INNOVATIVE SAUDI START-UPS ATTRACT INVESTORS

Unifonic, the Riyadh-based cloud communications services, was among the biggest start-up stars in the Middle East North Africa (MENA) region last year, securing funding from venture capital heavyweights.

The company, which has been labelled as “the Twilio of rising markets”, closed a USD 21 million Series A funding programme led by Saudi Know-how Ventures (STV), and the rising market specialist fund Endeavor Catalyst, which is backed by LinkedIn co-founder Reid Hoffman, Riyad Taqnia Fund, Elm, and Raed Ventures.

The capital injection will be used to accelerate Unifonic’s expansion plans in multiple markets and industries, and support further product platform development. The profitable company already employs 100 people across five countries.

STV says it invested in Unifonic due to its role in the fast-growing cloud communications market. According to IDC, the Communication Platform as a Service (CPaaS) industry is forecast to grow from USD 867 million in 2016 to USD 8.2 billion in 2021. It also believes Unifonic is well-placed to capitalise on the opportunity that the industry presents.

In our view, Unifonic’s cloud-based communications platform is helping transform major industries,” STV said. “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 favourite 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 utilise SMS messages and voice calls in their systems and applications.

According to Magnitt, which tracks start-up deals in MENA, the Unifonic venture capital deal was the sixth largest in MENA last year, and the largest in the kingdom. Saudi start-ups accounted for 7% of MENA deals in 2018.

In the same vein, Lucidya, the Jeddah-based Arabic-focused social media monitoring tool, also raised USD 1.1 million (SAR 4 million) in Series A funding in January. The funding came from the newly established Business Incubators and Accelerators Company, the Small and Medium Enterprises General Authority (Monshaat), which invested through their VC arm, Abu Nayyan Holding, and other regional investors.

The company monitors online content on social media, websites and blogs to give real-time analytics on everything about the client and its competitors.

We’ve been able to raise this investment successfully due to the company’s outstanding performance and the substantial growth it has experienced in the last two years,” Lucidya’s founder and CEO Abdullah Asiri, told Menabytes.

This reinforces our positions among companies developing artificial-intelligence-powered technologies in the space of social media and digital channels analytics and monitoring. This investment will enable us to develop solutions and products at the highest standards.”

Meanwhile, Dubai-based Aramex acquired Saudi TAL for Commerce and Contract Company Ltd, for approximately USD 80 million.

Saudi Arabia is Aramex’s largest market in the Middle East and holds significant growth potential for the business,” said Bashar Obeid, chief executive officer of Aramex. “Our acquisition of Saudi TAL supports Saudi Arabia’s Vision 2030, which aims to encourage private sector investment to diversify the economy.

The examples above shows that the government’s efforts to boost SME culture is starting to pay off, with a number of small enterprises leveraging technology to develop exciting new products and services that are securing funding from prominent Saudi and regional venture capital companies.

The new budget further underscores the government’s desire to boost the environment for small to medium enterprises.

The Ministry of Finance’s 2019 budget statements outline the reimbursement of SME fees initiative and the creation of the Fund of Funds to invest in venture capital.

This has been complemented by the restructuring of the SMEs financing programme (KAFALAH), establishing a fund to invest in SMEs and a new framework for encouraging and supporting female entrepreneurs and improving their working conditions,” the statement said.

Another key initiative that will help SMES is the Spending Efficiency Realisation Centre (SERC), aimed at injecting efficiency in the government’s procurement.

SERC’s Strategic Purchasing Unit aims to raise the efficiency of government spending in addition to directing spending to support the development objectives, enhancing local content and supporting SMEs, as well as enhancing transparency and competitiveness.

The incentives from both the government and the large VCs will further nurture the country’s SME environment.