Investing in Salla: Enabling the Rapidly-Growing E-Commerce Market in MENA

We are leading an $8.5m (~SAR 32m) Series A investment round in Salla, the leading Makkah-based e-commerce enabler. With Salla, anyone can easily set up and manage an Arabic e-commerce store. We look to support Salla to grow and scale their business, which has already achieved SAR 2bn (~$533m) in GMV. The company already has the highest GMV of any such platform in the MENA region, and has seen significant growth from 2019 to 2020.

More and more people are relying on online channels for their day-to-day purchases. In fact, user penetration in the e-commerce market is at 66.1% in Saudi Arabia in 2019. Yet, the market size has not yet caught up. In order to reach the global average, the e-commerce market size in Saudi Arabia stands to grow 4 times, with the wider MENA standing to grow 7 times.

There are already signs that the region is catching up. According to a report by Bain & Company and Google, e-commerce in the region has been growing ahead of the global average with an annual growth rate of 25%. The GCC and Egypt account for 80% of the e-commerce market, and they have been growing at a 30% annual rate, more than twice as fast as the rest of MENA. 

We are delighted to be supporting Salla, a champion of the e-commerce industry in Saudi Arabia and the wider MENA region. Salla allows anyone to easily set up an e-commerce store, among the first to do so in the region. This is critical, as e-commerce markets rely heavily on the infrastructure that they are built on to operate properly. Moreover, with building a local ecosystem at the core of its proposition, we believe that Salla has the right approach to contribute significantly to this market and enable the many players in it. 

Salla’s platform features inventory management and marketing tools, as well as detailed reports on store performance and automatic invoices for orders, which enables e-commerce merchants to set up, maintain, and increase sales through their stores without any fees or commissions. Furthermore, due to a variety of payment and logistic partnerships, store owners do not have to worry about payment or delivery challenges once their store goes live – it is all taken care of. 

The moment we met Salla’s founders Nawaf Hariri and Salman Butt, we knew that Salla is the play needed to catalyze the growth of the e-commerce market in Saudi Arabia and the wider MENA region. More importantly, we also immediately knew that they are the right team to do it. Nawaf and Salman started Salla in 2016, building on their experience and knowledge as founders and IT professionals. 

They have the right mix of knowledge, industry experience, and market understanding to lead the charge. We are excited to invest alongside existing investors Raed Ventures and Vision Ventures to be part of their journey.

Our Journey Thus Far: Emerging Digital Champions, A Unicorn Exit, and a Fast-Growing Ecosystem

We are thrilled to launch our Economic and Social Impact Snapshot, reflecting on the fund's journey and impact on the regional landscape since starting operations in early 2018. Through our investments in rising digital champions, we are proud to have played a part in regional digital transformation and economic diversification.

In recent years, Saudi Arabia, and the MENA region in general, has seen a significant increase in the amount of venture capital funding. In H1 2020, Saudi Arabia saw an increase of 102% in total VC funding compared to H1 2019, making it the fastest growing ecosystem by total funding in the MENA region. Moreover, as highlighted in our previous report, this growth trend is expected to continue with VC funding in Saudi Arabia estimated to reach $500 million by 2025.

Given this anticipated growth, the favourable regional demographics, and Vision 2030’s emphasis on technological advancements, STV continuously looks for opportunities to unlock the potential of the region by backing its emerging digital champions. 

Since starting operations a little under 3 years ago, STV has led 30% of all VC fundraising in Saudi Arabia. It has led and participated in regional funding rounds totaling $333 million, accounting for a sizable 16% of all VC fundraising in MENA. With this contribution, the fund has quickly become one of the largest contributors to VC funding and technology enablement in the region.

Learn more about the economic and social impact of STV and our world-class portfolio companies here.

Doubling Down on Noon Academy: Universalizing Access to Quality Education

We are leading a $13 million (SAR 48.8 million) investment round in Noon Academy, the leading EdTech company in MENA. The investment will strengthen the company’s position in current markets such as Saudi Arabia and Egypt, fuel its geographical expansion into new markets, as well as go toward refining Noon’s social offerings. Since our initial investment, Noon Academy has launched in 4 new markets and reached 6M+ students served.

A little under a year ago, we announced that we co-led a Series A round in Noon Academy. At the time, we were particularly inspired by the founders’ passion for increasing access to quality education and commitment to crafting an intuitive and engaging online classroom experience for students and teachers alike. The team’s unique approach to online education differentiated it from global players, with its social learning platform achieving 4x the global industry average of student engagement at the time of our initial investment. Their dedication to its mission and reliance on data-driven product development has led to tremendous growth that exceeded our expectations. We are proud to announce that we are doubling down on our position in Noon Academy by leading a Pre-B round that serves to bolster the company’s growth.

In order to curb the spread of COVID-19, schools worldwide have been forced to close down, impacting over 90% of the world’s student population in the process according to UNESCO. As a result, we are seeing education transcend the confines of the traditional classroom at an unprecedented scale. While educational institutions have been slow to adopt online education, they have now been forced to rely on fully online solutions. We believe this will significantly accelerate the adoption of online learning, ushering in an era of digital transformation for education that is long overdue.

Even though the measures put in place as a result of the pandemic will be lifted eventually, we anticipate the digitization to last and are excited to see Noon Academy champion the digital transformation. The increasing reliance on EdTech solutions and digital platforms has resulted in increased acceptance and credibility; families and institutions alike are beginning to recognize that such solutions are in many ways better alternatives to traditional learning, especially as they discover the superior cost-effectiveness, scalability, and accessibility they provide. 

As it happens, digital platforms also present a unique opportunity to develop engaging learning experiences by incorporating social and gamification features. This is an area where Noon Academy excels; the company has developed a robust social offering that includes features such as group study, advanced collaboration tools, a social media-like timeline that encourages sharing and interaction, as well as opportunities to participate in live competitions related to course materials. In fact, this is a key driver behind Noon Academy’s success, noting that their social learning platform is achieving 5 times the global industry average of a student’s daily engagement. Since our initial investment, sign-ups have grown by 2.6x, with the total number of students served reaching 6M+ and counting. The company has also launched in 4 new countries and is continuously working on adding new features to further increase engagement and make learning more enjoyable. 

As younger populations become increasingly digital, the need to adopt online learning capabilities to accommodate students’ evolving preferences and learning styles will become essential. Noon Academy is preempting this paradigm shift and capturing the attention of an intuitively digital younger population by tailoring the experience to them. We are strong believers that investment in Education pays the highest dividends, on all levels.

Investing in Nana: Unlocking the Region's Online Grocery Market

We are leading a SAR 67.5 million ($18 million) investment round in Nana, the leading KSA-based online grocery marketplace. Our latest portfolio company delivers the new standard for grocery shopping.

Grocery is the second-largest spending bucket for households in Saudi Arabia. While this might not be surprising, what is surprising is that grocery shoppers in Saudi Arabia spend an average of 5.6 days every year commuting to and from grocery stores. That is equivalent to 5.6 months every 30 years spent —or, more accurately, wasted— entirely on the commute. Luckily, Nana offers its users the chance to win back the wasted commute time without compromising on the quality of the shopping experience. Needless to say, the opportunity for Nana to digitize the market is substantial, considering that the grocery market in Saudi Arabia, UAE and Egypt alone amounts to $83 billion.

According to the latest data reported by Delta Partners, only 0.1% of grocery sales in Saudi Arabia happened online. Compared to the global average of 1.8%, the market in Saudi Arabia stands to grow at least 18 times, illustrating the sizable opportunity to enable the market to reach its fair share. This is one of the main reasons we are excited about Nana.

Nana enables its customers to seamlessly order groceries from their favorite supermarkets or shops, choosing when to have them conveniently delivered right to their doorstep. What began as an experiment in 2016, when it was just a grocery shopping list app, grew into something truly astonishing: the leading online grocery marketplace in Saudi Arabia. Today, counting the likes of Panda and Carrefour among its partners, with presence in 14 cities and more than SAR 100m in total funding, Nana has proved its ability to lead the online grocery space across the wider region. We have the utmost confidence in Sami Alhulwah and the Nana team’s ability to execute on their ambitious expansion plans, backed by an intuitive app, first-rate technology and world-class operations.

Our co-investors in this round include Watar Partners, SVC, MEVP and Wamda, as well as existing angel investors.

On a more personal note, we are particularly proud to support Nana in light of the unfortunate COVID-19 outbreak. During this difficult time, Nana is prioritizing its social responsibility towards the community, ensuring that people have access to the food and supplies they need. In an effort to limit the need to go out and minimize people’s exposure to the COVID-19 contagion, Nana has tripled its capacity in just 10 days and is continuously increasing it further to ensure that all of the demand is met.

Investing in Vezeeta: market scale-up, Saudi and beyond

We are joining a $40m million (SAR 150m) investment round in Vezeeta, the leading digital healthcare platform in MENA, connecting patients with healthcare providers and health services. The financing enables the company to continue its expansion in Saudi, scale up new products, and expand into new markets.

We first met Amir, the CEO of Vezeeta, in early 2018. At the time, we believed the company's success in Egypt was remarkable, and the early traction they were seeing in Saudi Arabia was worth backing and scaling. We led their Series C fundraising round and worked closely with Amir, his team, and the company's board to help the company expand into Saudi Arabia. The progress the company has achieved since our investment is astounding. We are thrilled to double down on our position and increase our stake in Vezeeta, while also welcoming Gulf Capital to the table.

During the past year, Amir and his management team have established an office in the heart of Riyadh. They engaged all the major and long-tail healthcare providers in the country, connected with public and private stakeholders, and appointed a Saudi healthcare executive to their board. Within this period, the company has tripled in all metrics, including hitting the milestone of 4 million appointments per year.

The next chapter for Vezeeta holds an even bigger opportunity. In addition to continuing its growth in Saudi, we are excited to see Vezeeta grow in vertical healthcare that goes beyond appointment booking, as well as establish presence in new markets. Healthcare is ripe for disruption and MENA is the best ground for it. 

We invest in founders with deep market insights and global ambitions –and Amir is the embodiment of that, a first-rate founder that is also capable of building a world-class team. We are excited to share the board with Gulf Capital and are eager to see the next chapter of Vezeeta unfold.

Investing in TruKKer: digitizing land transportation

We are leading a SAR 86.25m ($23 million) investment round in TruKKer, the leading truck-focused digital freight marketplace and aggregator in MENA. TruKKer is optimizing the supply and demand between cargo owners and truck drivers, bringing efficiency to a large and critical sector.

Logistics touch every physical thing around us —it is everywhere. Consider its impact on the pricing of goods. Pricing impacts the demand on these goods, which, in turn, impacts the growth of the industries to which these goods belong. It is arguably the vertical with the most impact on macro growth, yet it is the least digitized and most fragmented. The World Bank places Saudi Arabia at the 55th spot on the global “Logistics Performance Index”, so there is much value on the table.

Today, truck drivers must communicate with brokers via phone calls in order to negotiate pricing of each transaction and discuss capacity and routes. Shippers and brokers must rely on their large rolodex of drivers with different truck types, laboriously communicating with each driver until they find the first available one. It is normal for shippers to call multiple truck drivers only to secure one quote. That is more wasted cycles in an already inefficient system.

TruKKer aggregates and matches supply with demand, offering a cohesive workflow for transactions. The company’s digital freight marketplace enables the booking, tracking, rating, and paperless processing of land freight. It brings standardized rates and higher efficiency to a regional marketplace that is large and fragmented. By solving challenges faced by shippers — such as, pricing transparency and real-time tracking— and solving challenges faced by drivers — like large deadhead miles and slow payment cycles— it truly optimizes supply-and-demand in a critical industry. TruKKer’s growth in Saudi Arabia and the UAE has been very promising, and we believe they will soon be present in every logistics hub in the MENA region.

We invest in entrepreneurs who understand their industry inside out, and that is exactly what Gaurav and Pradeep have in abundance. We are inspired by their vision to become the de-facto platform for the MENA logistics industry, and we are very proud to support them in this journey.

Investing in Noon Academy: Social Learning Anywhere, Anytime, for Anyone

We are co-leading a SAR32.2 million ($8.6 million) investment round in Noon Academy -- The leading EdTech Platform in the MENA Region. Our latest portfolio company gives millions of students access to social collaborative learning and on-demand tutoring.

There is a massive opportunity for the growth of the Educational Technology (EdTech) sector in MENA. Governments in the region spend significant portions of their annual budgets on public education, meanwhile spending on private education continues to grow as well. Globally, EdTech funding reached $16.3bn in 2018, according to market research firm Metaari,

Noon Academy is capitalizing on this trend, offering students on-demand tutoring, group study, and opportunities to participate in live competitions around their curriculum. The platform offers teachers the tools they need to take the classroom experience online, removing friction and increasing student engagement so educators can focus on what they do best: teaching.

When we first met Noon Academy's founders, it was immediately apparent how mission-driven and passionate about EdTech they are. They have been working in the space since 2011 and Noon Academy is their second EdTech company.

Mohammad and Abdulaziz are intensely focused on two goals: making learning more interesting and engaging, and giving more students access to this type of education. Using thousands of data-driven experiments, Noon Academy learned that the problem with education is not comprehension, but boredom. The unique Noon Academy platform can keep a student engaged for more than 55 minutes a day. This level of student engagement far exceeds the industry average of 14 minutes per day for most educational apps. The founders' second goal of increasing access to education is being achieved at an exciting pace; To date, Noon Academy has served more than 2 million students and 1500 certified tutors across Saudi Arabia and Egypt and is continuing to grow rapidly.

Noon Academy was founded in 2013 by Mohammed Aldhalaan and Dr. Abdulaziz (Aziz) AlSaeed. Mohammed, as CEO, has a background in Computer Science and comprehensive experience in strategy formulation and management. Abdulaziz, as COO, has a background in Computer Science and a Ph.D. in Cloud Computing Security and is a teacher himself being an Assistant Professor of Computer Sciences.

Raed Ventures was a co-lead investor in this fundraiser. Alisamiah Investment and a number of prominent angel investors joined this round.

Investing in Mrsool: Fueling the On-Demand Economy in MENA

We are leading, along with Raed Ventures, a multimillion-dollar investment round in Mrsool — the leading Saudi on-demand delivery service. Our latest portfolio company is exactly the type of partner we like: incredibly ambitious, innovative, and attuned to the needs of the region.  

Mrsool is a service where couriers can purchase products on behalf of a consumer from any shop in the city, and then instantly deliver them. The company’s huge potential hinges on the growing consumer demand for fast delivery services and a user experience that takes into consideration local payment preference. In our view, Mrsool is truly unique in what it does. It processed more than SAR 1 billion (approx. $ 270 million) in transactions in 2018, attaining a total of 4 million registered users at the end of the year.

With the growing adoption of digital commerce, consumers are fast becoming accustomed to the convenience of same-day, almost instantaneous, deliveries. A leading category of goods that benefit from instant-delivery is food. Of the $97 billion global food delivery market, 47% of orders are estimated to have originated online in 2018.

We believe this trend holds in MENA and is even amplified by the high mobile penetration rates in markets like Saudi and the UAE, and the sizable offline-to-online movement of demand in that category.

Two things stood out when we first started talking to Mrsool’s founders:  firstly, the depth of their product insight was impressive, and this is reflected in the design of an original user experience solving a common consumer need. Secondly, Mrsool’s business model has been validated by high rates of organic growth they have experienced over the past couple of years.

Mrsool was started in 2015 by founders Ayman Al Sanad and Naif Al Samri. Ayman, as CEO, has a background in software engineering. In 2009, he was the first to localize the android operating system in Arabic -- two years before official Arabic language support in the mobile operating system. Naif, as COO, has a background in architectural engineering and has been handling operations scaling in the bootstrapped company.

Raed Ventures was a co-lead investor in this fundraiser. Alisamiah Investment and a number of prominent angel investors joined this round.

Investing in Careem: MENA’s platform for internet opportunities

We are co-leading a SAR 750 million (USD $200 million) investment round in Careem -- the leading ride hailing app in the greater MENA region. Careem is a true pioneer in the MENA technology industry, a local champion whose rapid rate of growth shows few signs of slowing as it explores new territory in the form of payments and mass transportation.

For many people, ride hailing is now part and parcel of everyday life. And as internet penetration rates increase, and consumer habits change, analysts expect the ride hailing market to grow 8 times its current size by 2030, with much of this growth coming from emerging markets. Careem is capitalizing on this trend. It has developed one of the most recognizable brands in greater MENA and has become the de facto app for 15+ million riders and 1+ million captains.

We’re excited that this latest investment round will fuel new verticals for Careem that include payments and mass transportation. By expanding the scale and reach of its services, more startups can use Careem as the platform of choice, unlocking a new wave of online retailers and internet opportunities.

Careem started as a small experiment in Dubai in 2012 and today it operates in 120+ cities, from Pakistan to Morocco and everywhere in between. Mudassir Sheikha, Magnus Olsson, and Abdulla Elyas have set a new bar for technology startups in the region - the trio bring a rare mix of world-class operations and purpose-driven management. We share a common belief that technology is the key to simplifying and improving the lives of many. Our journey together continues.

Our co-investors in this fundraise included Al Tayyar Group, Kingdom Holdings, and Rakuten.

Investing in Unifonic: Unleashing the Power of the Cloud

We are leading a SAR78.75 million ($21 million) investment round in Unifonic -- the leading cloud communications platform for emerging markets. Our latest portfolio company empowers thousands of companies (including major firms like Careem, Uber and Domino’s Pizza) to communicate with millions of their customers through text & voice solutions by leveraging advanced data analytics and AI.

We are particularly excited about this investment given Unifonic’s leading role in the fast-growing cloud communications market. According to IDC, the Communication Platform as a Service (CPaaS) industry is forecasted to grow from $867 million in 2016 to $8.2 billion in 2021. We think Unifonic is perfectly placed to capitalize on the opportunity that this industry presents.

In our view, Unifonic’s cloud-based communications platform is helping transform major industries. It gives clients like major banks, airlines, and e-commerce companies the ability to send millions of messages in an instant -- allowing them to notify a group of customers of a flight delay, update consumers on an order from their favorite e-commerce store, or even confirm an individual customer bank transaction as a secure and reliable two-factor authentication message. Unifonic offers easy-to-use APIs that allow developers to directly utilize SMS messages and voice calls in their systems and applications.

Our co-investors in this fundraise, which ranks as one of the largest Series A financings in the MENA region, included Riyad Taqnia Fund, Endeavor Catalyst, Elm, and Raed Ventures. The new capital will help accelerate Unifonic’s expansion plans in multiple markets and industries, and support further product platform development.

Unifonic is a great example of the type of founder-driven, capital-efficient businesses we like to invest in. Started by Ahmed and Hassan Hamdan in 2008, Unifonic has since grown into a consistently profitable company with over 100 employees in five different countries.

Investing in Vezeeta: transforming the healthcare experience in MENA

We are leading a 45 million SAR investment round in Vezeeta – the leading digital healthcare platform in MENA connecting patients with healthcare providers and health services. The financing will be used to fund Vezeeta’s continued regional expansion and for further investments in key new products.

Healthcare is one of the most promising sectors in MENA, with robust annual growth and a value expected to reach $100+billion in 2020. The sector is currently undergoing a transformation driven by the rapid technological adoption across the region.

Vezeeta provides consumers with the ability to discover and book medical appointments and health services improving healthcare access for millions and increasing the efficiency of the sector. Empowering patients through data is Vezeeta’s mission to MENA. It also provides innovative SaaS solutions that utilize cloud computing and big data to empower patients and doctors; building the infrastructure needed for the development of the broader healthcare ecosystem.

Vezeeta has managed 3 million bookings in the region, served 2.5 million consumers/patients, and connected more than 10,000 doctors in Egypt, Saudi Arabia and Jordan.

We love to support capable founders who are transforming major industries. Upon meeting Amir and Vezeeta’s management team, it was immediately apparent to us that they are on such a mission. We believe Amir and the Vezeeta team have built what can potentially elevate the healthcare experience in the region and are ready to scale.

Vezeeta was founded by Amir Barsoum who worked as a management consultant at one of the top global firms, advising public and private clients across Europe and MENA with a focus on the healthcare sector. Amir also led the development of the MENA strategy for one of the largest multi-national pharmaceutical companies in the world. We are excited to be partnering with Amir and his team on the mission of providing a better healthcare experience using technology in MENA.

Our co-investors in the round are BECO Capital, Crescent Enterprises Ventures, Silicon Badia, and Vostok New Ventures.

Investing in Telfaz11: betting on the region’s digital media industry

We are leading a 33.75M SAR investment round in Telfaz11 — our first investment in the Region's digital media space

This deal represents one of our first steps towards investing in a new media industry for MENA. The digital revolution transformed how content is generated and consumed globally, and the rules of the game in the media space are changing at an accelerating rate; especially in our region. We believe that empowering leading players in the digital media ecosystem —connecting areas spanning digital distribution platforms to original content creation engines— is an inevitability and one that comes with a tremendous opportunity.

The demand side of the media market is strong: MENA is the second largest region globally in terms of views for some of the world’s largest video platforms. Additionally, the growth in online video demand is among the highest worldwide when compared to global averages (Saudi Arabia has the highest views per capita globally). Moreover, the majority of these views occur on smart devices (Saudi Arabia is on par with advanced nations such as South Korea and the US when it comes to consuming content on smart devices). This a great demand-side story.

On the flip side, we think the market’s supply side is relatively weak compared to such strong regional demand. Moreover, many traditional broadcasting and content companies, even globally, are trying to catch up with changes in the space. Dealing with disruption is hard but there are emerging vehicles that proved to have the right vision and capabilities to create new forms of value in this new media landscape.

Telfaz11 is one of those vehicles we believe in and in its founders. Founded in 2011 in Riyadh by Alaa Faden, Ali Al Kalthami, and Ibrahim Al Khairallah, Telfaz11 was consistently able to create high quality original content and leverage digital tools and distribution platforms. They have also done that in a way that reflects a deep understanding of the industry’s new dynamics and the needs and opportunities of the regional audiences and market. Today, we announce leading an investment round of 33.75M SAR to accelerate the company’s growth and scale-up plans.

This is our first step. We still have so much to do but we see the size of the opportunity and the building blocks that can be connected and fueled to create new media champions for the region.