For e-commerce startups in MENA and all over the world, it is a conflicting time to do business- while the industry is thriving on the whole, the pressures of competition are perhaps at the highest levels and are indicative of a winner-takes-all scenario. Add to that the poor levels of customer loyalty in online shopping, and you have a difficult problem in your hand as an e-retailer. It is in such tough times that entrepreneur Hedi Zaher felt that it would serve e-commerce players well to do something about the large data mines they’re sitting on, and use the hard-to-define concept of big data to their advantage.
With this in mind, Zaher with co-founders Aymen Ferchichi and Oussama Messaoud launched Tunisia-based big data startup Datavora in late 2016 as an e-commerce monitoring service serving the information needs of a variety of stakeholders, such as brands, e-retailers, distributors, and market researchers. With a proprietary technology, the startup “crawls” websites and marketplaces to collect e-commerce data on a global scale, and analyzes and interprets results in real-time to aid decision-making. “Our aim is to be the Bloomberg of e-commerce: a trusted independent third party that collects data at a large scale and in real time, and makes it available for the different actors,” says Zaher, explaining Datavora’s ambitions.And these ambitions of the entrepreneur got a boost recently, as just a few months into its launch Datavora has successfully closed a seed funding round of around TND1 million (approximately US$500,000) raised from investors including United Gulf Financial Services - North Africa (UGFS), two Tunisian investment funds, family, friends and employees as well. The company plans to use the funds primarily to enhance the quality of their technology and “equip customers with a competitive advantage through a unique value proposition.” Accordingly, a big share of the funds are set to be used for business development and customer adoption in target markets of Europe and North America. Datavora’s platform monitors e-commerce websites, distributors’ data, online marketplaces and brand portals, and provides its users details of product assortments, their exposure, displayed prices and other analytical reports on an easy-to-use dashboard view. The technology hence assists e-retailers in making key decisions by providing insights on price positioning for a given brand compared to the competition’s, major competitors for specific product lines, where products are most sold.
“Thousands of new products enter the market every day and thousands are taken down. Thousands of promotions and flash sales happen daily across the e-commerce platforms, many of them remain undetected, and thus the information available for decision makers in terms of pricing and assortment is truncated,” says Zaher, explaining Datavora’s value proposition. “Therefore, e-commerce managers are looking for an accurate, exhaustive, and instant data they can trust and use in order to build the right strategies.” Elaborating on the startup’s relatively quick and efficient fundraising round, Zaher says that the investment procedures took less than four months, followed by a two-month duration to get the funds in hand. “I believe that at this point, it was fairly quick and accessible,” he says. “We examined alternatives for funding and we pitched several funds and investors, and benchmarked and shortlisted some of them. One month later, we selected and started exclusive discussion with UGFS-NA.” He adds that the team continued to work in parallel on market discovery and prototype even while being engaged with updating their business plans and forecasts, and dealing with investors.
And for those entrepreneurs who struggle with the decisions around what constitutes smart money for their venture, Datavora’s fundraising strategy can act as sound guidance. Explaining their reasons for aligning with UGFS, Zaher says, “UGFS-NA proposed a fair deal, but also showed a very good understanding of the economic issues, the market and how to run an innovative company with specific needs for cash burn, especially in the very early-stage. It also appeared that we shared a common view on the importance of the timing, the scheduling, and the place that should be taken by research and innovation in the company. We found in them not only investors, but also partners, who understand and are willing to help the company and catalyze its growth.”
If valuation negotiations are your biggest grievance as an entrepreneur, there’s a simple formula that Datavora used and Zaher proposes, to deal with difficult conversations: “We showcased [to the investors] how we can run the company and, at the end of the day, how we can make money,” he says. “I think founders need to be soothing [clear] with their ability to run the company, and their ability to find, share, show and defend common interests with their investors and shareholders. At that point, all the discussion about valuation, strategies, and perspectives become easy and natural.”
With the latest investment in its bag, and with such direct and simple strategies to run their startup, it seems Datavora has both resources and ability to stand its ground among a plethora of startups emerging in the big data space. Zaher agrees, and is both confident and hopeful about the startup’s future. He cites the latest development of Souq.com’s acquisition by Amazon as a validation of opportunities, and says: “The room for progression is incredible!”
Hedi Zaher, co-founder and CEO, Datavora
What are your top tips for MENA startups to pitch to investors and be successful in raising funds?
“In order to achieve a successful round of fundraising in the seed stage, it is necessary that you come to the potential investors with a clear pain point that you are solving in the lives of your potential customers, and how you are being disruptive in doing so. If you can illustrate it by a prototype, or even sketches of how you will execute your solution, then you are starting the conversation in the best possible position. Once the discussions start, keep in mind that your goal is to start executing your idea as soon as possible with the best possible resources. Therefore, the deal should be fair enough to allow a solid start but should not be the main objective. You are not making money out of your seed fund. You will make money if you start on time with the right resources. Aim for a fair deal, but be flexible.”
What are your views on MENA startup ecosystem, and your take on the Tunisian business environment in specific?
“The last few years have seen the emergence of a large number of startups. The ecosystem is very effervescent thanks to many initiatives aimed for young people. Tunisia has an enormous advantage: the quality of its engineers and its youth. Here, we can build products that meet [solve] worldclass problems with extraordinary quality in an open economy and an open-minded country. The last year also saw the emergence of another generation of startups created by experienced founders, who address global problems and markets, rather professional and B2B, with a lot of ambition and credibility. I can quote the fabulous work of Instadeep, Managys, and many others.”