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

SaaS is everywhere around us. This newsletter was sent to you by one – Mailchimp. You’ll maybe share it with your colleagues through another – Slack, Zoom or Gmail. Or you’ll WhatsApp it.

While many SaaSers in the west managed to hack their growth, our local SaaSers’ growth has always been sluggish for a number of reasons. Scroll down to read what the team @ArzanVC got to say about post-Covid19 SaaS in the Middle East.

Are our local SaaSers becoming fast-growers?

SaaS — in other words, subscription-based software as a service over the internet — is not just about our personal use. Some say 86% of companies will be entirely SaaS-run by 2023.

During the rapid move towards everything remote in 2020, SaaS solutions have proved to be one of the easiest to adopt and roll out. Our colleague Asia agrees that the Middle East, too, has witnessed a higher-than-usual growth of SaaS as a result of the pandemic.

The topic we are tackling this month is whether our local SaaSers may be finally becoming fast-growers like their counterparts in the US and Europe.

A stereotype SaaS business would pursue rapid growth. This can’t be said of the SaaS startups in the Middle East. Not that they don’t have the potential; they do. But they can’t achieve scale very easily because the local SME market (for which most of them are built) is not yet big enough to embrace them all.

According to our colleague Mohanad, the number of SaaS startups in the region is increasing dramatically. Actually, SaaS startups appear as number 1 across all the industries in our pipeline. He says that SaaS startups tend to grow 6-7% MoM on average, but he adds that this is expected to change upwards given the pandemic. More SMEs have started to realize that the use of SaaS products is very important to running their business.

Kenneth Research asserts that the banking, financial services and insurance (BFSI) segment continues to hold the largest market share in the vertical segment, and the manufacturing segment will be growing at a significant rate in 2020-2023. However, Mohanad believes it is the retail SaaS that is really picking up, fueled by the new demand coming from stores and restaurants who are trying to go from offline to online. That’s why startups like Zid, Taker and Expand Cart are gaining a lot of traction recently. These startups allow retailers and/or restaurateurs to create their own e-commerce websites and apps with their own branding and customization, which reduces their reliance on Delivery Hero, Talabat and other online delivery platforms and saves them the commission they usually pay on every order.

On the other hand, banking and financial services continue to be restricted by the region’s tough regulations and so their potential remains quite suppressed.

Similarly to the retail SaaS, the education segment (e.g. Noon Academy, Ynmo, Praxilabs, Quizzito, etc.) is also experiencing a surge in demand and the same applies to the healthcare SaaS startups (e.g. Vezeeta, Altibbi, etc.). For example, Noon Academy recently launched in India and Pakistan. Earlier this year Vezeeta expanded to Kenya with Nigeria being the next move. The startup also partnered with Saudi STC to provide telehealth services to its employees.

Mohanad notes that one thing that can help SaaS products further expand in the coming period is that their cash burn rate is relatively lower than in the most of the other industries. In other words, SaaS startups can run on much lower costs. Another advantage is that if you have a good SaaS product, you can really sell it anywhere—most of the times you are not constrained by the area you are in. This brings us to the point that making sure your product-market-fit really fits is very crucial. You can have rapid growth but if your product doesn’t fit, you’ll lose your customers just as fast as you gained them.

Mastering content marketing (any educational content for that matter) plays a major role, too. Zid provides education (online courses) for its users in various e-commerce-related topics through its Zid Academy. Also, Altibbi’s “Ask about Coronavirus” hotline has been praised by H.M. Queen Rania for raising medical awareness among the public.

🥁 rebranding
Reportcard rebranded to Classcard. Check out their new website!

2 stars in Forbes’ Top 10

TruKKer and Swvl got featured in Forbes’
list of top 10 Most-Funded Startups in the Middle East in 2020.

Top SaaS 👑

Crowd Analyzer was listed in SaaStock’s top SaaS & tech companies in the Middle East and Africa.

Instant commission

FlexxPaysuccessfully launched the “instant commission feature” for Zain KSA sales staff.

Meet Mejuri for Men

Mejuri debuts men’s jewelry offering by launching nine-piece collection for men as of October.

Latest Jobs @ArzanVC Family

• Front-end Developer at Classcard

• Back-end Developer at Classcard

• Head Chef at iKcon (Dubai)

• Operations Manager at Swvl(Amman)

• Senior UI/UX Designer at Crowd Analyzer (Cairo)

Ready for the pumpkin season?

Hasan

We exited OnFleet with a higher than 4x return! Thank you @khalednaim for the exciting 4-year ride. We saw how the OnFleet team grew the company and overcame challenges and we wish them all the best in taking OnFleet to the next stage!

And we continue with the good news. Do you know we can now get our emotional states analyzed through our voice? Thank you, Halo by Amazon. This month we will focus on mental health startups. So… how’s your mind today?

Touch base: mental health startups

Covid19 gave us a cold shower of the many realities we neglected. Among them the simple fact that emotional and mental health is sometimes more important than the physical; or let’s say—the mental health is often described as the founding stone of the physical. If the mind is at peace, the body will follow.

Healthtech startups gained sky-high momentum thanks to Covid19 and a huge chunk of them are focused on mental well-being. But how big is the Middle East’s health tech footprint within the mental health field? Small but growing. Yes, there is the issue of stigma when it comes to mental illnesses, but the demand for online mental health services is increasing. Here are some examples of local startups within this field.

Shezlong (Egypt), the first online platform in the MENA where you can book anonymous online mental sessions, had a 31% increase in the number of therapy sessions bookings between February and March. They also recently secured a new investment to expand. Sympaticus (Lebanon) is an online psychotherapy and well-being platform with a prime focus on women.

Saudi Arabia’s Youpositive offers online coaching. There are also various platforms providing medical information and advice such WebTeb (Jordan) and Sohati (Lebanon). eTobb (Lebanon) is a medical Q&A platform while Altibbi (UAE) offers access to health answers from a network of doctors as well as live consults.

Family Postcard

No.1

Cartlow is trending as the no.1 shopping app on the Google Play Store.

Luxury sustainable fashion + beauty tycoon

The Luxury Closet has raised an investment from Huda Beauty Investments (HBI).

$10M

iKcon has secured $10M funding since inception, including a recently closed pre-series A round of $5 million led by ArzanVC, AlTouq Group, Nazer Group and others.

At the request of the merchants, Zid’s network now covers more than 170 cities.

Latest Jobs @ArzanVC Family

• Business Development Associate at FittiCoin (Egypt)
• Sr Front-end Engineer at POSRocket (Jordan)
• Sales Manager at TruKKer (Egypt)
• Product Manager at Crowd Analyzer (Egypt)
• Call Center Supervisor – Arabic speaking at iKcon (Dubai)

Take good care.

Hasan

Our topic this month is slightly atypical. We focused on kids-centered startups and platforms from around the region that are trying to take the pressure off the parents’ shoulders while the travel and physical socializing options equal to almost zero.

P.S. some are for adult-friendly, too😎

P.P.S. in case you missed it, our super-visual fintech report is available here.

Spotlight on kids’ edtech and edutainment

The famous World Health Organization’s Wash Your Hands With Peppa Pig is just the tip of the iceberg of the edutainment content out there.

Activities and socializing are crucial for the development of kids and, Covid19 aside, the summer in our region is already a tough nut to deal with. Luckily for all of us, there is an increasing number of regional startups/platforms focused on kids (from toddlers to teenagers) and their education, entertainment and socializing.

We prepared for you a snapshot of what the region offers in terms of online learning, coding, gaming, socializing & activities, robotics & engineering and books & music:

Under online learning there are 3asafeer and Alhodhud which are dedicated to teaching Arabic. Cherpa provides courses for teenagers (12-18y) in self-driving cars, building smart cities and cyber security. Coded Minds offers practical tech-enabled iSTEAM subjects designed for both children (4-16y) and adults. And PraxiLabs offers a 3D virtual lab simulation of physics, chemistry and biology.

Coding covers Coded, which runs coding programs (and bootcamps) for high school students and older wanna-be coders, HelloCode, a platform where kids can learn the concepts of coding, and Hello World Kids, which operates HelloCode and teaches programming at eight different levels.

In the gaming field there are players such as GBarena, Play3arabi, RABABA Games, Tamatem and The Stories Studio.

Socializing & activities include Join, a go-to guide for activities & clubs in Kuwait, Kiddo App, an education marketplace that recommends activities and classes in the UAE, Kidzapp, a platform listing activities for kids in the UAE and Egypt, Nowaday, a marketplace for kids clubs in Kuwait, and Play:Date, a UAE-based app that helps build your kids’ social circles.

The robotics & engineering field comprises Junkbot, where kids can make their own robots, and The Little Engineer.

Finally, books & music cover excellent platforms for audio books such as Dhad and Kitab Sawti. Book quizzes are available at Quizzito. Kidzigo is a YouTube channel streaming fairytales. And those who love music can take lessons at I3zif.

Family Postcard

5 US stores and 15 minimalist jewelry brands

Mejuri opened its 5^th retail store in the US located in Boston and it is one of the 15 best minimalist jewelry brands to shop now.

2 integrations

🎙️🎙️🎙️
TruKKer‘s founder and CEO Gaurav Biswas had an interview with Arab News. Tamatem was featured in The National UAE. Also, iKcon was quoted in an article on the GCC’s cloud kitchen sector by Wamda.

And Shieldfy is now live on Product Hunt.

Latest Jobs @ArzanVC Family

• Senior Software Engineer (Python) at POSRocket (Jordan)
• Technical Support Astronauts at POSRocket (Egypt)
• Back- and front-end developers at Zid (KSA)

Remember how we spoke last month about the rise of super apps in the Middle East? You definitely came across Careem’s latest announcement of their very own super app. Mind you; we don’t have a crystal ball in our office (yet). Future-telling is our natural talent 🔮

And in July, we are introducing to you super comprehensive visuals accumulating data from 240 local fintech companies in the MENA. This is only a tiny entrée of our upcoming fintech report.

MENA’s fintech riches

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.

We @ArzanVC do stress on the fact that proper regulatory scrutiny of the sector is essential least to say. If we nurture proactive, innovative regulators, we will be able to avoid situations like Wirecard. However, if we end up having strictly reactive regulators, then we will face similar problems in the MENA. So, the Wirecard story is a good lesson for our region.

There is certainly no fintech hype in the MENA; on the opposite—there is a need for it. This month, we dug deep to present you the stellar leaders as well as untapped areas—and there are quite a few.

Recently, Fintech is MENA’s most active industry by the number of deals. Below is a snapshot from our research—we will be sending you our MENA fintech report in a few days’ time, so stay patient.

The first snapshot is a geographical overview based on an analysis of 240 fintech companies and platforms from the region. The biggest fintech footprint is in the UAE (88), followed by Saudi Arabia (33) and Egypt (28). However, there is a big gap between the UAE and the rest of the countries, especially those at the tail, who need to catch up—in other words, there is a lot of space to grow. For example, we see Bahrain to improve their ranking within the next year due to their proactive regulations which will attract fintech to the kingdom.

Secondly, it’s a must to look at the general functions of MENA’s fintech. We split the functions into 4 key areas: currency & transactions, funding & capital markets, business tools & management and financial marketplace. The findings conform to the global reality: currency & transactions are at the forefront of the fintech landscape and they represent nearly half of MENA’s fintech market (!).

The last snapshot shows categories that MENA’s fintech companies may fall into. Some companies belong to two or even more areas, so please remember that certain companies may be overlapping categories. Based on the functions graph above, it is clear that payment solutions are by far the top category, followed by alternative private equity and alternative lending. There’s a potential for more growth in areas such as fintech-focused cybersecurity, real estate or niche wealthtech such as retail investments, which have, for now, only few players.

Family Postcard

💰 1 billion Saudi riyals
Sales executed by stores that rely on Zid amounted to 1 billion Saudi riyals!
 

Latest Jobs @ArzanVC Family

1. Senior iOS Developer at Cartlow (Dubai, UAE)
2. Front-end Engineer at POSRocket (Jordan)
3. Sales Astronaut at POSRocket (Kuwait)
4. Junior Sous-chef at iKcon (UAE)

And how’s the summer going with you?

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