The Middle East has risen, in a short space of time, from a digital backwater to a region of immense tech promise. The Gulf Cooperation Council (GCC) sits atop its valued metrics. The GCC was formally established in 1981, and includes all the Arab nations of the Persian Gulf except Iraq: Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE and Oman.
The region’s total population is a little over 53m–over half of whom are non-national migrants, making the GCC a uniquely diverse and fragmented proving ground for tech companies.
They are also countries with huge sovereign wealth thanks to abundance natural resources – and each of their governments has played an increasing role attempting to diversify their economies before those resources vanish, or are made obsolete.
Thankfully, they have the statistics: the UAE’s mobile penetration, for example, is 228%, and its smartphone penetration tops the US. Internet penetration is 88%, while Bahrain, Qatar and Kuwait all boast rates well within the world’s top 50. Arabs are hugely active on social media, creating a giant potential advertising market that is yet to be fully tapped.
Digital VC, however, is relatively sparse in comparison to established tech markets like the US. A 2016 McKinsey report found that while the US boasts $2,300 per $1m of GDP to the sector, Asia makes $640 and Europe $370, just $120 is accounted for by digital VC spending in the Middle East.
The GCC is producing some startling startups, though. And, after many years of neglect, top financiers are pulling out their wallets. Here are five firms to look out for heading into 2018.
Carriage, Kuwait
In 2015 Abdullah Al-Mutawa was the owner of a burger joint in Kuwait City called The Stack. He had no intention of founding a tech startup. But when he encountered problems delivering via online giant Talabat, Al-Mutawa decided to go it alone and fill the digital gap himself.
Having gone live last year Al-Mutawa has enjoyed almost instant success, bringing hundreds of Kuwaiti, Bahraini and Emirati restaurants on board. That enticed Berlin-based delivery unicorn Delivery Hero, which made Carriage its second acquisition in six months this May.
The reason may have had a little to do with the fact that Delivery Hero was already operating in the region–as Talabat. That doesn’t bother Al-Mutawa, who worked 16-hour days to get his firm off on the right foot. “We didn’t reinvent the wheel,” he said recently. “We just brought the wheel to Kuwait.”
Careem, Dubai, UAE
When it comes to eye-raising VC rounds, few in the Middle East can better Careem. The Dubai, UAE-based ride-hailing firm has won $517.7m across six round from 19 different investors – including an undisclosed amount from China’s DiDi Chuxing, placing it firmly in competition with the industry’s biggest players (yes, Uber).
The company is currently valued at a whopping $1.2bn, therefore, which takes into account the $10-12bn addressable market it is working in, which includes the MENA region (Middle East and North Africa), Turkey and Pakistan. Add to that the coming advent of widespread autonomous vehicles–which bodes particularly well for the GCC’s vast, well-serviced road infrastructure–and Careem is sitting on a goldmine.
Little wonder the 2012-founded firm’s co-founders, Mudassir Sheikha and Magnus Olsson, both graduates of McKinsey, have felt emboldened enough to challenge some of the region’s taboos – including a push for Saudi women to drive, which was recently acted upon by Riyadh, and shaking up the Middle East’s calcified taxi industry. That has placed it at odds with some governments, like Jordan’s. But expect Careem to pull up even more trees on its path to success in 2018.
PayTabs, Dammam, Saudi Arabia
This year has been huge for Saudi’s PayTabs, a payment processing firm founded in 2014. In August it announced a $20m funding round, with which it wants to expand beyond its home market. It is already present in over 20 countries, with a roster of small to medium-sized enterprises it believes it can service with its solution – that offers payment in 160-plus currencies with a strong focus on security.
CEO and co-founder Abdulaziz Al Jouf told a reporter recently that “as a GCC startup it is always a challenge to raise funds and convince investors about global ambitions.” But that is precisely what the company has done – and expects to service around 4,000 more jobs within the next two years.
PayTabs’ latest round will help it move even deeper into the fintech scene, adds Al Jouf, who worked in sales and logistics startups before beginning his latest venture. He says that his team’s research is focused on three major aspects right now: blockchain for payment distribution; omnichannel payments; and offline to online commerce enablement.
Noon, Riyadh, Riyadh, Saudi Arabia
Chances are, if you live in the GCC you’ve been following the travails of Noon, an e-commerce site that could, some say, challenge Amazon-owned Souq. This May the firm, a project of Dubai businessman Mohamed Alabbar and part-funded by the Saudi Public Investment Fund, let staffers go in Dubai, leading some to suggest its long-awaited rollout was spluttering.
Alabbar, who is also the head of retail giant Emaar Malls PJSC, made assurances otherwise (he had initially bid $800m for Souq, losing out to Jeff Bezos and co). And this month Noon, after a series of C-suite shakeups, finally went live.
Whether it goes on to compete with mega-backed Souq is another matter entirely. But Alabbar and his cohort have the money, and the experience, to at least give it a good shot.
Fetchr, Dubai, UAE
Logistics firm Fetchr has had a huge 2017. In May the company added $41m-worth of series B money, to add to its $11m of existing funding. That will allow the five-year-old startup to expand into other areas of the Middle East: it is already present in the UAE, Bahrain, Egypt and Saudi Arabia.
Fetchr has managed to tackle some of the Middle East’s particular logistical challenges, including roads that are often unmarked or unnamed. Little wonder that it is backed not only by local but by Silicon Valley, too. New Enterprise Associates were among the first investors in the company. Their money looks secure right now.
So impressive has Fetchr’s rise to prominence been, that Forbes Middle East recently rated it one of the three top startups in the region. And with a host of new features that includes Fetchr Now, a 45-minute service, and the multiple-item Fetchr Web option, it is set to win many more customers into the new year.