This October, we have seen the announcement of 4 new VCs and 2 new funds, among other investment vehicles such as SME-loan platforms and SME public exchanges.
Investors are geared up for the anticipated growth in the sector since late 2019, and while some fundraising plans were delayed due to the pandemic, this has not derailed the sector. The rush to digitize and implement real business transformation has finally brought digital startups and providers into the spotlight, an overnight success many were not ready for, yet funding is a key component missing from the equation.
We tracked 20 new funds and firms that have been announced since January, which announced a cumulative of $176M in secured funds, as well as plans to raise at least $195M more by March 2021 (only 8 of the 20 vehicles disclosed the target or closed funds sizes). Of the twenty, 3 angel networks were announced: Emirates Angels Investors Association, Iraq Angel Investor Network (IAIN), and Alex Angels Fund. While the majority of funds are located in the UAE, Egypt, and Saudi, the funds’ mandates are regional for most.
Even with these new funds, the region does not have nearly enough financing vehicles and alternatives from which founders can tap into to sustain their growth. Sadly it took a pandemic for SME lending platforms like Beehive to get government endorsement, which was allocated $5.4M through The Mohammed Bin Rashid Fund for SME loans in the UAE (May 2020) and expanded to Saudi in partnership with the Social Development Bank and Gulf International Bank (GIB) to improve their SME loans facility (July 2020).
Additionally, Foodics, the Saas provider for F&B and retail, launched a $100M micro-lending platform: Foodics Capital in Saudi just this week in partnership with Maalem Finance, a sharia-compliant financing firm.
Meanwhile in North Africa, Tunisian SMEs seeking loans can tap into Tamweeli.tn, a platform that connects founders with financial institutions, launched in July by the U.S. International Development Finance Corporation (DFC), in partnership with the Middle East Investment Initiative (MEII). Google re-kindled its investment in Egypt with a $3M micro-loan program ($2M dedicated to Egypt only) and an accelerator-driven grant scheme announced last week.
The launch of the Nasdaq Dubai Growth Market just this week heralds in new alternatives for SMEs. This grants access to SMEs in the UAE or abroad, valued at over $250M with a minimum operating time of one year, to list 25% of their company’s shares on the dedicated exchange, tapping into a whole new world of financing previously inaccessible to founders. Tunisia also announced plans to launch a dedicated exchange for startups earlier this month, although no timeline was revealed.
Saudi Arabia has launched a similar platform in 2017, Nomu-Parallel Market, which allows SMEs of a $2.5M market value to list 20% of its shares on the exchange. Nomu Market has not attracted tech startups as of yet.
More funds, check
More financing alternatives, check
More growth vehicles, check
More business going online, check
More consumers living online, check
Bring on 2021!