Get All Access for $5/mo

The Road To Successful Exits In Saudi Arabia: Lessons From Impact46's Investment Strategy As a leading VC firm in Saudi Arabia, Impact46 has proudly backed startups on their path to the stock market, which is a milestone that presents itself as a celebration of the company's growth and legitimization of its sustainability.

By Basmah Al Sinaidi

Opinions expressed by Entrepreneur contributors are their own.

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

Shutterstock

Venture capital (VC) firms have often been described as the lifeblood of innovation, providing not only funding, but also strategic support to startups with the potential to disrupt markets and industries. And the ultimate testament to a VC firm's success is its ability to guide companies to "successful exits," often through a sale or an initial public offering (IPO).

We at Impact46 are committed to supporting top Saudi startups and reinforcing the incredible potential they have. As a leading VC firm in Saudi Arabia, Impact46 has proudly backed startups on their path to the stock market, which is a milestone that presents itself as a celebration of the company's growth and legitimization of its sustainability.

The first investment and exit we did at Impact46 was through the Saudi Arabia-based financial services marketplace Lendo. Impact46 was the first institutional backer for the company in 2019, recognizing the fintech revolution opportunity in Saudi, and the impact of crowd-lending on the SME sector. We invested at the idea stage, and exited after multiple investment rounds. This exit allowed the company to better align with its other stakeholders, and demonstrated the importance of creating value, and attracting potential buyers or investors who recognize that value.

The second exit for Impact46 was Tamara, another startup where we were the first institutional investor who invested at the ideation stage, and then followed on in further multiple rounds, before selling our shares to a global payment service provider. This exit emphasized that a local player like Tamara has the consumer needs understanding as well as the technology expertise required for transforming retail experiences, and it also highlighted how Saudi startups could effectively cater to contemporary consumer needs. This transaction in 2021 sent waves through the startup community, as it showed the viable path for local and global collaborations in the fintech field.

Related: Making Change Happen: The Talent That Will Bring Saudi Arabia's Vision 2030 Into Focus

Additionally, KSA-based online food delivery company Jahez's debut on the stock exchange -with a market cap of SAR8.9 billion- allowed it to achieve a stellar exit within three years of impact46's investment, which amounted to SAR137 million in exchange for 40% of the company. Securing an IPO in the Saudi parallel market (Nomu) is a milestone showcasing the strategic vision in identifying scalable ventures. As one of Saudi Arabia's leading food delivery apps, Jahez demonstrated incredible growth dynamics that aligned with global trends towards on-demand services. The company's successful IPO is indicative of a healthy appetite amongst investors for innovative tech-driven companies from Saudi Arabia.

Our most recent listing transaction is KSA-based fintech firm Rasan's public listing on the primary Saudi market with a valuation range up to SAR2.8 billion. Impact46's strategic investment of SAR90 million in the company in 2021 anticipated the pressing need for the insurance sector to adopt tech solutions. Rasan's advancements in tech-driven insurtech solutions appeal to modern customers' evolving preferences, and demanding dynamic response from traditional sector players. Today, Rasan stands as the first and largest insurance aggregator in KSA by gross written premiums (GWP), boasting a market share of approximately 47% in motor for its insurance platform, Tameeni.com.

The past transactions only emphasize the promising future of Saudi Arabia's entrepreneurial ecosystem. These evolutions in the market demonstrate the global potential of Saudi-based startups, and they also attract further investment and support from both local and international players. The opportunity to pave a local homegrown exit , and to forge a path towards an international exit have all been demonstrated by the previous portfolio and startup scene. Now, we look forward to fostering further growth and development with the upcoming revolutionary technology companies in Saudi Arabia.

Related: Saudi Arabia Has The Potential To Become The Switzerland Of The Middle East (And Here's Why That Matters For The Kingdom)

Basmah Al Sinaidi is a Managing Partner and Head of Asset Management at Impact46. Founded in 2019, Impact46 has quickly established itself as a leading venture capital firm in the Kingdom of Saudi Arabia, and gained the distinction of being one of the first asset management companies to be authorized by the Capital Market Authority (CMA). Impact46 focuses on alternative investment opportunities in Saudi Arabia, investing in theme-specific venture capital and private equity opportunities from the seed stage to mature, profitable businesses.

Marketing

SEO Trends You Need to Be Aware of Right Now, According to a Seasoned Pro

Navigate the future of search engine optimization to elevate your online presence and drive meaningful engagement.

Fundraising

You Don't Need Venture Capital Anymore — Here Are 4 Funding Alternatives

Are you hoping to raise capital for your business without traditional investor interference? Here are four alternatives you could pursue.

Starting a Business

3 Things to Consider Before Your Perfect Business Partner Becomes Your Perfect Disaster

There are many reasons for start-up businesses' high failure rate, including lack of cash, not doing enough research and poor marketing. But this one reason is definitely not getting enough attention.

Business News

How to Be a Billionaire By 25, According to a College Dropout Turned CEO Worth $1.6 Billion

Austin Russell became the world's youngest self-made billionaire in 2020 at age 25.

Starting a Business

He Started an 'Accidental' Business at 25 With Just $2,000 — Then Gave His Product to the Pope: 'Anyone Can Be an Entrepreneur'

Michael Aram, founder of the namesake luxury home and jewelry brand, learned the art of metalworking in India — and used it to launch a global brand.

Living

The 5-Hour Rule Used by Bill Gates, Jack Ma and Elon Musk

The most successful people on the planet are also the people most likely to devote an hour a day to reading and learning.