What Your Startup Can Learn From The UAE's Billion-Dollar Frontrunners
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Uber. Airbnb. Dropbox. They’re household names –unicorns– all valued at over US$ 1 billion. But what about the Middle East’s rapidly growing digital disruptors such as Propertyfinder, Wadi and Namshi? These Dubai-based unicorns-in-waiting are attracting huge amounts of investment, underlining the UAE’s status as one of the best places in the world to hatch a technology business.
So, what are these UAE startups doing that attracts investors like bees to honey? More importantly, what can you do to follow suit? Here’s your guide.
1. Understand your local market
In the UAE, the most well-funded startup is Noon, the e-commerce startup spearheaded by Emaar Properties chairman Mohamed Alabbar. A new report by CB Insights says the fledgling business has raised a cool US$ 1 billion in funding since November last year. Billed as the Middle East’s homegrown competitor to Amazon, Noon is backed by a group of prominent Gulf investors, including Saudi Arabia’s Public Investment Fund (PIF) and Kuwait’s MH Alshaya & Co. Noon is battling against another Dubai startup Souq.com, which was recently bought by Amazon. How can it possibly win the fight?
The answer may lie in language: ‘We are proud to take this important first step in our journey and we are committed to making Noon the region’s Arabic-first e-commerce platform,’ Alabbar was quoted as saying about the company formation. The e-commerce startup has partnered with market leaders, small and medium enterprises, and other startups, with the goal of helping them capture a greater share of the e-commerce market in the region. In turn, this will create a strong network of local businesses focused on e-commerce and its offshoots.
What you can do: Grab local market share and develop local partners
Find that uniqueness which you can use in enhancing your local market share. Leverage a competitive edge through being proudly homegrown and specific to your region when it comes to language.
2. Adapt to the market place and attract investors
Another tech startup with unicorn potential is Wadi, an e-commerce platform which raised US$ 67 million in a Series A round led by Al Tayyar Travel Group in 2016. It was the largest funding of its kind in the Middle East. Commenting on the record-breaking Series A funding, Abdullah Bin Nasser Al Dawood, Managing Director & CEO Al Tayyar Travel Group, was quoted as saying that the company had proven a strong capability to adapt to the market and build a huge portfolio of products. The market, however, is by no means oversaturated. E-commerce represented 10.2% of total retail sales worldwide in 2017, up from 8.6% on the previous year, according to data specialist eMarketer. Global retail e-commerce sales reached over US$ 2.3 trillion, a 24.8% increase over the previous year. Wadi is tapping into this potential goldmine by offering a general merchandise marketplace online.
Started in 2015 by the Middle East Internet Group (MEIG), it is now one of the leading e-commerce players in the region, offering more than 150,000 products from more than 2,000 international brands.
What you can do: Adapt to the market
Adapting to the market means you can continue to ride the wave, meet customer demands and remain attractive to investors.
3. Keep it simple and create disruption
The Urban Dictionary defines modern day unicorns as ‘uncatchable’, and the way in which some UAE startups are expanding certainly seems to back this up. Take Propertyfinder, the disruptive startup changing the face of the industry by providing ‘high-quality, credible real estate listings in the region available in real time at the click of a button’. Started in the UAE, the company has expanded internationally and now operates across MENA. Like so many successful tech startups, the idea is incredibly simple. CEO and Founder Michael Layhani is quoted in Entrepreneur Middle East as saying, ‘I strongly believe that behind each frustration, stands a potentially great solution’. The frustration was the lack of channels through which to find a property in Dubai. The solution is a search engine that enables people to find a property to buy or rent in a few clicks. I
Propertyfinder has actually been around for several years, and key to its growth was a second round of funding in 2016. The property firm sold a 10% stake to investment firm Vostok New Ventures for US$ 20 million. The deal valued the firm at US$ 200 million and enabled the company to further develop its technology for the benefit of both homebuyers and developers.
What you can do: Be disruptive and continue to evolve
It may sound simple, but by resolving common customer frustrations you can disrupt the market and give your company a chance to secure its place in the market. And even if you’ve been around a few years, there are still opportunities if you’re ready and willing to evolve.
Related: What You Need To Know When Starting Up A Company In Dubai's Real Estate Space
4. Always be in fashion
Another innovative e-commerce business growing at a blistering pace is Namshi, the online fashion startup with more than 50,000 products serving customers in the UAE, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain. Namshi targets the 20-something customer by promoting a fashionable lifestyle. Around 80% of the business comes from mobile devices. Namshi’s Marketing and Brand Director Ian Smith was quoted as saying that the mobile market is ‘something we're working hard on to tap into’, and it’s clearly working. Launching an app has also played a significant part in the company’s growth. The amount of money changing hands for this fledgling business is astounding. Emaar Malls acquired a 51% stake in Namshi for US$ 151 million in an all-cash transaction, which valued the five year-old Namshi at US$ 300 million. The remaining 49% is owned by Rocket Internet though its Global Fashion Group.
Since launching in 2012, Namshi has grown to become one of the Middle East’s leading online fashion retailers. The business offers free and fast deliveries in the GCC, 24-hour delivery in the UAE, a 14-day exchange policy, and the option of cash on delivery.
What you can do: Overcome barriers and know how to reach your market
Overcoming barriers and knowing how to reach your market can be a major challenge for any e-commerce startup. The key is in solving your audience concerns and addressing their pain points. Make the most of digital technology and social media to raise awareness of the brand and the safety of buying online.
5. Provide a rich experience for customers
Providing a rich experience for property seekers is the simple philosophy behind the runaway success of property portal Bayut. CEO Haider Ali Kahn has been quoted saying his business is a ‘driver for change’ and this is no idle boast. Since its launch, Bayut has a growth rate of over 100% annually over the last five years. As with any search engine-based business, content is key. ‘Starting out, we had to physically map out a lot of the locations and mine data, so that we could create more content around each property to provide a richer experience to a property seeker’, Kahn told Entrepreneur Middle East magazine. The startup also introduced an Arabic real estate blog to connect with local property seekers. Like Propertyfinder, Bayut has also invested heavily in new technology to enrich the user experience with the use of artificial intelligence to offer more insight to listers, and interactive tools to calculate commute times.
What you can do: Practice does makes perfect
As well as investment in the user experience it is important to consider having a physical presence when launching your startup in the UAE. Although Bayut only did so in 2014 (after starting the business in 2008), they had gained a wealth of experience around launching portals in emerging markets, and this, they claim, has been a key factor in their success in the Emirates. Practice most certainly does makes perfect.
Be a frontrunner and improve your chances of unicorn success
The success of these tech startups in attracting investment and achieving extraordinary growth rates is no accident. The UAE has emerged as a significant incubator of tech companies in the Middle East, thanks largely to new government initiatives to attract investors and entrepreneurs. The Financial Times has heralded Dubai as the ‘startup capital’ of the region, buoyed by the UAE’s 78% smartphone penetration, a diverse population, as well as versatile banking products and strong financial support services. So, when it comes to unicorns, the only question left is this: Who’s next?