Over the past few years, we’ve seen a fair number of Middle Eastern internet start-ups rise to become regional powerhouses. Many of these businesses have seen their valuations skyrocket as they’ve either taken on new investment, or simply dug in and dominated the markets they play in. This has set the scene for a 2017 that may see a raft of regional businesses reach that fabled ‘unicorn’ status — (ie) they’ll be worth more than $1bn.
Indeed, it’s often said that Souq.com is pretty much there already. It’s also said that Amazon has looked at buying Souq.com for $1bn. Who knows if that’s true, but we’ll obviously be looking on with great interest throughout the year to see if anything comes of these reports.
In 2016 alone, local ride-sharing firm Careem raised $350m in the first tranche of its $500m funding round. I think it’s fair to say that, once you’re talking those kinds of numbers, you’re probably looking at a company worth $1bn.
And let’s not forget that, although they’re not quite at unicorn status yet, plenty of internet businesses in the UAE are growing at alarmingly quick rates. For example, Propertyfinder.ae recently raised $20m at a $200m valuation.
The company continues to grow, and you’d like to think that the company’s grip on the region, from a property portal point of view, makes it a merger and acquisition target for international portals like RightMove or Zillow.
Valuations will also be helped if we start seeing successful exits, which could well happen in 2017. Gulf Capital, one of the leading private equity firms in the region, has already announced that some of its companies are for sale, and that they’re hoping to close deals over the next two years. The next 12-18 months could see a number of startups either merge or exit as they continue to mature.
If we do see a few high profile exits next year, the entire ecosystem could look significantly better for everyone else. We may even see more activity from European and American funds, who currently don’t give the Middle East enough attention.
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At every start-up event I’ve been to, whether it’s been in London or Silicon Valley, the Middle East is often the last place to be mentioned when discussing interesting markets. Souq.com, Careem and Propertyfinder.ae are flying the flag for the Middle East, and some big exits would really put the region on the map.
None of this is set in stone, obviously. The global economy is still reasonably fragile, and with big political issues affecting Europe and the US, funds could dry up extremely quickly. Still, with the big internet businesses here playing out their expansion strategies, things are looking good.
Next year could very well be the Middle East’s year of the unicorn.
Jon Richards, CEO and co-founder, compareit4me.com