NFTing the Middle East

NFTing the Middle East

June has kept us all over the place just like May 🤹. We announced an investment in Khazenly, a Cairo-based on-demand digital warehousing and fulfillment platform… and our 7th startup from Egypt (lucky 7? :P). Khazenly team, welcome again to our big Arzan VC Family!

 

Just on that same day, Fatura (AVC Fund II) announced that it got acquired by Tanmeyah Micro Enterprise Services (an EFG Hermes subsidiary). And last Friday, MUNCH:ON (AVC Fund I) got acquired by Careem – our former Fund I company. (And that brings us to 11 exits to-date 😎).

 

Well, enough unintended bragging for now, do you know what these have in common?
– A $560K New York Times column.
– Beeple’s $69M JPEG.
– Jack Dorsey’s $2.9M tweet.
– Kristel Bechara’s Beauty in DeFi.
NFTs. Vatican got involved in them too, so there must be something holy good about them. Let’s find out what it is.

 


 

NFTing the Middle East

 

First off, let’s recap what non-fungible tokens are:
– digital assets or virtual goods — which can range from images to songs to videos to tweets — that are verified through blockchain technology
– non-fungible = no 2 NFTs can be identical
– inspired by the success of cryptocurrencies and powered by blockchain
– a new way to buy & sell digital items such as collectibles
– a new form of royalties for digital creators
– thanks to NFTs, assets can be certified as authentic (thanks to digital signatures of the artists themselves)
– the owners are able to claim exclusive ownership over these digital assets

 

The typical process to buy or sell an NFT:
1/ Set up a digital wallet and buy cryptocurrency
2/ Connect your wallet to an NFT marketplace
3/ Mint/list your NFT or start bidding on pieces

 

 

CB Insights’ 2021 Blockchain Report notes that last year there were 250+ rounds in NFT space (vs. 21! in 2020), collectively raising over $4.8B (130x more than in 2020), with US driving ~80% of all Q4’21 funding, followed by Asia and Europe.

 

Why the sudden global excitement for NFTs?
1/ because “decentralization” / Web 3.0 ecosystem is very attractive right now and NFTs are a building block of a “user-first” future
2/ new sources of revenue for everyone – from big brands to local street artists
3/ the classic “get in before it gets too pricey” argument

 

Future use cases:
– writers’ content distribution and monetization
– NFTs as loan collateral (from DeFi to NFTfi)
– NFT index funds
– selling diamonds via NFTs
– burning calories and getting rewarded with NFTs (fitness x video games)

 

 

What’s Middle East’s footprint in NFTs?
In terms of interest in NFTs, UAE ranks 7th globally (first places belong to Southeast Asian countries and Canada), and Lebanon is on the 10th spot, ahead of the USA.
However, our region’s traffic to NFT marketplaces remains at below 10% of the global traffic as shown on the graph below.

 

 

In 2021, three regional NFT marketplaces raised about $10M according to Wamda. Nifty Souq claims to be the first and biggest inclusive and environment friendly NFT marketplace in MENA (more about the envi-friendly aspect below). In Egypt, Odiggo, who you’d all know as a car parts marketplace, recently pivoted into an NFT marketplace. Meanwhile in Saudi, only days ago, Saudi’s first NFT marketplace NuqtahNFT signed a partnership with US’ Consensys to facilitate knowledge transfer and empower Web 3.0 startups in KSA. And if you attended the 116th session of the UN World Tourism Organization (UNWTO) in Jeddah, you were lucky to get an NFT souvenir — courtesy of the Saudi Tourism Ministry.

 

In the world of art – in parallel – the region’s first online NFT exhibition took place in November 2021 thanks to UAE-based Emergeast gallery. Meanwhile, Kuwait held its first NFT art exhibition last year at Gallery Bawa. NFTs are becoming popular among artists in the Middle East (here’s your top 15 watchlist), mainly because they believe that NFTs will help them protect their rights and provide them with a just financial compensation.

 

What’s the NFT regulatory framework like in the Middle East? Many grey areas. The future may possibly require NFT AML laws to support the growing purchases. Blockchain is not allowed in Egypt and, until recently, cryptocurrencies were banned in Qatar. For now, Dubai is at the forefront thanks to its Virtual Assets Regulatory Authority (VARA), which was set up earlier this year to manage the issuance and trade of virtual assets and virtual tokens and authorize virtual asset service providers (among other tasks). In May, VARA joined the Metaverse to become Dubai’s – and the Metaverse’s – first government authority.

 

I mentioned above the environmental friendliness of NFTs. Or should we say unfriendliness? Transacting on blockchain is surprisingly very energy intensive. One transaction consumes more energy than an average UAE citizen consumes on a weekly basis (source: Money Supermarket/Wamda). Could this become a major setback for NFTs in the long run?

 

Whether you’re an NFT fan or not – what’s your take on NFTing the Middle East? Is it all only a temporary marketplace wrapped in naive enthusiasm? Too early to tell, of course. But its implications for the art and gaming industries are real and significant, and most probably here to stay. In the Middle East, too.

TL;DR (too long; didn’t read)  
You don’t have to be a digital artist or gamer to deal with NFTs; fitness enthusiasts can benefit too and NFTs can serve as your loan collateral. Globally, there were 250+ rounds in NFT space in 2021 (vs. 21! in 2020), collectively raising over $4.8B (130x more than in 2020), with US driving ~80% of all Q4’21 funding, followed by Asia and Europe. I discuss the presence of NFTs in the Middle East, including the limited regulatory framework and positive effects on the local art industry.

 

Family Postcard

 

(you’re the) Lucky One

Lucky launched its new Lucky One card that comes with a wide list of benefits – and cashback on every transaction.

 

Hola Madrid

Merit Incentives‘ CEO Julie Barbier-Leblan will be speaking at Loyalty & Awards conference in Madrid in October 2022.

 

Get popcorn

TruKKer has released its official film “Highway To Future!” On-road. Off-road. Through the lens of a driver’s life and up to a freight’s fate.

 

 

Push to grow

Gameball explores how to use push notifications & in-app notifications to drive massive growth to your store in their latest blog.

 

Latest Jobs @ ArzanVC Family

 

  • Financial Reporting Manager at Cartlow (Cairo)
  • Business Development Manager at Merit Incentives (UK/Hybrid)
  • Senior Back-End Developer at SubsBase (Cairo)
  • Digital Marketing Manager at Citron (UAE)
  • Junior Graphic Designer at Citron (UAE)

 

Our Cairo team – Mohanad & Noha – will be at the Flat6Labs investor mixer on July 6 — ping us if you’re also attending… 😉

Hasan

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Our startups @Egypt

Our startups @Egypt

I’ve waited to release the May issue until we conclude our very intense and fun team-building session in Cairo. We welcomed back on-board Mohanad Elhartany – our Senior Investment Associate, and freshly welcomed our new CFO: Adeel Shahid 😎. (Special thanks to Cairo Marriott Zamalek for hosting us at the Palace.)

 

We’ve done hours of internal meetings, one-on-one pitch-sessions with 15+ local startups – even managed to fit in between that some refreshing walks around Zamalek and Downtown, and we topped it all with a super pleasant evening at Crimson where we gathered 50 people from the local ecosystem: VCs, angels, founders and – of course – our founders from Lucky, Fatura, Gameball and Subsbase. Oh, here’s a little secret: we have a new addition to our local portfolio – TBA soon. We’re really excited to be investing more in Egypt and growing our Cairo team.

 

@Swvl team – we will catch up with you in Dubai 😉

 

 

May didn’t end for us with Cairo though. I’m in Qatar right now where I’ve just had a live session on “All about Growth & Investment” at the Digital Incubation Center. Thank you @DIC Team for having me!

 

Last but not least — while we were in Cairo, Middle East Startup Awards took place in Abu Dhabi — and Arzan VC was a top 3 finalist in the “VC of the Year” category… (next year we’re winning :P)

 


 

Our startups @Egypt

 

The latest from the lives of our Egypt-based startups and their founders. We asked each founder about what they have been up to in the last 12 months, including the most exciting moment, and what’s their goal for the rest of the year…

 

Yes, we’re Lucky to have you:

  • – introduced its credit pilot 8 months ago, extended credit to thousands of customers
  • – received the first fintech credit card approval in the Egyptian market in addition to the agent banking license allowing Lucky to operate its own card program in full
  • – Exciting moment: their Series A round was the largest Consumer fintech round in Egypt ever
  • – 🔜 start on-ground card distribution and extend instant consumer credit products
  • – Founders’ goal: to become Egypt’s leading digital bank in 2 years from now

 

A Fatura beyond FMCG:

  • – followed an aggressive merchant acquisition across Egypt and built a fully digitized embedded financing cycle
  • – Exciting moment: crossing $100M annualized GMV
  • – 🔜 fully establish multiple markets beyond FMCG (already piloting)
  • – Founders’ goal: a successful IPO

 

The ball keeps rolling at Gameball:

  • – achieved 3x organic growth YoY, reduced churn to 4%, improved retention and more than quadrupled their customer base (whoa!)
  • – Exciting moment: introducing a Growth team and witnessing instant growth in all metrics
  • – 🔜 optimize for enterprise and achieve 10+x growth YoY
  • – Founders’ goal: build an inspiring organization that defines benchmarks for others to follow

 

Subsbase is collecting long-term customers:

  • – finalized the product and kicked-off
  • – grew the team, revenue and market share while landing enterprise scale customers
  • – Exciting moment: landing their first enterprise customer with a 3-year commitment
  • – 🔜 more growth (presence, reach, team)
  • – Founders’ goal: become the main driver and catalyst behind the creation and adoption of subscription businesses in the region

 

Swvling on Nasdaq:

  • – the acquisition spree Swvl has been on in the last several months: Viapool (Argentina), Shotl (Spain), door2door (Germany), Volt Lines (Turkey) and Zeelo (UK)
  • 115+ cities in 18+ countries and counting
  • – Q1 results from this year show 4x growth in total ticket fares and 3.9x increase in bookings (both YoY)… What’s next, Swvl?

 

+ 1 new investment in Egypt: an e-commerce fulfillment and logistics startup. Keep your eyes and ears open for the announcement 👻

TL;DR (too long; didn’t read)  
A very eventful May this year for Arzan VC team – we did a team-building week in Cairo filled with fun (and serious) internal discussions, bit of sightseeing and plenty of meetings with players from the local ecosystem… I summarized for you the most exciting updates from our local startups: Lucky, Fatura, Gameball, Subsbase and Swvl.

 

Family Postcard

 

Founder of the year

Klaim’s co-founder Karim Dakki was awarded Founder of the Year by Middle East Startup Awards 2021. Also, Klaim will be attending the 9th Annual MENA Health Insurance Congress on 12-13 May 2022 (Dubai).

 

Top CRM companies

Repzo was listed as one of the top Arab World-based CRM companies by BestStartup.Asia.

 

Swvl on a spree🛍️

Swvl acquired Zeelo, a UK-based B2B smart buses operator, in a deal valued at $100M.

 

 

Fresh from the press

New issue of Qoyod’s magazine is out!

 

Latest Jobs @ ArzanVC Family

 

  • Country Manager – Germany at Mejuri (remote)
  • Business Development Manager – KSA at Cartlow (KSA)
  • SaaS Sales Executive at Repzo (Amman)
  • Senior Accountant at Armada Delivery
  • HR Specialist at Qoyod (Riyadh)
  • Creative & Fashion Specialist at The Luxury Closet (Dubai)

 

Laith & I are off to Dubai (June 5 & 6) and then Abu Dhabi (June 7). Let’s grab a quick coffee?

Hasan

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DIY: How to build a tech dream-team

DIY: How to build a tech dream-team

We’ve had a swim in the local talent pool with Maha Al Zeir, our Talent Acquisition Manager, a seasoned HR consultant and the founder of WizHRD, a HR consultancy firm for tech startups in the Middle East.

 

Plenty of insights and advice below.

 


 

On talent pool in the region and building a strong tech team

 

Some CTOs in local startups are non-Arabs and thus standing out from the rest of the (Arab) team – does it mean there is a lack of skilled local resources in our startup ecosystem?

 

Let me start by saying that there is great energy over here in the Middle East. The new generation is constantly evolving, and they desire a job that suits their need to develop and grow. They focus on learning & development, and they were able to use globalization to their own benefit. As a HR consultant, I come across high-potential local candidates every day.

 

Arab founders are disrupting big existing businesses and industries. UAE and KSA have developed regulatory reforms to encourage Arab founders and enable them to grow their companies. This reflects on the caliber quality and prompts fresh grads to concentrate on growing and enhancing their skills and knowledge to meet the market needs.

 

On the other hand, we cannot ignore the financial factor. Many companies are opting to hire qualified employees with lower costs. I see some tech companies hiring from Eastern Europe for specific technology roles.

 

In general, there is no lack of skilled local hires, but I have to admit that my team faces trouble when hiring AI experts, machine learning and metaverse experts.

 

For the VC field, things are blooming, and candidates with a financial background are interested in the investment sector, so we witness an immigration from the strict corporate environment to VC firms. There’s no wonder why though – VCs as employers offer flexible work hours and a more interactive structure.

 

What is the talent pool like in startups around the region?

 

We certainly have a high caliber across the region. Majority of the local talent pool are graduates of foreign universities (mostly USA and UK). You can also notice a shift in the way our local undergrads understand the importance of internships and coop programs. So, when screening candidates, I usually expect them to have work experience.

 

What I usually emphasize is that the geographical location is no longer valid for tech startups; globalization has influenced the recruitment field, which allows any company to hire any employee regardless of their geographical location. This latest trend urges us to ask a new question: Are talent pools within tech startups robust or not? What I mean by a robust talent pool is a group of individuals who are eager to learn and keep up with new technologies and programming languages. Nowadays, companies are more aware of the value of learning & development, and they started including this among the list of objectives for each employee.

 

 

Also, our new generation relies on self-learning to grow their skills. Startups are all about growth and, without investing in your employees, you will never be able to advance and build a disruptive business.

 

What more can be done to strengthen the tech element in startup teams?

 

1. Having a solid CTO (coaching day-to-day training) – and I personally advice startups to have a CTO among the members of the founding team.
2. Solving problems once at a time.
3. Having a solid technical project manager within each team.
4. Investing in the tech team and tech tools.
5. Learning & development structures should be linked to a performance-based culture, including a growth objective for each quarter.
6. The essential tip is not to build a team for a startup but build for the big dream! Meaning – having an organizational chart that reflects the long-term structure in mind, including all other teams.
7. Making sure to hire based on your values and bring in people who understand and respect your culture.

 

How does WizHRD help the region’s tech startups build their dream teams?

 

WizHRD is the region’s first HR consultancy specialized in tech startups; our team concentrates on values and building a culture right from the beginning.

 

We are specialized in working as a strategic partner with the senior management and helping them grow their teams.

 

I personally believe that companies are not built by policies and procedures. It all comes down to people and people building companies; understanding the new generations and blending four generations to come up with the new great idea that would change people’s lives and solve problems. This is where WizHRD steps in; we act as specialized partners who add value by sharing our rich experiences with you.

TL;DR (too long; didn’t read)  
Quick tips for strengthening the tech element in your startup team: have a solid CTO (if the person is also a co-founder - amazing!), invest in the tech team and tech tools, focus on learning & development and set a growth objective for each employee every quarter... and - build a team for the big dream that reflects the long-term structure of your startup!

 

Family Postcard

 

+1 acquisition for the bell ringer Swvl

Swvl acquired door2door, the largest private Germany-based mass transit SaaS provider.

 

1st acquisition for Retailo

Retailo acquired Dubai-based B2B eCommerce platform DXBUY.

 

 

Say Hello to early wages in Egypt

FlexxPay expanded to Egypt. The estimates say that around 20 million people across Egypt could benefit from early wage access.

 

It’s raining gifts

Merit Incentives prepared a special Ramadan Gift Card – the only gift card that can be redeemed across 5,000+ brands in 100+ countries.

 

3,200+ Ramadan Food Boxes

Gameball embarked on Ramadan-themed CSR activities where they packed over 3,200 Ramadan Boxes for those in need at The Egyptian Food Bank.

 

Latest Jobs @ ArzanVC Family

 

  • Post-merger Integration Associate at Swvl (Dubai)
  • Country Manager UAE at Cartlow (Dubai)
  • Product Manager at Fatura (Cairo – hybrid)
  • Back End Developer at SubsBase (Cairo)
  • Software Engineer (Ruby on Rails) at Qoyod (Cairo)

 

Happy Eid in advance and safe trips during the travel carnival!

Hasan

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#FounderSpotlight 🛋️

#FounderSpotlight 🛋️

I recently spoke with a founder of a startup based in the UAE.

 

It’s an e-commerce business established in 2017 and its presence covers 24 countries…

 

Here’s what we talked about:

 


 

#FounderSpotlight 🛋️

 

Hasan: You are a direct-to-consumer startup providing meal accessories and your footprint in the regional ecosystem is strong and growing. Where do you want to take the company over the next 9 months?

 

Founder: Our brand has three main strategic objectives. First, we aim to continue our growth journey in the key markets we have expanded to in the last 2 years. Second, we want to continue to create and release new products every year and thus maintain our policy of applying and acquiring patents. The third objective is to enter and succeed as a direct-to-consumer brand in the above-mentioned key markets, especially in the US.

 

As part of our annual product release culture, this year we’re introducing a whole new range targeting teens and young adults. And although pre-school kids remain our main target, our new line of 50 products catered exclusively to our older audience is this year’s pledge to gain more momentum as we expand to bigger markets. Also, we’re already working on next year’s products and we’ll be again introducing a new audience – pets – and essentials made and designed specifically for them.

 

Hasan: Which market has surprised you most so far?

 

Founder: Australia. Maybe because we didn’t have expectations for the market, and so we’ve been surprised to see our products becoming extremely popular there. But, to be honest, I’m very curious to see what happens in new markets we just signed in, such as Japan, Malaysia or Canada.

 

Hasan: Why did you open a brick-and-mortar store and what kind of experience does it offer to its visitors?

 

Founder: We wanted to give our products a home. Deep down, I think it’s a common dream for business owners like me to want to see their products in a brick-and-mortar store. For one, I feel like having a physical store after a digital one means that something went right; that somehow and in some way we’re making it. But also, the shopping journey is so much different from the online one that, if we play our cards right, we can deliver a richer and more personalized customer experience. As a matter of fact, it’s a space we like to be in because we get to benefit from the strength of both online and physical presence.

 

In the store, our customers can touch and feel our entire line of products. And unlike retailers, who make their own decisions about what range and colors get displayed, in a branded store customers can fully experience the brand journey like it was intended.

 

 

Another factor that contributed to the opening of our store was its newly-found capacity to show our distributors how they can build window displays for their retailers. It also provides the right environment to answer questions or doubts and to exchange or repair a product.

 

Hasan: Let’s talk funding. What are you up to in terms of fundraising?

 

Founder: We are currently fundraising for our Series A. This will allow us to invest in R&D, develop more products and launch and implement our direct-to-consumer plans in the US.

 

Hasan: There are many similar products in the market, so what makes your company special?

 

Founder: We got three key competitive advantages. First, we always bring something new to the market before everyone else. Second, we take our time to launch our products, meaning we discuss, try and test our products until every product is perfect and ready to be launched. Third, we are a consistent brand when it comes to our designs, as we don’t suddenly change everything overnight. Every year, with each new collection we launch, our style progresses a little bit but still remains immediately recognizable by our customers.

 

Hasan: What was your biggest lesson learned so far during the 4-year journey?

 

Founder: Whatever you do in life, resilience is key. Having something go wrong at first doesn’t mean it’s wrong per se. It’s also important to fail. Failing has taught me that if you need to fail, fail quickly, stand up fast and carry on promptly.

 

I live by the motto that nobody gives you opportunities; you need your own.

 

And I would also like to stress on the lessons learned from my customers. You need to become your customers in order to attend to their needs. Customer knowledge coupled with solid data can open a lot of doors and boost up your results.

 

Hasan: Your best advice to entrepreneurs out there?

 

Founder: If you have an idea, make it a reality.

 

Don’t listen to anyone who has tried and failed because that will only push you down. Instead, listen to people who have succeeded. They will probably be more inclined to encourage risks.

 

Also, don’t replicate or copy other people’s or businesses’ ideas. It’s usually a short-term gain because investors rarely invest in copycats.

 

—–
We’re very proud to have this company in our portfolio.
We invested in it because we believed in the founder, brand potential and market size.

 

I interviewed Sara Chemmaa, the founder of Citron, on the occasion of the Women’s Day (and the upcoming Mother’s Day).

 

Dear reader, has your perception of the founder changed now that you know it’s a female founder?

TL;DR (too long; didn’t read)  
I spoke to a founder of a successful direct-to-consumer startup with presence in 24 countries, which offers meal products like lunchboxes and tableware for specific age groups. And they’ll be soon introducing products for pets. Also, the company is currently raising its Series A. Look 2 paragraphs upwards to see who I’m talking about.

 

Family Postcard

 

New acquisition on the block

Taker acquired Brisk Delivery to strengthen TakerGo capabilities. TakerGo is an innovative delivery solution that connects restaurants to leading delivery services providers.

 

New agreement

Zid signed a cooperation agreement with Saudi Exports Development Authority.

 

Growing

Armada Delivery is now active in Kuwait, Bahrain and Saudi Arabia.

 

Branching out

Carseer opened a new Carseer Customer Service Branch in Tabarbour (North Amman) to cater to the increasing demand while delivering easy and speedy service to customers.

 

12 items that will sell out!

New York’s The Strategist has rounded up 12 items that will almost definitely sell out and a Mejuri necklace is on the list.

 

 

Latest Jobs @ ArzanVC Family

 

  • Sr UX Designer at Repzo (Amman)
  • Sr Frontend Developer at SubsBase (Cairo)
  • Ruby on Rails Developer at Qoyod (Riyadh)
  • Digital Marketing Director at Cartlow (Cairo)
  • Digital Marketing Specialist at Armada (Kuwait)

 

So, after reading the #FounderSpotlight, has your perception of the founder changed once you knew it was a female founder? (I don’t take Yes as an answer!)

Hasan

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We are 40 and ready for another 40

We are 40 and ready for another 40

Our LinkedIn and Twitter have been exploding since NYE.

 

This issue is all about 40 ‘cause we reached 40. Not years. Startups in our portfolio. 😎

 

And to celebrate that in our ArzanVC way, Laith & I cooked for you…

 


 

Takeaway lessons on 40 investments… and “thinking” of a new fund

 

Last month we discussed dragon exits and, well, we can’t say that we have never stumbled upon a write-off. C’est la VC vie.

 

Let’s press ⏪ and dig into all we’ve seen, heard and learned so far.

 

Based on the performance of our 40 investments, these are the strongest sectors: transport, D2C and supply chain (incl. FMCG).

 

The traits of our successful startups
– Founder-market fit… that makes you really stand out.
– Healthy founder mix: Builder + Seller. We believe founders must be both builders and sellers. If one character is missing, it may be a very bumpy ride with a possibly bad end.
– Honest and humble.
– Talent for fundraising. We know that fundraising can be a hard nut to crack for many founders, so get skilled in the cracking! 🐿️

 

Lessons on pivots
Making a business pivot means changing your strategy (product, model…) during the journey. It’s something a startup is usually unprepared for. Sometimes the pivot comes out of necessity (as your only survival card), sometimes out of opportunity.

 

Some of our portfolio startups faced a pivot and managed it really well…

 

Do you recall when MUNCH:ON used to be called LUNCH:ON? It started as a platform that served offices Dhs25 lunches with free delivery. Then Covid happened, WFH took over the office life and the startup’s corporate lunches got a blow. But, within a matter of 10 days, the team was able to launch a residential lunch & dinner service on the same platform. The new vertical was well-received and the startup pivot became a success. Let’s just add that MUNCH:ON is currently operating in UAE and KSA, offers both corporate and residential meals and Q4’21 was its highest performing quarter to date.

 

Taker, the online ordering management platform for restaurants, wasn’t created from scratch. Its predecessor was Dook, a delivery management platform for more efficient and less costly restaurant delivery fleets. The founder soon realized the problem wasn’t in the delivery but rather in the demand generation and order quality. Therefore, in 2019, Dook founder created Taker to fix this problem and the company later introduced TakerGo (on-demand delivery aggregator) with a vision to make the on-demand delivery available as a service (DaaS) to all businesses that want to tap into the Quick Commerce. The pivot allowed Taker to adopt an asset-light model.

 

Armada Delivery is an on-demand delivery marketplace with a presence in Kuwait, Bahrain and Saudi Arabia. Its pivot was in the revenue model. Initially Armada paid fixed daily rates to its drivers, but the team soon realized that the drivers were not working full hours and the model was too costly. They changed the model to revenue sharing as in 80% for the driver and 20% for Armada. This means they only pay if the driver actually delivers. The pivot fixed all cash issues faced by Armada and they have been doing superbly well ever since and expanding.

 

PointCheckout announced earlier this week that it’s changing its name to Paymennt.com in response to the accelerated growth in the payments industry during Covid (thanks to its PayLink app launched in Q2’20 that allows merchants to accept payments via links). Originally launched as an online payment gateway for loyalty points, the company has grown to become a comprehensive platform for online payments helping over 2,000 small and medium businesses move to digital payment in a faster, cheaper and more customer friendly way… Well, the last quarter of 2021 was their best to date in terms of the payment volume and they have nearly 1.5K enrolled online stores. Pivot gone well.

 

 

Oh, the disappointments
1. Founders with bad attitudes. You do realize that your attitude will catch up with you sooner or later, right?
2. Team disputes & disagreements which led to a startup failure. Choosing your co-founders is like choosing your spouse. Give it a big, long thought.
3. Bad accounting in place. Fix that ASAP.

 

DON’T do this again
– Don’t Whatsapp your significant other while sharing your screen on a Zoom call.
– When you want to make an espresso or use the bathroom, PLEASE press mute first.
@Laith, switch off your camera while driving or fixing your keyboard next time.

 

🔮 looking ahead
Arzan VC is proud to have hired individuals who had zero experience with the VC world at the time of hiring. We provided them with our knowledge and training and, for example, 2 of our former team members are now managers of regional funds. We say this humbly but proudly: ArzanVC Team has grown so much and we’re happy we could have shaped each and every team member and assist them in their growth and success. Because that’s success for us, too, and we can’t wait for what’s next for our Team because…

 

– we’re definitely going to see MORE EXITS.
– following the footsteps of Swvl, we could have another IPO.
– we may soon announce Arzan VC Fund III? 🤔

TL;DR (too long; didn’t read)  
Laith and I rewind our 40 investments and discuss the characteristics of successful startups (incl. healthy founder mix!), examples of successful pivots in our portfolio (MUNCH:ON, Taker, Armada Delivery and Paymennt), what disappointed us most (founders' attitudes and team disputes, among others) and what's ahead of us (certainly more exits and upcoming Fund III).

 

Family Postcard

 

Impressive rounds 💰

Retailo raised a USD 36M Series A funding (in which we participated), while TruKKer secured USD 96M in their very recent Series B round. Shall we add that Retailo bagged the 14th place in Forbes 50 Most Funded Startups of the Middle East? Well done, teams, well done!

 

PIPEd up

Swvl secured an additional USD 21.5M PIPE investment from European Bank for Reconstruction and Development (EBRD) in preparation for its SPAC (expected in Q1’22).

 

New name

PointCheckout rebrands to Paymennt.com to focus on micro and small business payment struggles.

 

New partners on the block

FlexxPay and Merit Incentives forge a partnership to offer employee benefits platforms for their corporate clients in the GCC and MENA region.

 

 

Women in leadership positions

Did you know Gameball‘s team is 40% female and that females represent 30% of its leadership team? The company also acquired 3x more paying clients in 2021 and 95% of users gave them 4-5 star reviews.

 

Latest Jobs @ ArzanVC Family

 

  • Senior React Developer at Klaim (Lebanon)
  • (Different positions) at Fatura (Egypt / hybrid remote)
  • Business Development Executive at Cartlow (Riyadh)
  • Backend Developer – Node.js at Repzo (Amman)
  • Front-end Engineer at Qoyod (Cairo)
  • Performance Marketing Executive (International) at Mejuri (London)

 

Oh and we’ll be seeing you soon at Step Conference (Feb 23-24) and Taqadam Investor Showcase (March 9-10). Reach out if you’ll be around 👋

Hasan

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Remember, it’s not a race to invest but to exit (and exit well)

Remember, it’s not a race to invest but to exit (and exit well)

How is 2022 treating you so far? Resolutions going well?

 

We’re all neck-deep in last year’s financials and reports, defining the value we generated.

 

For us @ArzanVC, that value is not in the amounts we invested or how many times we led a round. We look for it in returns. In the money we exited. And we made 4 exits in 2021, which we internally call a stellar year. 😎

 


 

It’s not a race to invest in unicorns but to make a dragon exit

 

We’ve been out there for 7 years, taking it slowly but steadily, making well-informed bets (40 investments to-date!) that so far turned into 2 IPOs, numerous exits… Let me pause here. I’m not sure if this is what you want to read about.

 

Any VC can say how they took the investors’ money and invested it – and how many times they did that – but let’s talk about how much money we VCs get to take out when the time comes. An honest cash talk.

 

Dragon > unicorn
Fund investors often look at how many unicorns a VC has in their portfolio. But unicorns are illiquid; they represent returns yet-to-be-realized. So, no cash in hand – unlike in the case of a dragon. (Also, having a unicorn in your portfolio doesn’t mean high returns as it all depends on the actual valuation at the time of the exit.)

 

A VC becomes a dragon whenever it returns the fund with just one exit. (No sci-fi / magic involved.) Dragons are the elite of VC managers. For the sake of example, let’s say you’re managing a $20M fund and you make an exit of $20+M. Your VC just turned into a dragon.

 

So, let’s get the basics rights. It’s not about the number of investments we make or how many dollars we inject in, but how high our returns are.

 

It’s not a race of who gives out more or how many rounds we get to lead or how many unicorns we nurture in our portfolios…

 

It’s a race to make an exit. A better-than-good exit. A dragon exit. That’s where the real value for the fund investors is.

 

Arzan VC made 4 exits in 2021: Swvl, iKcon, POSRocket and Tamatem. Let’s check out the metrics = the returns they gave us.

 

1. Swvl (IPO; Arzan VC Fund II)
Back in July’21, the ride-sharing ace Swvl announced its IPO on NASDAQ by merging with a SPAC Queen’s Gambit Growth Capital. Swvl will thus become the 2nd company from the region to take this path (the 1st was Anghami). The startup‘s goal is to bring its annual gross revenue to USD 1B by 2025.
gross multiple: >10x Can become higher or lower depending on the stock price performance once the company de-SPACs. If it goes higher, it can turn us into a dragon 🐉.

 

2. iKcon (partial exit upon acquisition; Arzan VC Fund II)
Backed by SoftBank and Mubadala, REEF Technology (US) decided to make its first transaction in the region by acquiring iKcon. The cloud kitchen startup was only founded in 2019 and a year later Forbes Middle East ranked it among the region’s 50 most-funded startups in 2020. As of November’21, iKcon has been operating 30 cloud kitchens across the UAE and KSA. 🍟
gross multiple: <10x Since this is a partial exit, we’re holding onto our stock. And the stock part of the deal (which is the majority) can pay back the full fund, hence another potential dragon for us 🐉.

 

3. POSRocket (exit upon acquisition; Arzan VC Fund I)
The news about POSRocket’s acquisition came out earlier this month. The 2nd largest restaurant cloud tech player got acquired by its Saudi competitor Foodics. And so, the team will now work on turning Foodics into the leading restaurant tech provider in the MENA. Safe onward flight, astronauts!
gross multiple of <10x

 

4. Tamatem (exit; Arzan VC Fund I)
Tamatem is one of our oldest investments. This publisher of Arabic mobile games has generated over 100 million game downloads since inception. Towards the end of 2021 we got a good opportunity to exit it and so we took it. Thank you for the journey, gamers!
gross multiple of <10x

 

Pretty diverse exits, aren’t they?

 

Prior to 2021, we recorded other memorable exits like Onfleet (gross multiple of >4x) and, of course, Careem (gross multiple of >8x). The exit from Careem turned us into a dragon 🐉 – our returns were actually bigger than our Fund I size!

 

Our mission at Arzan VC is simple: we look for dragons.

 

The size of our investments in 2021 increased by 208% YoY; we made new investments, we made follow-ons, we co-invested with big names… – because that’s our job.

 

But our job is not only about taking your money and investing it but also returning it. Not so many VCs can say they’re mastering that process. So, if you’re an investor considering investing in a fund, look out for the real value behind all the numbers and infographs out there.

TL;DR (too long; didn’t read)  
As a VC, our job is not only to take your money, invest it, lead rounds, collect unicorns in our portfolio... our job is also to return that money back to you. At Arzan VC, we focus on making dragon exits. A VC becomes a dragon whenever it returns the fund with just one exit. We already became a dragon through Careem exit, and two of our exits in 2021 could become dragons, too… And how was your 2021? 😎
 

Family Postcard

 

Astronauts boarded a new spaceship

POSRocket got acquired by its Saudi rival Foodics (KSA). Congrats again, guys!

 

Labor Award

Zid won the Labor Award from the Ministry of Human Resources and Social Development in Saudi Arabia, an award for companies that are following the nationalization path.

 

Come on in

Citron has opened its first Flagship Store at Times Square Center in Dubai.
 

 

200+ clients

Repzo‘s salesforce automation solution has been deployed by 200+ clients.

 

🎤

Dana Baki of MUNCH:ON spoke at Dubai’s Enterprise Agility Forum 2022, Abdullah AlDayel of Qoyod was interviewed by AlRiyadh Newspaper and Kunal Kapoor of The Luxury Closet had a talk with Blomberg Middle East.

 

Latest Jobs @ ArzanVC Family

 

  • Tech Lead – Python and React at Merit (Dubai)
  • DevOps Engineer at Qoyod (Riyadh)
  • Sales Specialist at CARSEER (Amman)
  • Marketing Director at Zid (Riyadh)
  • Head of Business Development – KSA at FlexxPay (Riyadh)
  • Engagement Lead at Retailo (Dammam)

 

 
… almost like our winter here in Kuwait!
Btw. We’re cooking something and there are many 0s in it 😉

 
Hasan

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