Get All Access for $5/mo

#VCViewpoint: Global Ventures' Basil Moftah And Noor Sweid On What Entrepreneurs Need To Know About Startup Exits In The MENA Region "Whenever you start a business, we believe that entrepreneurs should focus on solving a problem."

You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

How far along should entrepreneurs think about exit strategies? Should MENA startups aim for an exit or an IPO? What do buyers look for when acquiring a startup? What does the exit process for a startup actually look like?

These are the kind of questions that gets answered in #VCViewpoint, an editorial initiative by Entrepreneur Middle East featuring Noor Sweid and Basil Moftah, General Partners, Global Ventures. Having overseen the exits of MENA startups like Eventtus, Mumzworld, Kitopi and more, as well as having years of entrepreneurial and investing experience under their belt, the two investors shared their insights on how entrepreneurs can follow similar trajectories for their businesses in the region.

On the discussion of exactly how far along entrepreneurs should think about exit strategies, Sweid encourages founders to first focus on solving a problem, followed by generating traction. "Whenever you start a business, we believe that entrepreneurs should focus on solving a problem," she says. "A problem that they believe exists, that they can validate, where the market is large, and really create a product and a solution that the market needs. Once that tackled and there's traction, maybe you pivot once or twice or three times, and then you capture the market, generate revenue, build a team, continue to build the company, maybe then you raise a round of funding. And then you get to a point where it's substantial and you have investors. Once you have outside investors and outside money, it's probably time to start thinking that these investors are not here for the long term, just a little bit of the of long term, and then ultimately, they will want to see a return on their capital. That's the right time to really start thinking about your exit, and your exit strategy."

Moftah agreed with this sentiment, adding that it's also worth considering your competitor's outlook when making such decisisons. "If you know a potential competitor would buy you and they're not in Saudi Arabia, for example, then moving into Saudi first might give you an advantage that makes you attractive down the line," he notes. "I don't think people should dream about exits and sit there- I think it can be distracting, and I agree with Noor that focusing on solving a problem is the most important, but thinking about exit scenarios can help you make some options or decisions that will set you up better of how that exit will be."

Related: Taking On The World: Dubai-Headquartered Global Ventures Is On A Mission To Impact Millions Of Lives

When it comes to the issue of whether MENA startups should for an exit versus an IPO, Sweid advises entrepreneurs to consider an M&A instead. "A very small percentage of companies IPO, it's just that they make a lot of noise when they do, so it seems like there's a lot," she points out. "70-80% of VC investments, the exits end up in industry M&A, and that's very telling. As a founder, the IPO might be the dream, but the reality is that an M&A is a lot more likely."

Moftah also notes that while it's exciting how MENA entities are considering IPOs as it creates additional options, it's more advantageous to consider strategic mergers. "Realistically speaking, the probability of getting IPO is incredibly not just small, but slim. My view is that you're always looking to build a sustainable business at some point, it has to be able to hold off on its own, it needs to generate cash, and be sustainable from a financial perspective, and then M&A or strategic buyers or mergers with other companies in the space are probably the more ideal option for company exits."

In this edition of #VCViewpoint, Sweid and Moftah also shared their thoughts on factors determining the success of a startup's exit, key characteristics that buyers look for when acquiring a startup, the exit process for a startup, and the state of startup exits in the MENA region. Check out the full video for all of their insights!

Related: Rewriting The Narrative: Noor Sweid, General Partner, Global Ventures

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Women Entrepreneur®

Follow The Leader: Charlotte Borghesi, Co-Founder And Managing Director, Kidzink

"I believe that a company at the leading edge globally for school design and school furniture design should be based in the UAE."

Growth Strategies

Dubai's Commitment to a Net Zero Carbon Future by 2050 is Well on its Way, According to a New Report Powered by Dubai Electricity and Water Authority (DEWA)

Dubai is setting out to become a city with the lowest carbon footprint in the world by 2050, and heavy investments in renewables are paving the way. The new report is packed with data on Dubai's strategies, initiatives, and mega-projects that are propelling the emirate to a net zero future.

News and Trends

International Fashion Brand Maison D'AngelAnn Secures US$2 Million Investment From A Private Family Office In The UAE

The newest round of funds follows Maison D'AngelAnn's $7 million investment in November 2020 from The Gate Business Services, a UAE-based investment and real estate consultancy, which also saw it also acquire a majority stake in the business.

Business News

A Billionaire Founder Admits He Had 'Horrible Habits' — Then He Started a Morning Routine That 'Transformed' His Life

Kind Snacks founder Daniel Lubetzky used to go to sleep at 2 a.m. and skip his morning workout.

Leadership

A Decade In Review: Badr Jafar, CEO, Crescent Enterprises

"As Socrates said, 'I know one thing: that I know nothing.' The more you grow as a person, the more this philosophy resonates."