Relax your mind now not tomorrow

Relax your mind now not tomorrow

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.

 

TL;DR (too long; didn’t read) 
Mental health is an essential field within healthtech that has grown on importance this year. We reviewed the region's local players providing online psychotherapy, life coaching and helpful information. And although there’s certainly room to grow, the region is moving in the right direction with more funding flowing towards online psychotherapy sessions.
 

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.

 

 

Oprah shops here.
Mejuri in an interview with Vogue revealed that their customers include Lizzo, Selena Gomez, Margot Robbie and Oprah Winfrey.

 

170 cities

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

Spotlight on kids’ edtech and edutainment

Spotlight on kids’ edtech and edutainment

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 GBarenaPlay3arabiRABABA GamesTamatem 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 QuizzitoKidzigo is a YouTube channel streaming fairytales. And those who love music can take lessons at I3zif.

 

TL;DR (too long; didn’t read) 
Our region is home to a growing number of edtech and edutainment startups and platforms tailored for kids (and not only them). We prepared an overview of the most interesting players in online learning, coding, gaming, socializing & activities, robotics & engineering and books & music.
 

Family Postcard

 

5 US stores and 15 minimalist jewelry brands

 

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

 

 

2 integrations

 

POSRocket announced 2 new integrations: one with iisal and the other Kitchen CUT. Someone’s on fire!
 

 

Forbes Top 10🌟
Dana Baki, the co-founder of MUNCH:ON, got listed as no4 in Forbes Middle East’s ‘Women Behind Middle Eastern Tech Brands’ top 10 list.

 

 

🎙️🎙️🎙️
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)

 


 

Good luck for the rest of Jumanji Level 8 (aka August 2020). The start was too tough.

 

Hasan

MENA’s fintech riches

MENA’s fintech riches

  

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 areasand 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 & transactionsfunding & capital marketsbusiness 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 cybersecurityreal estate or niche wealthtech such as retail investments, which have, for now, only few players.

 

TL;DR (too long; didn’t read) 
Fintech is the most active industry of the MENA by the number of deals. We present you four visuals classifying 240 local fintech companies based on geography, function and category. Payment solutions are at the lead of MENA’s fintech, followed by alternative private equity and alternative lending. While UAE’s fintech strength is profound, other Gulf countries like Bahrain, Qatar and Oman remain largely untapped.


 

Family Postcard

 

Keep on munchin’

Probably the biggest announcement of the past month is coming from MUNCH:ON – yes, that’s a new name of LUNCH:ON. You make us proud, guys. Mabrouk!
 

🎮 1.5 million downloads
Tamatem announced a strategic partnership with a game developer and publisher Tilting Point. Also, its latest published game “Fashion Queen” hit 1.5M+ downloads across 17 countries in the Arab world in a period of 3 months.

 

 

 

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

14 ports
TruKKer is now operating across 14 ports in the Middle East.
 

📖
Qoyod offers free accounting material and lectures for students and teachers

 

 


 

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

Sailing the Rocking Boat

Sailing the Rocking Boat

Do you already see the sun rays that pierce through clouds after every storm?

They are always there, waiting for us 🌤️

And with that in mind, we reached out to a couple of founders to check on how they’re sailing through the rough corona seas. Last month we analyzed the overall endurance of business sectors, and today we will dive deeper to see how startup founders think, how their businesses adapted and what they can teach us.

More good news from ArzanVC’s Family will follow. Hold on tight to your boat’s helm! 


Copy the way I cope

Crises are part of life. They force us to think, rethink and make things better. It’s a rule that crises always give rise to something good. Even John F. Kennedy said: “When written in Chinese, the word crisis is composed of two characters—one represents danger, and the other represents opportunity.” And that’s what we @ArzanVC really believe in.

But what do founders believe in? We asked them. We were in touch with founders from multiple sectors—Algodriven (automotive tech), Almentor (edutech), Teela (essential e-commerce), The Luxury Closet (non-essential e-commerce), Tons (groceries e-commerce) and ViaVii (travel e-commerce)—and these are their insights and words of advice:

Adapt. Act quickly. Innovate. Whenever possible, all teams opted for working remotely, as the rest of the world did. Some of the founders experienced unprecedented demand, while others had to find alternatives to delivering their offering. Algodriven had to fast track new features to enhance their products and offered extended payment terms. Similarly, Almentor had to customize new products to manage the very high demand for the e-learning services. Teela saw it as an opportunity to expand and grow the market share. Tons chose to control the number of orders and slowly grow the capacity while onboarding new stores. The Luxury Closet made sure to implement a healthy supply and demand and stress-test financials. ViaVii was the first to launch online authentic cultural and artistic experiences, which gave them a leverage over international competitors. “We translated going into self-quarantine to a fun, entertaining and educational experience,” said ViaVii.

 

 

What are the most important attributes of a startup right now? Speed. Some founders believe that this is a unique opportunity for startups as many governments and corporations realized that it’s startups who can help solve nation-wide problems. Or world-wide. Empathy and communication are also crucial. “We’ve tried to engage all our stakeholders, from employees, to customers and investors so that we can work through the situation together,” explained Algodriven. “Establishing clear communication will help businesses win people’s confidence,” added The Luxury Closet. Teela thinks that having a vision is the key: how do you envision your business after the crisis? If implementation is slowing you down, an alternative route, according to ViaVii, can be a beta.

And the founder’s personal advice? We all have to keep our heads above the water level and stay positive, but don’t forget to always plan for the worst. Countries around the world have started lifting their restrictions. According to Tons, “companies who endure this situation will be more resilient and valuable going forward.” But “don’t jump on any opportunity and lose your original path. Maybe you’re benefiting now because you built the infrastructure to serve the right model, so stick to your model and don’t lose focus with the temporary, and maybe distracting, market needs,” warns Almentor. Teela has another view: “Maybe it’s the time to start a new venture, launch a product or a brand. And while people are staying home, they’re willing to try any product that is delivered to them.”

Who knows; maybe now is the right time to make your big move! Plan well and execute by day.

TL;DR (too long; didn’t read) 
We were in touch with the founders of Algodriven, Almentor, Teela, The Luxury Closet, Tons and ViaVii. According to them, the current times are favoring those who act quickly, innovate, customize and stress-test. What matters is speed, empathy, communication and vision. And don’t just jump on any opportunity out there. Plan well and execute by day.


 Family Postcard

ArzanVC’s family post office was very busy the past month and we couldn’t be any prouder!

Our Eyad AlBayouk participated in an online discussion by Qoyod (April 16th), giving advice on how to invest during corona times.

LUNCH:ON has partnered up with Gulf For Good to allow all the app user to donate to children in Nepal, Tanzania, Uganda, Peru and Lebanon and keep them fed, hydrated and educated.

Swvl has collaborated with Egyptian Food Bank (EFB) to support day laborers during the holy month of Ramadan.

Meanwhile, Repzo is offering Jordan’s supermarket, cafe and restaurant owners their very own application where customers can order their fav food, drinks and meals safely and securely from their homes.

 

UAE’s iKcon introduced various additional safety measures, including an additional layer of protective plastic packaging for all deliveries. Also, all bike riders are no longer allowed to enter iKcon premises to keep them separated from the in-house staff.

And finally, with all the teaching/learning happening online, Reportcard’s student CRM with an integrated online collaborative classroom becomes definitely handy! Reportcard also hosted a webinar on “Teaching Online with Zoom”.

 


 Latest Jobs @ArzanVC Family

 Those of you who recently had to downsize your company workforce, don’t hesitate to contact us and we will help your former employees to find a new job in other startups.


 Rehydrate during the night and stay positive. Better times are just around the corner.

Hasan

Any Profits in 2020?

Any Profits in 2020?

end of radio silence.

This is not a hacked newsletter. Nor have we relocated our offices to another planet. In fact, we grew into a truly regional VC, having on-ground presence in 5 countries across the MENA. Plus, we did our first closing for Fund II in August and made a whopping 4 new investments. Did I mention we grew our team to 8 members? Okay, enough of the news shower.

Amman hosted us for a few days this week for some team-building fun. You can see sometimes we also cook other things than sizzling deals! We also organized Founders’ Coffee & Chat – a casual meetup with a number of startups in Amman to brainstorm ideas and expansion. Well-spent time indeed. We already miss the laughs.

Now—first things first: Arzan VC’s top 10 trends for 2020. Then we will show you what’s the magic formula of growing a sustainable business.

Let’s go!


The 10 for 2020

1 Cash burning is not so popular anymore and the doomsday of blitzscaling may be near. Immense growth by surprise doesn't always result in a victory.

2 Yes to bootstrapping. Businesses would be checking on their revenues and minimizing losses by focusing on growth in their most profitable areas.

3 Profitability before growth. Priorities reversed.

4 What's your unit economics? Time to do some math 🧮➕➗

5 Long-term sustainability is the new (or old?) kid on the block.

6 Less competition. Less cash burning would be a game changer (ender) for many.

7 B2B could pave the way. Because they are keener on organic growth and sustainability.

8 More market consolidation. Mergers, acquisitions and IPOs.

9 Are you environmentally sustainable? Jeff Bezos has $10B fund for climate-based projects 💵

10 In MENA, initiatives that address logistics issues will continue to dominate the deals. That is transport, delivery, payments and e-commerce.

Disclosure: We don’t necessarily agree with the above trends, but we would still like to share them with you.

 


 Any profits in 2020?

There’s a lot of recent whispering out there about sustainability and profitability. The world got alerted when in the second half of 2019 Japanese conglomerate SoftBank, a major investor in Uber, Slack and other stellar startups, got shaken by the weak performance of some of its major investments. Not to mention the dramatic failure of WeWork.

Uber, just like Amazon, is a global tech monopoly in its respective field (that’s why they call it “Amazon of transportation”), but do you know what else makes these two similar?

They wouldn’t have been the companies they are today without their growth tactic: blitzscaling. It is a shortcut to immense growth via cash burning, resulting in massive edge in technology and customer base. You’re simply pouring in the money even if the numbers don’t make sense. Sustainability may seem trivial and profitability got a red light. What if the traffic signs don’t work and the business will never see its profits? The argument is that the growth would eventually compensate for the financial losses sometime in the future. Note: eventually does not mean definitely and, at one point, each business has to take certain measures to ensure sound financial standing in the long-run.

It took Amazon over a decade to touch the profits. Uber is yet to be profitable and its CEO recently said it would finally happen by the end of 2020. The main question is: when Uber decides to take measures toward profitability, to what extent would their customers stop using the Uber app? We @ArzanVC don’t feel it’s going to be anything major! Uber improved our daily logistical life and most people would be willing to pay more. (Let’s hope that’s the case—we have invested in a number of mobility players.)

Ultimately, we all want our businesses to be sustainable and profitable. Blitzscaling is a valid growth approach, but it doesn’t fit all business models. Many investors are recently eyeing businesses that opted for a bootstrapping tactic. Those who deliberately focus on the most profitable areas and slow, paced growth. If Uber got bootstrapped, it wouldn’t have grown so fast and it would have most probably been already profitable for some time. Or maybe it would no longer exist, since other players would have grasped the opportunity and burnt cash to grow their market share at the expense of Uber!

We shouldn’t need to remind you that each starting business must know the right ingredients of success and you must take into account different factors when considering a certain growth strategy. Is there a way to find out and predict the feasibility of your business model? Call in unit economics. It is a tool that tells you how much money one unit of any solution or service will generate. Essential from day 1. How much does it cost you to generate $1 value? Unit economics basically measures how much the business gains (or loses) from each customer (or transaction). You can then know if you are on the right path to profits and what to focus on in order to make that hit.

calculate

 Many startups are losing with each new customer. Why? Because it costs them a certain amount to attract a customer who is not going to stay with them for long. If you spend $2 for $1 value and your customer base is expanding way too fast, you will only be able to go on at this pace until all your money runs out… 💸

In simple terms, you need to balance well your customer acquisition cost (CAC) and customer lifetime value (CLV). That balance can be either positive or negative. Positive unit economics brings cash in, negative robs you of it. If your CAC is bigger than your CLV, you’re basically paying your customers to use your service. You may gain a mighty market share in the early stages, but that alone would not make your business sustainable. In the early days of Uber, Lyft and WeWork, no one looked at profitability—they actually used to make fun of anyone who would do that! After all, VCs are not in the business of early profitability yet the value proposition of any business should always be sticky and impactful. Are your customers willing to spend more or can they “live without you” once you start playing with the pricing? If they feel like your services/solutions are “nice to have but not must-haves,” this means they will be sensitive to price changes, lowered quality etc.

The lesson for 2020 is simple—hold on to your fundamentals and focus on real value creation.

Being over-ambitious on your growth strategy may often turn out to be risky. Do your unit economics, set realistic targets and spend responsibly so that you are able to create and sustain your value. Do you want to have recurring revenues? Then persuade your customers to stay with you for a while. Get under their skin.

TL;DR (too long; didn’t read) 
Following the falls and losses of many flagship startups in 2019, businesses (and investors!) shift their attention towards unit economics. Measuring costs/gains per transaction can reveal a lot about the future sustainability of any business. Growth-at-any-cost is becoming a strategy of yesterday. Today cares about the value proposition, so that tomorrow could be about long-term sustainability.

 


Welcome to the Family 

👋👋👋 Repzo, Cartlow, FlexxPay and iKcon. The 4 latest investments we made. Welcome to our ever-growing ArzanVC family!

Repzo is an Amman-based mobile employee management and CRM platform that turns a device into a standalone field force management tool. It allows FMCG and pharmaceutical companies to track and monitor their field employees. Repzo is used in 7 countries by more than 2,500 representatives.

Cartlow is a Dubai-based money-saving e-commerce that offers its customers various famous-name products at lower prices. It recycles, tests and resells returned/excess goods from retailers. No wonder the app has more than 1 million active users!

Dubai-based FlexxPay aims to bring financial security, dignity and savings to those experiencing financial stress. How? By fixing pay frequency problem through an instant pay platform.

iKcon – Innovative Kitchens Concept from Dubai – is all about cloud kitchens in prime locations! Thanks to these modern kitchen spaces, iKcon brings amazing F&B brands to the market – from existing chains to new concepts.

kitchen art

👋👋👋 Repzo, Cartlow, FlexxPay and iKcon. The 4 latest investments we made. Welcome to our ever-growing ArzanVC family!

Repzo is an Amman-based mobile employee management and CRM platform that turns a device into a standalone field force management tool. It allows FMCG and pharmaceutical companies to track and monitor their field employees. Repzo is used in 7 countries by more than 2,500 representatives.

Cartlow is a Dubai-based money-saving e-commerce that offers its customers various famous-name products at lower prices. It recycles, tests and resells returned/excess goods from retailers. No wonder the app has more than 1 million active users!

Dubai-based FlexxPay aims to bring financial security, dignity and savings to those experiencing financial stress. How? By fixing pay frequency problem through an instant pay platform.

iKcon – Innovative Kitchens Concept from Dubai – is all about cloud kitchens in prime locations! Thanks to these modern kitchen spaces, iKcon brings amazing F&B brands to the market – from existing chains to new concepts.

 

Family Postcard

 

Where to begin? 😍 

Ka-3.5M-Ching!
Amman-based game publisher Tamatem raised $3.5 million Series A.
yay

POSRocket opened new offices in Kuwait and Alexandria, and they just made the first step to enter the Saudi market. Their integration with Talabat and FineDine is now live, and they also launched a new product called Kitchen Display System (KDS) that replaces printed or handwritten ticket orders in commercial kitchens by connecting to the restaurant’s point-of-sale!

Swvl, a premium alternative to public transport, launched new routes in Egypt between Cairo and other governorates. Trukker, the Uber for trucks, expanded in Egypt. And Cartlow, one of our latest investments, has recently entered Saudi Arabia.

+ 1 news full of love – CrowdAnalyzer looked at how MENA celebrated Valentine’s Day in 2020.

date time
Latest Jobs @ArzanVC Family
Please stay healthy!
stay healthy
Hasan