Reflections While #StayingHome: The MENA's Response To The COVID-19 Pandemic Has Measured Up
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A note from VentureSouq:
When you cut to the core of it, our job at VentureSouq is pretty straightforward: we predict what themes are likely to happen in the world, determine which young companies are best suited to benefit from those themes, and then invest and convince others to allocate capital into those companies.
It’s thus part of our job to reflect on macro scenarios like that which the entire world is experiencing today, and follow closely as data is released, policies are rolled out, and general temperament of people changes. We’re also drawing parallels to the First Gulf War of the early 90s, to the 2000 tech crash, 9/11 in 2001 and the Great Recession of 2008- understanding the historical fallout from events like these can provide a blueprint for how to predict outcomes or make decisions today.
But whether or not a trodden path exists for any particular company, organization, government entity, or individual even, there is one absolute certainty: that the situation we’re in now changes everything for everyone.
We are venture capital (VC) evangelists. Ultimately, we believe in the long-term gravitation of the world towards a more globalized and technologically interconnected place. There is a prevailing belief that these two factors -globalization and technology- are the root source of the black swan event we’re experiencing now.
But we have no doubt that it is the same two factors that will ultimately get us out of this. This conviction runs through the arteries of our company. But we are also individuals, who can offer unique perspectives to our stakeholders, or other members of the venture and entrepreneurship ecosystem.
So we thought it would be an opportune time for each of us partners at VentureSouq to share some insights into, one, how we are processing this frightening, bizarre, dynamic, fascinating experience, and two, where we think this dislocation will give rise to opportunity, for our stakeholders and investors, for our portfolio companies, or for ourselves as a team.
Below is our KSA partner Maan Eshgi's account.
People are calling the COVID-19 pandemic a “triple black swan” event for MENA: public health crisis, economic downturn, and depressed oil price environment. It reinforces the extent to which MENA’s fate is linked with the rest of the world. I share the anxiety of others right now, but for me, it has been a proud moment to see the firm measures undertaken by regional governments to ensure the safety of their citizens and residents.
Saudi Arabia, in particular, was impressively quick to take action as soon as the first case was identified: installing thermal cameras at airports, shutting down certain flights, instituting work from home policies, and a strict curfew. This is showing us that, relative to other countries, economic models, or systems of government, the way that many of the countries here in MENA function allows us to act quickly and decisively. In situations like this COVID-19 outbreak, this is a positive, and it should reflect on how countries like Saudi Arabia rank on global competitive rankings.
From our standpoint here at VentureSouq, while external interactions with different stakeholders have definitely slowed down, this has been an opportunity for us to reassess our own priorities, and start utilizing all the digital tools we follow so closely. We’ve changed the way we work together, and have also hosted some impromptu but very successful online meetups. We’ve put out fires that arose because of this, and also jumped on unique opportunities (like M&A, for example) that otherwise wouldn’t be here. Most importantly, we’ve reinforced our role as a "solution provider" in the market for companies facing fundraising and business development challenges, for investors who view this market as an opportunity, and for government entities, whose job it is to keep the economy going strong.
The positive response of GCC countries like Saudi Arabia to the COVID-19 crisis proves that the investments they have made into technology have been worthwhile. The companies and infrastructure that has been built were ready to be put to the test when the time came.
Our investment thesis will continue to focus on backing local champions, and helping to expand the MENA venture ecosystem. We believe tech-enabled businesses that survive this time will rebound quickly, and take market share from traditional businesses due to innovation, efficiency, and speed. So, at the end of this, we think that we will definitely be deploying more capital into the venture space.