Global tech from mena leap

GLOBAL TECH FROM MENAC a i r o , E g y p t

08 – 12 - 2016

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Sources: World Intellectual Property Organization ( WIPO ). “Middle East and North Africa Consumer Report”: research into media consumption and habits of MENA internet users; Strategy & analysis.

A CONNECTED POPULATION READY FOR INNOVATIVE PRODUCTS

A SHIFTING MINDSET TOWARDS ENTREPRENEURHSIP

YOUTUBE VIEWS PER CAPITAKSA#1

AVERAGE FACEBOOK VIDEO CONSUMPTION

x2

MORE TIME SPENT ON SOCIAL MEDIA THAN THE US

UAE+43%|KSA+41%

WORLD GROWTH RATE OF PATENT APPLICATIONS

x2USE THE INTERNET DAILY83%

PREFER TO BE SELF-EMPLOYED73%

OF YOUTH FIND TRADITIONS OUTDATED AND EMBRACE NEW TECHNOLOGY

+50%

OF YOUTH PLAN TO START A BUSINESS WITHIN 5 YEARS

39%

MENA’s youth is rising to the innovation challenge

3

1,000

7,000

20,000

2014 2015 2016

Participation to entrepreneurship events is also on the rise

1,522

5,967

2008 2009 2010 2011 2012 2013 2014 2015 2016

4x

Linear growth in the number of presented projects.80,000+ individuals applied since inception in 2008.40% of idea-stage project launched afterwards.

2013 2014 2015 2016

2200 ≈ over 5kexpected3400 4600

Exponential rise in the number of attendees since 2014.

A 2013 grassroots movement that turned into a Global event.

Sources: MIT EF, RISEUP team, BDL

4The financing ecosystem is catching up with the rise of entrepreneurship

Investors (early & late VCs, family offices, corporate VCs)

X X

Sources: Arabnet, DIC ”State of Digital” 2013-2015; Wamda Research 2009-2012; Leap data

Angel Networks

Accelerator funds

9

30

12

12

13

64

221

Governmentsarealsostartingtosupporttheecosystem

à Lebanese Central Bank 331 circular

à Dubai’s Fintech sandbox, Museum of the Future

à Saudi vision 2030, Tunisia 2020

2008 2013 2016

+ 1.8 / year

+ 3.6 / year

+ 2.2 / year

+ 11.3 / year

+ 1.3 / year

+ 2.5 / year

5The ecosystem today looks well populated compared to only a few players 5 years ago

Sources: MENAscapes, LEAP Ventures

6The surge in financing was met by a plethora of new start-ups in the region

Numberoffundedstart-upsperyear

Sources: DIC Report, Wamda 2014 report, Leap Data

2839

54

99

126

182 185

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015

7MENA’s specialty: “copy + paste special”

Transportation71.7m in equity funding

Presence in 22 cities in MENA and Asia

CateringAcquired by Rocket Internet in 2015 for $170m

Leading restaurant delivery in GCC

EcommerceRaised $275m in latest financing round23 million visits per month

Content streaming$30m in financing

Largest music streaming app in MENA

8The need to copy is loosing ground to global tech innovation from MENA

Buildandoperateisbecomingattractiveforinternationalplayers

à Before, global companies weren’t appealed by MENA as:- There was a perceived complexity of the region- No international player had operations in MENA

à Now, global players have entered the market by launching operations in the region:- Buzzfeed- Airbnb- Uber- Facebook- Twitter- Google- Dropbox- MailChimp

Localentrepreneurshaveglobalambitions

à Now, MENA is experiencing:- a flux of returnees who bring ideas at the forefront of innovation- a flux of former employees of large digital players, who bring valuable insights- a second wave of innovation that learnt from the copycat experience

à Alibaba, M-Pesa, Spotify have demonstrated that global successes can originate anywhere.

9And MENA is naturally positioning itself as an Emerging Market innovator

PROBLEM TECH SOLUTIONS

Power shortageELECTRICITY Cost-effective battery storage solution, 24/7 electricity without interruption

Job search not adapted to

unconnectedEMPLOYMENT

Matches job-seekers and employers through SMS. Also expanded into patients and doctors, farmers and

product buyers

Water supply shortageWATER Purifying salt water through solar panels

Financial burden of after-school tutoringEDUCATION

Online educative video database, adapted to national curriculum

Physician shortageHEALTHCARE Augmented Reality telesurgery platform

Lack of culturally adapted credit marketplace

FINTECHShariah compliant crowd-funding and

peer-to-peer lending platform

10Some MENA tech start-ups are also addressing global problems

Drone-based solutionsApplications in Pipeline monitoring, Structure maintenance, Traffic, Wildfire, Agriculture…

In-App Feedback and Bug trackingHelping developers create better apps, and enhancing end-users bug reporting

experience.

Digital Identity ManagerApplication to protect online accounts from hackers and eliminate the need

to memorize passwords

3D Printing solutionsAutomatization of labor and time-

intensive steps in the diamond crafting process.

TROY DIMENSIONS

CleantechBlade-free wind turbine, producing cheap

and reliable energy

Communication techMakes cloud communications more

accessible, cost-efficient, and simpler to implement with solutions that scale.

Solar technology and integrationDevelops solar-powered water pumps for agriculture, energy independent building, off-grid solar integration.

11Several ventures are already global players

Bookwitty Unifonic

Chifco Energy24

Present in +115 countries; 50% of sales in US, 30% inEurope. Partnerships with JD.com and Alibaba in China.

Present in 150 countries, managing 5k+ accounts,through 10 offices worldwide including SF and Singapore.

Present in Maghreb, UK, South Africa, France and US. Deployment in Lebanon, factory in Bulgaria, jointventures to be deployed in Nigeria and Iraq.

12Despite the rise in venture capital, the region still experiences a lack of capital across the board

VentureCapitalinvestmentsAsa%ofGDPin2014

0.30%

0.62%

0.25%

0.15%0.12%

0.20%

0.02% 0.03% 0.016%

USA Israel India China UK Lebanon Saudi Arabia UAE MENA

2014 GDP $17,300 bn $300 bn $2,000 bn $10,300 bn $2,900 bn $45 bn $753 bn $399 bn $3,500 bn

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3%

63%

34%

2%

20%

78%

Seed SeriesA SeriesB

MiddleEast USA

The problem is even more acute when it comes to growth capital in the region to help start-ups go global

RisksoftheseriesBfundinggap

• Lack of rapidly available growth stage funding for revenue-generating startups

• Excessive competition among Seed / Series A funds

• Higher seed valuations

• Will force insider led rounds, leading to:

Ø higher risk concentrationØ higher failure rateØ opaque valuations

Sources : Thomson Reuters, Zawya On Eikon; Transactions with announced investments amounts onlyThe Wall Street Journal; The Growing Scarcity of Series B Venture Rounds 2015

Totalinvestmentsperstage(%,2014/2015)

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à Large exits are only possible when companies raise a proper funding.

à A successful US startup has raised an average of US$ 42M and has created an exit of US$ 243M on average.

à There are only 3 MENA companies that received more than US$ 42M in funding.

Why is growth capital important in tech companies?

15A huge financing opportunity to be seized, especially in countries with local talent pools

More available Growth Capital

& Capital in general

Globally ambitious Tech ventures

& Dynamic ecosystem

Successful Exits

à Egypt, Tunisia, Lebanon, Jordan, Morocco have local talent that thinks globally.

à Global tech companies need large talent pools and university hubs to function.

à Dubai will always be a hub for international expansion.

x

Maturing innovation ecosystemLocal players benefit from exits’ spill-overs

Region’s credibility as global innovator enhancedAttracting more investors

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Invest in MENA!

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