Top startup investing sectors in the Middle East

VC investments are on the rise in the Arab region which is a great trend that hopefully continues. I thought it would be interesting to look at small sample size of existing investments and breakdown investments by opportunity. Here is my method

1. Browsed invested companies from the portfolio of two VC firms (Wamda Capital and Middle East Venture Parnters (MEVP)) and two accelerators (Flat6Labs and Oasis500)

2. Broke down the companies into the following sectors: E-commerce, Mobile, Digital Content, Software or Other - this was based on the description of the startups. Note that others include startups in the service or hardware sectors.

3. Took a the total number of startups into account including any exits.

Here are the results:

Not surprisingly, E-commerce represented almost a 1/3 of the investments. However, it worth noting that the digital content space was represented in the highest proportion at 33%. This is an exciting area of investment since online digital Arab digital content represents ~2% while the Arabic speakers online represent close to 9%.

When breaking down the investment by investors there were some interesting geographic trends. Oasis500, based in Amman, invested almost equally in Digital content and E-commerce. Flat6Labs, based in Cairo and recently Jeddah, had a stronger focus on mobile compared to any of the other investors or accelerators in this study. MEVP, based in Beirut, and Wamda Capital which is based in Dubai, had a more even distribution amongst E-Commerce, Digital content and Software. 

Clearly, the E-commerce and Digital content space dominated the investments in this small study. However, it is interesting to see a more focus on mobile technologies in Egypt which is the most populous Arab country but not as much of a focus on E-commerce. This could be due to the lower disposable incomes available in Egypt. In would expect E-commerce to eventually settle since there are clearly a few big players that will likely dominate the region. However, mobile and software startups will likely continue to increase and will complement the E-commerce space. 

What do you think? Would you like to see a bigger study on these investment sectors. Do let me know. 

If these types of topics are interesting to you then sign up to my weekly digital Arabia newsletter below. 

Lessons from AngelList, CircleUp and Mattermark that can be applied to the Digital Arabia startup scene

Crowd funding is becoming a reality in the US especially after the passing of the Jobs act. However, the challenge remains for new investors who are way of investing in high risk startups. This is what makes models such as AngelList, which recently pushed their syndicate features - whereby you can co-invest with well known investors via Angellist, or others such as CircleUp which, spends a huge time vetting companies listed on their platform and educating investors about the risk and benefit of crowd funding very valuable for new investors.

One of the key common characteristic between these two crowd funding enabling platforms is their focus on creating a standard market place to streamline the investment process. This key feature could prove critical in emerging startup regions such as the Arab world. Many incubators and accelerators in the Arab world such as Oasis500, Flat6Labs, Wamda and others, are doing an excellent job of fostering and coaching entrepreneurs. However, more work will be required to further expose the Digital Arabia startups. Here is what I propose:

1. Build a Middle east focused startup database similar to Crunchbase that will diligently record public information about startups and will have an open API. Wamda is already doing a great job in building such a database. I would like to see them provide an API for developers to use and build services on top of that valuable data.

2. Build a Mattermark like service that extracts information from sources such as Wamda, Twitter, LinkedIn, Angelist, etc… and use it to provide actionable data to would-be investors.

3. Build a platform to host these startups and create standardized docs, profiles, transactions terms which are all prerequisite to move from a custom market to a marketplace. The only example I know of in the Arab world building such a platform is Samer Karam Alice’s platform which is still in beta form.

By checking off all the above three points, I think the region will become more accessible to investors. Using data to demonstrate the exciting investment opportunities in the Digital Arabia startups is the surest way to showcase the talent and possibilities that exist in the Arab world.

Which web or mobile services most inspire you, and why

This was one of the questions that applicants to the USV analyst position had to answer in a video format. Fred Wilson blogged about it and not surprisingly his blog post generated a lot of comments. Here is my answer and the reasons behind it

Answer: Angellist

1.     Disruptive platform that is working to bring change to a field that I hope to join one day J and together with platforms such as kickstarter has is making crowdsource funding a reality

2.     Passionate and driven founders

  • Both Nivi and Naval are laser focused wanting to give founders their freedom back and providing transparency.
  • They worked tirelessly with the blinders on to create standardized docs, profiles, transactions terms which are “all prerequisite to move from a custom market to a marketplace!”

3.     Uses network effect brilliantly; simple the more people that use it the better this system will become; and with the release of their syndicate earlier last year – the platform is more open for many others to join investments round (I believe this is ultimately a good thing for VCs)

4.     Awesome new products built on top of the platform – eg syndicate, jobs and invest online

5.     Some numbers – More than 28K startups; 380K people; Most are international!! More than 4K companies listed have raised 2.4bn; prestigious alumni that includes Uber!!

If you are interested in Angellist - check out these links below:


Three New Types of AngelList Syndicates I Hope to See By Hunter Walk

AngelList as the Modern Stock Exchange and Rome of Venture Capital By William Mougayar

Why the Digital MENA meeting last week was more about Toronto than the MENA region

Ryerson University hosted an event last week “Digital MENA: The Next Hotbed of Digital Innovation?” and I was fortunate to be on the panel discussing MENA’s startups and their opportunities and challenges.

The questions generated during the panel discussion and afterwards re-emphasized two points. One – Toronto is a truly connected global city, however, the opportunity to capitalize on this global connectivity is sometimes lost because of the lack of a centralized hub or structure that can organize and co-ordinate these connections.. Imagine, if Ryerson’s Digital Media Zone becomes the place to be to learn about Digital Arabia startups and coordinate partnerships and networking. For examples where this type of model works in Toronto, check the TIFF Bell LightBox where it has become the place the place to learn about the Toronto film industry. Two - complementary to the first point, there is clearly a genuine interest within Toronto’s diverse communities to learn more about opportunities in global markets.  This is promising, as I believe that entrepreneurs in the Arab have more in common with their counterparts in Canada, and every effort should be taken to enable these types of partnerships.

I would love to hear your thoughts about this topic so please do leave comments below. Also, stay tuned to future events to be held at Ryerson that focus on the Digital Arabia opportunities.

Update: For a video recording of the event - click here

Learning how APIs work

I cam across this article recently that was looking at Angel investors who invested in the same startups as the Midas list. I thought the data was very cool but what intrigued me even more was how the data was derived. The Blog author used Angelist API to get this info. While for many developers this may seem obvious, for non-developers this is a bit like a ‘black box’! However, this is a skill that I would love to learn and am going to start dedicating some time to understanding how API can be used to generated automated tasks. If you know of a good online resource to learn more about this feel free to mention it in the comments