Middle East investors have long had an interest in Silicon Valley, but now some of that attention is being reciprocated.
The Middle East's first unicorn, Souq.com, was acquired by Amazon in 2017 for $580m. More recently, at the end of March 2019, ride-hailing service Careem was acquired by Uber, in a $3.1bn transaction that is expected to close in Q1 2020.
Careem will become a wholly-owned subsidiary of Uber, operating as an independent company under the Careem brand and led by Careem founders.
SEE: Launching and building a startup: A founder's guide (free PDF)
Careem became the region's second unicorn in late 2016, just four years after it was formed. Since then, the company reckons it has "created over one million employment opportunities" and generated over $2bn in earnings across 15 markets.
However, not every journey to acquisition, or a $1bn evaluation, is that quick. As Ronaldo Mouchawar, CEO of Souq.com, noted in Harvard Business Review, his company was originally founded way back in 2005. His site migrated from being an eBay-like auction marketplace to a mobile-focused e-commerce platform before being bought by Amazon over a decade later.
Uber's financial foray into the region, coupled with Amazon's earlier purchase, has inevitably sparked interest in which company might be acquired next.
Predictions are notoriously difficult to make. Instead, we've opted to showcase four other major Middle East startups of varying sizes and focus on the ones that we think are worth watching.
ZDNet interviewed Fetchr's founders Joy Ajlouny and Idriss Alrifai in 2015, just after the company had announced $11m in Series A funding. At the time, this was the largest such US investment in a Middle East originated app.
Since then, the shipping and logistics service has added a further $41m in Series B funding and quickly expanded.
"We started Fetchr with three developers and six years later we now we have close to 3,500 employees," Alrifai told Supply Chain Digital in April 2018. "We've grown rapidly. Last year alone, we grew by 600%. Right now, we're recruiting about 100 people a week and we're still growing."
Fetchr is expected to seek Series C funding later this year. The service – which ships to UAE, Saudi Arabia, Bahrain, Jordan, Oman, and Egypt – seeks to "solve the unpredictability of package delivery in the UAE and Middle East because of the absence of a formal street address system".
This address issue matters in a region where non-delivery rates are high, yet where demand for e-commerce is growing.
"We're like Uber," Ajlouny explained to ZDNet. "But instead of picking up a person, we use the same GPS coordinates to deliver packages."
2. Property Finder
Real-estate classifieds might not be the most exciting area for technology, but UAE-based Property Finder secured a $120m investment late last year from General Atlantic, a New York-based private-equity firm.
Chief executive Michael Lahyani told Reuters that the business, which operates in Saudi Arabia, Egypt, Turkey, the United Arab Emirates, Qatar, Bahrain, Lebanon, and Morocco, is now valued at close to $500m.
This is up from a valuation of $200m in 2016, when the Sweden-listed investment company Vostok New Ventures bought a 10% stake for $20m.
SEE: 10 books every small business entrepreneur should read (free PDF)
The origins of the business can be traced back to 2005 when founder and CEO Michael Lahyani moved from Geneva to Dubai to launch UAE's first printed real-estate magazine, Al Bab World.
The publication featured classified ads for properties, with some 70,000 copies delivered every two weeks. In October 2007, the outlet was rebranded and moved online.
Jamalon markets itself as the largest online bookstore in the Middle East. Based in Jordan, the site offers customers access to more than 10 million titles – from more than 30,000 publishers – in both Arabic and English.
Founded in 2010, Jamalon offers "customized payment methods that suit the Arab region", such as Cash on Delivery, CashU – a prepaid online and mobile payment method available in the region – and Orange Money, a mobile money service used by the telecom operator.
To date, Jamalon has raised a total of $14.2m, Crunchbase reports, in funding over six rounds, including $10m raised in March from a Series B round. Wamda reports that the company is now valued at $1.7bn.
According to a press release announcing the investment, this latest cash injection will "will be used to increase the reach of Arabic books across the globe", the company said in a statement. Jamalon's Print-on-Demand service can "print over two million titles in under five minutes per book".
According to Vox: "The company has been referred to as the Amazon of the Middle East, but that label doesn't quite do it justice. The platform's success … is based on meeting a demand that Amazon has overlooked."
Jamalon offers more 150,000 books in Arabic, Vox pointed out, whereas "Amazon, by contrast, offers only a few hundred books in Arabic, and is often difficult and costly to use in the Arab world."
Spotify launched in 13 Middle East and North Africa countries in November last year, offering free and premium services designed for listeners in the region. The service will cost about half the $9.99 subscription Spotify charges in the US, according to Billboard.
In 2018, Deezer, the French streaming service, also launched in the region, following new investment and a partnership with the Arabic music service Rotana.
More than 100 prominent regional artists are signed to Rotana Records, which has historically produced its own content and shows for distribution via its TV, FM, and digital channels.
These moves have put pressure on Anghami, the Lebanon-based music streaming service, which has had much of this market to itself since it launched in 2012.
Speaking at a BECO Capital conference last November, co-founder Elie Habib revealed that the service, enjoys over 1.5 billion streams per month, and that it has more than 13.5 million monthly active users. The platform supports over two million artists, and includes "a self upload service for independent artists".
"Competition is great," he posted on LinkedIn in late March 2019, highlighting a series of job openings. "We're growing month on month and pushing hard to make sure that a local Arab business maintains domination in the region."
One plank of its strategy to stay ahead of the competition is to stress its local origins, as well as its local content. Rami Zeidan, vice-president of partnerships at Anghami, recently outlined how podcasts that originate in the Middle East are one element of this approach.
"We believe in our region; we are from the region, for the region," he told Communicate Online, explaining how Anghami is investing in podcast discoverability, production, and marketing.
Anghami is also innovating in other ways to tap into the region's love of social media and offer a product that differentiates itself from its new rivals.
Apart from its audio-streaming interface, the service has recently rolled out social features like Anghami Story, modeled after Snapchat and Instagram Stories, and Video Expressions, similar to now-defunct Musical.ly," according to Billboard.
Along with "unconventional ad formats such as 'shakeable' ads and an original-content and artist-development program", as a local company Anghami is also "currently ahead of Spotify and Deezer when it comes to high-quality localized content".
Whether that last advantage can easily continue is a moot point. As Fares Ghandour, a partner at Wamda Capital, has spelled out, Anghami has "had a monopoly over local streaming for the past six years, but customer acquisition costs have been cheap because there was no one else to compete with them".
"Now that Deezer and Spotify are there, those costs will skyrocket. An acquisition by Tencent is by and large the most likely exit strategy that Anghami will pursue," he predicted.
In 2018, a record number of investments – 366 of them – were made in the Middle East and North Africa region, Magnitt 2018 MENA Venture Investment Report found.
More widely, it detailed that more than 155 institutions invested in the region's startups in 2018, 30% of which were from outside the region.
These developments, coupled with efforts seen in the past year – such as the establishment of Egypt's first venture-capital fund focused on investing in fintech, the $100m for startups in the Bahrain-based Al Waha Fund of Funds, and Tunisia's startup act – are giving the region's startup scene unprecedented momentum.
With record levels of investment, interest from tech watchers and interesting new ventures launching all the time, the region's startup scene looks like it's going to get even hotter.