge stronger. 

1. food delivery/e-commerce – food delivery platforms are the no1 place to go to right now. While some well-established food delivery players may be offering a wide variety of food delivery services, they may want to focus on specific outlets to increase the scope of their offering.

2. ride-hailing –ride-hailing companies may consider entering new verticals, out of which logistics (delivery, parcel delivery) or even food delivery appear as plausible options to increase the startups’ growth potential. While ride-hailing may have been paused for a moment, these new segments can provide the companies with a better balance and a new impetus in general while making use of the existing assets and brand name.

3. fintech/payment processing – many POS SaaS platforms can be ready for a merger in order to consolidate their footprints. We see the potential especially in the Gulf area.

4. health tech – given the boom in online mental health services, general health platforms could consider acquiring specific platforms with a niche focus on certain areas such as online therapies.

5. copy-paste startups – many of the startups we have in MENA are basically concepts that were initiated in developed markets and regional entrepreneurs simply copied them. Sectors like grocery delivery, e-commerce or fintech are a playground for a lot of startups that practically do the same thing but each in their own respective country, which represents, in global terms, a very small market. By forming one regional player, they would not only increase their loyal customer bases but also unite into a fairly massive regional platform. Sounds good enough, right?

There is another concept that Hassan El-Keyi pointed out: the possibility of the first super app in MENA. There already exist few semi-super apps, which are apps offering various services in different segments such as transport, food delivery and, for example, a mobile wallet.

And how does he envision the first MENA super app coming to life? Well, most probably a well-established international super app like the Chinese WeChat or possibly a US counterpart would enter the MENA market through mobile carriers, mobile wallets and semi-super apps in general. In the East-West dilemma, China appears to have more experience in building super apps (e.g. combining e-commerce/messaging with mobile payments) than the US. Exciting least to say.

Imagine a well-established telecom operator or ride-hailing business acquiring a digital payments startup. Or a regional retail giant acquiring a retail tech startup. Or an offline hypermarket consolidating the digital grocery market. Or a major pharmaceutical company getting their hands on a health tech startup…

P.S. If you have a minute, tell us your personal M&A dreams.

The word of the COVID-19 crisis is adaptability. Business areas such as groceries delivery, online ed-tech, streaming and online comm platforms are at low risk, while ride-hailing, essential e-commerce and logistics are at medium. High risk zone entails of travel e-commerce, booking apps and non-essential e-commerce. But we must not forget that the survival of each and every business depends on how flexible it is to adapt and withstand the crisis. 

 Family Postcard

Forbes published a feature on Mejuri’s mastership of disrupting the jewelry industry. Read CEO Noura Sakkijhas’ insights here. 

🚛 TruKKer+Saferoad

TruKKer and Saferoad Information Technology signed in a new partnership agreement to provide joint services and make Saudi road freight even more efficient and safe.

Latest Jobs @ArzanVC Family

• Senior Software Developer at Cartlow (Dubai, UAE)
• VP of Engineering at POSRocket (Jordan)
• Digital Growth Hacker at Repzo (Jordan)
• Global PR Manager at Swvl (Dubai, UAE)
• Graphic Designer at Swvl (Egypt)  

Don’t stop dreaming.

Hasan

No Fool’s day this year.

If you’re reading this on your phone, at least we took you away from your laptop cameras and back-to-back online meetings.

We decided to have a look at the endurance of businesses during these tough times. There are numerous businesses that are doing pretty well right now, to the point that they can’t meet the demand. (And we are not referring to the producers of toilet paper.)

We will also bring you some good news from ArzanVC’s Family. Because what the world needs right now is more good news.

 Black swan is a test of adaptability 

You heard it. We are living through the biggest global crisis since 1945. It will set the tone for the years to come. And maybe even decades. Some say that the crisis may lead to a new way of economic thinking. It most probably will. And to new (or enhanced) and more flexible business models.

 The word of this crisis (and any crisis in fact)—whether for us citizens who have to abide by the rules and restrictions of our governments or for the companies and businesses in our local and international environments—is adaptability.

 And who can adapt best? The businesses that are flexible. We have entered a work-at-home economy, which favors companies that can come up with solutions no matter if the life moved out from offices to our dining tables and living rooms.

 We are noticing uniquely innovative and collaborative actions, with many businesses shifting their modus operandi to adapt to the market demands. This black swan event definitely favors businesses that possess strong organizational agility and alignment. And above all, online players clearly have a top leverage right now.

 In the diagram below, we have included a few examples of local companies (MENA) next to their sectors.

 Disclosure: Some of the companies belonging to the high risk zone of the diagram might not really be affected negatively if they are able to adapt.

 We placed the restaurants delivery platforms into the low-to-medium risk zone. These companies would be expected to do great right now, but the curfew that is set by some governments puts a restriction on when the orders can be made. Customers may also think twice of the extra expenses (cooking at home may be cheaper), and the issue of hygiene during food preparation could also be of concern given the pandemic. 

 Why is ride-hailing at medium risk? Passenger rides are down (for example, they equal 0 in Kuwait). However, if the business model is flexible, the companies can wait things out. Plus, IntiGo (Tunis) is now providing grocery delivery and concierge services, and Lyft and Uber are also considering the same and medical supply. 

Essential e-commerce at medium risk while non-essential e-commerce is at high risk because the consumer choices have been primarily redirected to necessities like staple goods. Yet shopping for home gym equipment, books, toys and games may make a good impact.

We also think that social media may be little squeezed due to decline in advertising spending. Though the current user’s usage is massive.

On the contrary, communication & teleconferencing tools (vs. in-class teaching, office meetings etc.) are booming. WFH is safe and it reduces employers’ costs. Many Gulf countries lifted bans on Zoom, Skype for Business, Microsoft Teams and others. Slack shares jumped up by 26% this year, while Microsoft Teams’ DAUs reached 44 million (vs. 20 million in November). And despite the rising demand, Zoom’s call quality has not degraded!

As we are now embracing e-baskets over regular trolleys, online grocery delivery platforms face a doubled or tripled surge in online orders. Additional onboarding of thousands of shoppers and support staff is a new trend as well as safer and contactless delivery procedures. The increase in demand is unprecedented yet definitely a “good” problem to have right now!

And we cannot forget the crucial role of online streaming platforms – movies, series and podcasts alike – that are giving us and our kids a huge helping hand during these quarantine and self-isolation times. In fact, there is so much streaming that the providers had to reduce the quality to SD (primarily in Europe) and ask people to be more data-spending conscious. By the way, Disney+ launched in Europe in the best time possible!

Although this unprecedented growth of new customers and service users may cease once the crisis is behind us, we believe that it will ultimately change certain consumer habits. Just notice the growth of the online grocery stores: many of them gained the trust of their customers only thanks to COVID-19. And that trust won’t be temporary!

Is this the new normal? Will we see more online conferences, bigger online grocery orders and cloud kitchens rivaling the conventional cooking outlets? (Hopefully; we made a recent investment in one cloud kitchen start-up.)

The truth is, many of us desire to have 24/7 goods and services, and the crisis has only pointed out that our day-to-day actions and transactions do not necessarily require in-person, physical presence.

📣Call-out to founders: Share with us how you are adapting your business to the crisis. We would like to include your stories in our next newsletter.

TL;DR (too long; didn’t read) 
The word of the COVID-19 crisis is adaptability. Business areas such as groceries delivery, online ed-tech, streaming and online comm platforms are at low risk, while ride-hailing, essential e-commerce and logistics are at medium. High risk zone entails of travel e-commerce, booking apps and non-essential e-commerce. But we must not forget that the survival of each and every business depends on how flexible it is to adapt and withstand the crisis.

 Family Postcard

Flexxed up

 Cartlow has secured a six-digit USD figure in its first round of funding from Arzan VC, Vision Ventures and a group of angel investors.

And Lunch:on now provides free & contactless home delivery of its 25AED lunches from 200+ restaurants.

Latest Jobs @ArzanVC Family

• Business Development Manager (Corporates) at LUNCH:ON (KSA)
• Engineering Lead at Crowd Analyzer (Egypt)
• JAVA Engineers at PointCheckout
• Director of Operations at TruKKer (KSA)

 Corona Essentials

• If they can survive 1 year in the space… notes on self-isolation.
• Feeling anxious? Snapchat launched a Here for you tool.
• Once you’re done with Zooming and Slacking for today, throw a Netflix party!
  
  

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  Black swan, it’s about time you fly away!
  And the rest of us—let’s try to do WFH and social distancing for a little longer. 

Hasan