With the pandemic-led changes in the region, startup investments have increased, and innovative companies are joining the unicorn bandwagon
Rapid digitisation, advanced technology, and change in customer demands are the catalysts for the increasing business investments in the Middle East. In 2020, the MENA region witnessed record-breaking start-up investments worth over $659 million. Moreover, some existing companies received significant funds and gained entry into the Unicorn club.
Experts opine that three main factors drive companies to the end of the unicorn race: the powerful capability and viability of tech-driven firms, the flexibility of the region’s start-up eco-system, and the increase in opportunities.
The pandemic impacted the Middle East investment and technology ecosystem, which is brewing startup unicorns. According to a LinkedIn report, the UAE has over 2300 startups, and Israel claims to have over 6000 startups. With massive funding opportunities in the country, Israeli unicorns tag the highest count in the world. Sixteen Israeli-founded companies were added to the unicorn list in 2020, followed by ten more in 2021.
Experts believe that the number of unicorns in all of Europe might be less than Israel’s. On the other hand, MAGNiTT reports that the Emirates ranks first in the region by the number of deals and capital investments.
Saudi Arabia’s $500m technology venture capital fund STV is on a mission to nurture startups and push them forward to become unicorns. This tech VC fund that backed Careem before it was sold to Uber is eyeing potential companies like the digital marketplace Trukker and delivery application Mrsool.
Meanwhile, here are seven new startups that have become unicorns since the second half of 2020.
Also Read: Top Funded MENA Startups
Emerging Markets Property Group
In 2020, EMPG acquired the status of a unicorn when they raised a $150 million funding led by OLX Group. The company runs property portals in global markets, including Bayut, Dubai, Mubawab, North Africa, and Zameen in Pakistan. With promises of disrupting traditional processes, the Dubai-based company will use the investment to launch a range of services to create efficient user experiences, better data transparency, and develop enhanced market intelligence.
The Israeli cybersecurity company raised a Series C funding of $210 million led by CapitalG and Redpoint Ventures. With this development, Orca Security’s valuation hit the 1 billion mark. In 2019, Orca Security was launched by Avi Shua, former Check Point Software CTO and Gil Geron, former Check Point executive. The company claims to be the first cloud security solution with the capability of identifying misconfigurations, malware, vulnerabilities, lateral movement risk and asset integration in minutes.
The social networking and entertainment platform reached its billion-dollar unicorn valuation in 2020, becoming UAE’s first technology unicorn to grab a spot in the New York Stock Exchange (NYSE). Through the listing of 18.5 million American Depositary $7.5 shares each, the Dubai-based Yalla Group aimed to raise $139.5 million. Today, the share market value is $18.32. With their tailored local cultural experiences, Yalla has over 5 million paying customers, and over 12 million users visit their platform every month, with an average spend time of 4.5 hours.
With a $100 million Series C funding, the Tel Aviv cloud-based payroll company entered the unicorn club with a $1 billion valuation. With a vision of a better payroll system and HR industries, Papaya Global was founded in 2016 by Eynat Guez, Ofer Herman, and Ruben Drong. The unicorn provides an automated SaaS platform with comprehensive solutions that includes onboarding, cross border payments, and privacy security regulations. Their services are spread across 140 countries.
STC Pay, a subsidiary of STC Group, the largest telecom operator in Saudi Arabia, entered the Unicorn club after Western Union acquired a 15 per cent stake for $200 million. On reaching around $1.3 billion valuations, they plan to expand their financial services across the Gulf countries. Harbouring innovative technologies, the unicorn is an integrated payment app that can be used to handle daily expenses and purchases. Western Union allows STC Pay customers to transfer money from their app to accounts in over 200 countries worldwide.
Also Read: Top 10 Cybersecurity Software For Enterprises
An AI-powered telemedicine health platform in Israel received a $132 m series E funding at a 1.4 billion valuation. The startup was founded in 2016 with the goal to utilise AI-based and anonymised reports for diagnosis. Founded by former Wix CEO Allon Block, the free application depends on a database with a hoard of data from physician notes, lab results, medical histories, and treatment summaries. The unicorn then offers precise, data-driven information about a user’s health status.
DriveNuts
Drivenuts arose from stealth mode in 2019. On completing a $208 Series B funding round in 2021, the startup joined the Unicorn club with a valuation of over $1 billion. Hooked to the idea of revolutionising the telecom industry by lending a hand to Communications Service Providers (CSPs), the Israeli telecommunications startup was launched in 2015. They aim to maintain the customer’s profits by setting up agile networks and removing growth from business costs. They also launched their flagship software Network Cloud that changes a physical network into a shared resource to support several services.
While startups continue to seek opportunities with the rise of big data, artificial intelligence, cloud computing, machine learning, and automation, the Middle East unicorn club is expected to get bigger across sectors. Encouraging innovation, experts believe it might just continue to increase the willingness of investors to write cheques.
