Wednesday 14, June 2017 by Jessica Combes

Start-up exits across MENA over last five years aggregate over $3 billion

 

To celebrate over 3,500 startups listed on the platform, MAGNiTT released its research on the exits that have taken place over the last five years.

 

Off the back of recent activity with Amazon’s acquisition of Souq and Payfort, Alabbar’s acquisition of JadoPado and Namshi as well as Delivery Hero’s acquisition of Carriage, MAGNiTT looks to review and dispel a few myths around exits in the MENA region.

“It is interesting to see consolidation predominantly in the E-commerce, Logistics and Food & Beverage space across the region. All of which are startups that are consumer facing that solve a logistical problem of delivery. These startups have been acquired by larger organisations to further their consumer reach. The time to exit of those startups that successfully sold their companies is in line with international benchmarks at seven years from founding to acquisition,” said Philip Bahoshy, Founder of MAGNiTT.

The research noted that over the last five years there have been 60 exits of startups in the MENA region to a value of over $3 billion. MAGNiTT reviewed tech companies and tech enabled startups over the last five years to identify trends, and 2015 saw a peak in recent activity with 16 startup exits. But 2017 is shaping up with a strong start to the year with eight exits year in the first six months 2017.

1. Who are they?
Of the 60 exits in the region are spread across MENA, the UAE headquartered 38 per cent of the startups that were exited followed by 15 per cent in  Egypt’ ecommerce (22 per cent), Media (18 per cent) and F&B (15 per cent) make up 55 per cent of the industries covered in the M&A activity in the startup space; the average time to exit of the 60 startups was seven years from founding the company to exiting; and 47 per cent of startups have been acquired by MENA organisations.

2. Experience:
While only 38 per cent of the deals have been disclosed, there are key insights that come from the research that are of interest: the pre-dominant exit valuation was in the $10 million to $20 million mark accounting for 35 per cent of the startups; in aggregate 62 per cent of the disclosed deals were M&A activity for less than $50 million; only 26 per cent of the startups that exited have disclosed previous funding; Souq is noted to have had the highest previous startup funding of $425 million; and several VCs in the MENA region have noted exits of startups in their portfolio including MVI, Jabbar Internet Group, Middle East Venture Partners, and BECO Capital.

“We are beginning to see VCs in the region make return’s on their investments. Given many VCs in the region are still relatively young and with an average of seven years to exit of successful start-ups, we anticipate to see more exits come to fruition in the coming years as their portfolio companies mature,” Bahoshy added.

3. Top 10:
From the top 10 disclosed startups some interesting themes emerge: 60 per cent of the top 10 disclosed exits in the region originated from startups set-up in the UAE; media.net, a Dubai based advertising technology startup, was acquired in 2016 by a group of Chinese investors in the largest MENA exit to date; Delivery Hero acquired Yemeksepti in 2015 as they continued to expand in the MENA region with further investments in the F&B domain of Talabat by Rocket internet in 2014; Maktoob was one of the first exits to set the trend in the region within the startup tech space acquired in 2010 by Yahoo; and ecommerce has been a hot subject of recent discussion following Souq.com’s sale to Amazon along with acquistions of JadoPado and the 51 per cent acquisition of Namshi by Alabbar’s entities.

In line with MAGNiTT's pursuit for transparency in the MENA startup ecosystem, this report looks to raise awareness around the M&A activity taking place in startups space in the region. The data provides positive news to MENA entrepreneurs and investors alike that there is light at the end of the tunnel. With seven years on average to exit many investments are likely to come to fruition in the coming years while the MENA region continues grow and develop awaiting its first Unicorn exit or startup IPO.

 

  

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