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.

Best Recognition & Reward Program Agency award goes to Merit

2 awards for Subsbase

Swvl secured $2.6 million in Saudi contracts

Taker + Alinma Pay

FittiCoin + MenaME-Plus+

Taker launches aggregation Service APIs for restaurants

Cartlow integrates crypto payments

+1 photo with Yara Burgan, Co-founder of Elevatus (a Fund II company we exited in 2020). Catching up with you was like time-traveling!

• Head of Cybersecurity at Hala (Riyadh)
• Finance Executive at TLC (Dubai)/span>
• Regional Counsel at TruKKer (Cairo)
• Senior Frontend Engineer (Angular) at Money Fellows (Cairo)
• Software Quality Engineer (POS) at Hala (Cairo)

See you this week at SuperReturn Middle East.

Also – Asia will be at Gitex tomorrow.

Hasan

We’ve just made our 47th investment which is also the 4th investment of our AVC Fund III.

It only makes sense that this issue will be all about HulexoA, the award-winning ERP solution based in Abu Dhabi, currently eyeing Kuwait and Saudi.

Welcome to the family, team Hulexo.

This award-winning ERP is our 47th investment

Let’s rewind to 2021.

Huzaifa, Marwin and Ibrahim are working together in an ERP company where they are witnessing firsthand the challenges and inefficiencies that plague the space.
Clients are struggling with systems that are slow to customize and pricey to implement.
They see projects fail due to poor partner choices, resulting in frustration and tons of missed opportunities…

They realize they are driven by a shared vision and decide to leave their jobs to create an ERP solution that not only addresses the above pain points but also redefines what’s possible in the industry.

[Hulexo enters the scene.]

There are plenty of competitors on the scene already. How does Hulexo stand out? It kinda goes against the ERP industry norms.

Robust decision-making engine: The competitors’ systems leave it to the retailer to make sense of the data collected, whereas Hulexo’s system uses a robust decision-making engine to process the data and suggest profitable decisions in real time, reducing stockouts and deadstock while making the operations & decision-making process proactive rather than reactive.

No third-party implementation partners: Hulexo is built using Rapid Application Development Technology (RAD), which allows for 6x faster customization & implementation times. This technology gives it the ability to scale rapidly without ever needing third-party implementation partners, which is the ERP industry norm.

Huzaifa Hameed – CEO (top right); Ibrahim Al Rachdi – CPO (bottom right); Marwin Favila – CTO (bottom left); Kunal Thadhani – Head of Marketing (top left)

Early on in its journey, Hulexo closed a supermarket client inside Abu Dhabi Police College. This client needed a POS system based entirely on RFID cards and store credits, with only 3 days to go live. The team had no experience with RFID technology, but they worked tirelessly, learning and customizing the system on the fly. Despite the tight deadline, they pulled it off and the launch was a success.

Since 2021, Hulexo has onboarded more than 100 retail locations for clients like The Giving Movement, Transguard Group, My Vapery, Padel Life and Nauras Sandals.

Here’s a retail story that stands out for the team:

+1 random fact about team Hulexo— they admire the culture at Zapier because of its emphasis on flexibility & employee empowerment.

What’s next for Hulexo?
300 retail locations by end-2025.
Expansion to Kuwait and Saudi Arabia.
New partnerships with malls, payment providers and licensing authorities.

I guess it’s very clear why Hulexo won our team’s heart. We see it as a game-changer for retail SMEs in the region. We want to support Hulexo’s MRR growth and expansion into Kuwait. Plus, we genuinely believe in the strength of the team.

Your startup = our 48th investment? We will invest in 3 more early-stage startups before the end of this year… awaiting your decks.

Crowd Analyzer got acquired

$3 million for Lucky

happy 8th birthday, TruKKer!

2x Excellence award for Merit

There’s only ONE ORIGINAL Citron!

+500% subscriber growth

ClymbAI in Flat6Lab’s Cycle 3

• Manager – Content at Zid (Riyadh)
• Financial Planning & Analysis Manager at TruKKer (Dubai)
• UX Writer – Arabic Speaker at Hala (Dubai)
• Sr Software Quality Engineer at Hala (Riyadh)
• Last Mile Supervisor at Khazenly (Egypt)

Will I see you at Riyadh’s 24Fintech?

Hasan

Is it a surprise that, for the third half-year in a row, Saudi attracted the most of the capital deployed in the MENA region? Nope.

The big surprise though? Funding for Saudi fintechs grew by 360% (vs. H1’23) and it remains the most transacted sector.

Let’s map its players across 9 verticals.

+360% for Saudi fintech (+ the latest fintech map)

MAGNiTT & SVC dropped their H1 2024 Saudi VC report just days ago and it surely comes in handy. I was planning to write about Saudi fintech anyway 😉

In the first 6 months of this year, KSA attracted $412m worth of VC funding compared to UAE’s $225m. The $412m represents less than a half of what Saudi got in H2 2023.

In terms of the number of deals, UAE retains a strong grip on its #1 spot with 83 deals vs. 63 for KSA. And, for the first time since 2020, Saudi hasn’t recorded any late-stage deals in 2024 so far… but look at the total growth of fintech funding: +360% vs. H1 2023. The number of fintech deals has sunk though; -40% compared to H1 2023.

There was an annotated map of UAE fintechs circulating on X recently and it made me realize that I hadn’t properly dived into fintech since we released our general, MENA fintech report… well, fintech is making headlines around the region on an almost daily basis, so it’s becoming kinda dull to talk about it? Nevertheless, drafting a fintech map and sharing it with you guys certainly never hurts.

So, let’s map.

I analyzed around 100 Saudi fintech startups across 9 verticals.

Looking at the growth of Saudi fintech, we should soon opt for compiling reports of the size of Oxford Business Group country reports in order to map the progress I’m presenting only selected players within each vertical due to limited space. Intersections of fintech with retail, proptech, healthtech and other fields were excluded… they require a map of their own 😉

Payment Solutions dominate the market in terms of the number of players, tightly followed by Alt Lending, Alt PE, Wealthtech and Financial Intelligence & Services platforms.

Notes on Digital Banks:
— STC Bank was formerly known as STC Pay, which started off as a mobile wallet in 2018.
— I included Hala because one doesn’t need a crystal ball to see them there in the imminent future. They’re on the right path.

Anyone I left out? Send me your tips & comments.

Reminder: We’re screening early-stage startups at the moment. And we will invest in 4 before the end of this year… awaiting your decks.

Swvl secured a 5-year contract with e& ($6.3m)

TruKKer’s PPP with Dubai’s RTA

Certified Loyalty Marketing Professional Workshop in Riyadh

The Loyalty Circle Meetup (Riyadh edition)

Citron’s 2024 Collection

Summer internships at Money Fellows and Lucky

A massage chair with a POS

And… We are no. 2 investor by portfolio M&A transactions (thx, Philip / MAGNiTT!)

• Senior Key Account Manager at Hala (Riyadh)
• Project Manager at TruKKer (Dubai)
• Collection Manager at Money Fellows (Cairo)
• Backend Developer at Hala (Abu Dhabi)
• Senior Designer at Cartlow (Cairo)
• Senior Specialist, Sales at Zid (Riyadh)
• Sales Executive at Khazenly (Cairo)
• Sales Executive (B2B) at Cartlow (Dubai)

I’m in Cairo until August 5th, see you?

Hasan

I can hardly believe that our AVC II is done investing. Its investment period was over in Q3 of last year.

AVC II is a body of over 2,300 screened decks, almost 1,200 first calls and over 170 deal briefs. All spread across 5 years. Considering that our focus was on startups in the MENA region only, I don’t think those numbers are little, but I’d like to hear your thoughts on that 😉

From 2,390 screened decks to 27 deals

Our Fund II strategy was clear from the start: target Pre-Seed to Series A opportunities that are either MENA-based or have MENA founders or are selling in MENA. We were generally industry-agnostic. We also cared about MVPs, measurable traction and having technical co-founders. Looking back, we did end up investing in a few startups with a sole founder and, in all those cases, we kept encouraging and assisting the existing founder with finding a suitable partner. We don’t recommend founders to remain solo.

The team reviewed deals very religiously. Like I said above, AVC II is a body of 2,390 screened decks that transformed into 96 DDs. The team sent 58 term sheets which resulted in 27 closed deals. All of that happened between 2018 and Q3 2023.

Out of the total opportunities screened by AVC II since 2020, 25% were Egypt-based, 24% were from UAE and 17% from KSA. We also reviewed deals from Kuwait, Jordan, US, Bahrain, UK and others.

In terms of industry segmentation, fintech was the most common sector (20%), followed by e-commerce (9%) and SaaS (8%). Plenty of marketplaces, healthtech, F&B, edtech, logistics and AI.

Our deal screening peaked in 2020 & 2021 – the Covid era – when we reviewed 729 and 629 deals, respectively. It seems WFH was more intense than pre-Covid office and our deal briefs were on fire!

Note the higher proportion of deals closed in the first 2 years of the fund (2018 & 2019) vs. the total deals screened during the same period. Although we screened many more deals in 2020 & 2021, those decks didn’t materialize as they would have if we used the conversion ratio of the first 2 years. 2020 & 2021 were certainly hype years and I’m glad we didn’t jump on just any deal for the sake of it.

You can see we kept screening till the very end (Q3 2023) however we ended up using our remaining dry powder in a few follow-ons. And in parallel, our AVC III began investing.

So… 27 closed deals.

What were their stages when we got in?

Out of the 27, we made follow-ons in 11 (until our dry powder went dry). 3 companies received our follow-on more than once.

The most active grasshoppers in our portfolio have been the Seed deals. Out of the 12 Seed investments we made, 2 got acquired, 2 remain at Seed, 4 progressed to Pre-A, 2 to Series A, 1 to Pre-B and 1 reached as far as Series B. For the sake of comparison, Philip Bahoshy (MAGNiTT) recently published data on 813 MENA seed-funded startups (2015-2020). We beat those statistics. 33% of our seed investments made it to Series A (vs. 15% acc. to MAGNiTT). 8% made it to Series B (vs. 4% acc. to MAGNiTT).

21 companies of our AVC II companies remain active. The fund is a vivid mosaic and the next 2-3 years will tell its final story. Our philosophy goes against Peter Thiel’s opinion on winners and losers; we try to spend time with everyone, including non-grasshoppers = those that are not moving the needle for us.

Right now we’re planning to invest in 4 early-stage startups before the year ends – through our Fund III. The team is currently exploring verticals like Loyalty & discounts, BI SaaS, DaaS (D = Device), AI/Data, F&B Data and HR tech.

…awaiting your decks.

Merit raised $12 million and partnered with SAIB

645,000+ accelerated claims

NEV program by TruKKer

Hala gets a debt-based crowdfunding license

The future of finance is customer obsession

and… Gameball has a new look and offers Summer Internships

Turns out my last month’s newsletter was a good prelude to Swvl’s news of their $3.1m net profit in 2023 from few days ago.

Today I want to talk about the future, why the future is a verb and why Japanese have a word for companies older than 100 years. I’ll also throw in some thoughts on the investment trends in the region.

Building our immortal algorithms

If you’re 30 or younger, you are already living into the future that we all are making right now, whether it’s the tech changes or the climate changes. The world is building “immortal algorithms” that are already defining the future of humanity. (And I don’t mean building AI that will produce the best trip itinerary for Bali.)

Few days ago I listened to a podcast episode with a futurist Ari Wallach. He got me with:

“The future is not a noun.
It’s not this thing out there that we’re heading towards that’s going to kind of wash over us.
The future is very much a verb.
It’s something that we do consistently and constantly as humans, as parents, as partners, as professionals.”

You and I are biologically wired to focus on now and our current selves. The key to overriding that is to be able to envision what success looks like. It’s not as easy as it sounds and there’s training that can help us envision our futures – like writing letters to our future selves. The research shows that writing that letter would change how you think about yourself and your role in future shaping.

Wallach also reminds that every one of us is a futurist thanks to the actions we take at a micro level. But can we see beyond the short-term incentives of our today’s actions? Japanese for sure can. Fun fact – did you know that Nintendo is 135 years old?

The longest-running businesses on planet Earth are:

1/ majority Japanese (they even have a word shinise for companies older than 100 years, literal meaning is “old shop”),
2/ over 1,000 years old (in fact there are 21 such companies in Japan) and
3/ run like family businesses. That means that whoever is in the CEO seat is there to represent them and the future people in his seat. Those individuals never lose sight of their relationship with stakeholders or their role in the community at large.

It’s true that Japan’s startup ecosystem has often been labeled as sluggish. Thinking long-term may trigger a fear of failure. Well, even Japanese entrepreneurial culture is reforming itself nowadays to ensure it can create new, future shinise.

Last weekend I discussed the past, the present and the future on a panel at RiseUp Saudi Summit together with Sharif El-Badawi (DFDF), William Bao Bean (Orbit Startups), Waleed A. Alballaa (Sukna Ventures) and Mohammed Alzubi (Nama Ventures), moderated by Omar Al-Shabaan (The Space).

My thoughts on the future investment trends in the region? We cannot exactly say when the investment activity will increase but at least we know there are things that need to be fixed first before we see any improvement. Which is: We need to see more exits and LPs need to see a proof that their money will come back to them as promised by VCs.

There are companies that have survived the downturn and they continue to grow – those are potential acquisition targets or IPO candidates. Once this cycle comes to an end and money goes back in investors’ hands, we will witness a new cycle where investors will be willing to invest more in VCs and in blind pools in general.

And the distant future? We certainly have our own, regional shinise in the making… A team building another immortal algorithm. A founder imagining his or her legacy. A founder writing letters to his or her future self.

Now go get that paper and pen and start writing.

And don’t forget – we can be immortal through our actions. Stay conscious and careful.

Gameball joined Hub71

Women Leaders Summit in Riyadh

CarSeer partnering with China

NearPay in Las Vegas!

Ahmed Wadi interviewed by Forbes Middle East

One day in the life of a founder

Recover your flood-damaged devices

• Franchise Development Manager at Cartlow (Dubai)
• Enterprise Account Manager at Subsbase (Cairo)
• Loyalty Manager at Gameball
• Senior Product Designer at Qoyod (Cairo)
• Product Designer – UI/UX at Hala (Riyadh)
• Data Architect at Money Fellows (Cairo)

How’s your water sports training going this year?
Depending on your location, you could consider getting stands for kayaks by the main office entrance… skip the umbrella stands and go for the kayaks instead.

Hasan

Are you following up on the latest tech stock resurrection on the block?

It’s been exactly 7 years since the company was established and 2 years since its debut on Nasdaq, which was followed by a valuation drop from the initial $1.5 billion to $16 million in December’22. Almost a year later we witnessed a long-awaited twist to the story.

The first $1.5 billion unicorn from the Middle East to list on Nasdaq seems to be standing again on its 4 legs. Healthier 4 legs.

The unfolding resurrection of Swvl

The first investment of our Fund II. The first $1.5 billion unicorn from the Middle East to list on Nasdaq stock exchange. I can still remember the excitement on March 31, 2022, ahead of Mostafa Kandil’s ringing of the opening bell. Red confetti flying all over, slowly descending towards the ground. Swvl’s stock price began mimicking the confetti, as if the gravitation force was also pulling it downwards…

Q2 2022, the first quarter since Nasdaq debut

Corp’s Class A ordinary shares and warrants commenced trading on Nasdaq on April 1, 2022 (ticker: SWVL), which was followed by a drop in the stock price due to January anomaly and post-IPO trends. The stock price recovered at the end of April’22 only to be followed by another drop as a result of the global economic downturn.

Swvl announced a portfolio optimization program to turn cash-flow positive in 2023. At that time, the company was already operational in countries like Germany or Argentina. And Swvl’s acquisition spree was in full force: Volt Lines (Turkey), Zeelo (UK) and Urbvan (Mexico). (Note: Zeelo was called off.)

By June’22, Swvl paused daily intra-city rides in Pakistan and Kenya in light of the global economic downturn. The management signaled a possible headcount reduction affecting mainly engineering, product and support. A not so rosy outlook…

But they managed to raise. In August’22, Swvl announced a $20 million private placement, which was supposed to take them to their breakeven point.

Trading below the $1 mark

The optimization program seemed successful: the company turned contribution margin breakeven (after everything except fixed OPEX/R&D), and Egypt, Turkey, Germany, Kenya and Jordan turned Adjusted EBITDA positive or breakeven… But come September’22 and Swvl’s stock price was trading below the $1 mark. The founders explained this was due to short investors and temporary unwillingness of institutional investors to invest. One could also blame Swvl’s rapid expansion policy, which cost the company hundreds of millions of dollars.

Shutting down Pakistan, reducing total headcount by 50%

The company introduced another optimization program to reduce costs by (i) focusing on the largest markets which contribute the majority of Swvl’s revenues (i.e. Egypt and Mexico), (ii) shutting down operations in Pakistan, (iii) reducing headcount by 50% and (iv) cutting operating expenses (incl. marketing).

Swvl’s market value continued to be below the required threshold ($50 million) throughout the last quarter of 2022 and a written notice of non-compliance from Nasdaq was on its way.

Reverse stock split, pending 2022 Annual report

In January’23, Swvl got an ultimatum from Nasdaq to ensure that its minimum market cap is worth $50 million for 10 consecutive days ahead of July 10, 2023.

To regain compliance with the Nasdaq $1.00 minimum bid price requirement, the company proceeded with a reverse stock split of Class A ordinary shares, at the ratio of one-for-25 such that every 25 issued Ordinary Shares would be combined into one Ordinary Share, with a par value of $0.0025 each. Swvl began trading on Nasdaq on a split-adjusted basis at the start of trade on January 26, 2023.

In the middle of all that, Swvl cancelled its acquisition of Volt Lines (Turkey). Not a shocking move.

Another notice from Nasdaq was on its way in May’23, this time for Swvl not doing its homework. Its annual report (fiscal year ended December 31, 2022) was not submitted on time. Nasdaq’s new deadline was the end of October’23.

Licensed in Egypt, moving to Nasdaq Capital Market

In June’23, Swvl became the first company to acquire a license for transporting people in Egypt using an app. This five-year license was granted to them by Egypt’s Land Transport Regulatory Authority (LTRA). The company was also looking into operating smart transport lines to link Greater Cairo with the New Administrative Capital.

Given the persisting market cap issues, Nasdaq approved Swvl’s request to transfer its listing from the Nasdaq Global Market to the Nasdaq Capital Market, an equity market for companies with the smallest levels of market capitalization within the Nasdaq Composite Index. The trading commenced on July 19, 2023.

In line with Swvl’s strategy to focus on higher priority markets, the company sold Urbvan Mobility to Kolors, a leading transport provider in Latin America, for aggregate gross proceeds of $12 million (all cash). Urbvan represented approx. 7% of Swvl’s IFRS revenues as of December 31, 2022.

First group gross profit

The last day of October’23 couldn’t come faster enough. Turns out Swvl’s 2022 revenues grew 101% yoy and the company posted its first group gross profit ($2.75 million), largely because its revenue grew faster than its basic cost of operating its fleet of buses (55% yoy). Booked rides jumped to almost 46 million and Swvl buses were full 96% of the time.

The market was expecting a jump in stock price following the H1’23 results announcement that was due at the end of December’23.

Graph: Swvl 6m stock price chart as of April 3, 2024.

First-ever net profit

On December 27, 2023 we all learned of Swvl’s first-ever net profit of $2 million in H1’23 (vs. -$161.6 million in H1’22).

Turns out that most revenues (73.7%) come from selling technology that clients use to plan their routes, operate fleet services or even manage riders. The rest is from operating buses. Also, the company’s largest market (Egypt) brought in 93% of its revenues, while KSA brought in 7%. (Nada from the UAE though it’s also one of their focus markets.)

How did they achieve profitability? Swvl had cut about one third of its workforce in 2022, which allowed them to reach profitability in 2023 instead of 2024 as originally planned. They sold off their subsidiaries in over a dozen countries (Argentina, Chile, Mexico, Germany & Pakistan) and narrowed the focus to three markets: Egypt, KSA and the UAE. They also reduced the compensation paid to senior management and company directors from $13.4 million in H1’22 to $344k in H1’23. And they sold Urbvan earlier in 2023.

Swvl aims to proceed with careful expansions in 2024, with a focus on Saudi and rehiring some of its employees, which will again increase their compensation packages.

And the stock price? Resurrected. Awake. 1,420.18% growth over the past 6 months.

2023 annual report should be announced soon. We’re all ears.

Swvl turned 7

Klaim + Emirates Development Bank

Carseer + Abu Khader Automotive Group

Taker + Saudi Food Bank

Zid’s new strategic partnerships

Whatever your business is… (an ad by Qoyod)

Shortlisted for the Positive Luxury Awards

• Manager/Director, Legal Affairs at Zid (Riyadh)
• Backend Tech Lead at Qoyod (Cairo)
• Merchant Acquisition Specialist at Money Fellows (Cairo)
• People & Culture Specialist at Gameball (Cairo)
• Senior Accountant at Lucky (Al Giza)
• Business Development Associate at Subsbase (Cairo)

Take care,

Hasan