The Middle East could be seeing more and more billion-dollar start-ups in the coming months, according to the CEO of ride-hailing company Careem.
It comes from a “magical combination” of top talent in the region choosing to build start-ups, and investors realizing that funding these entrepreneurs is a big opportunity, Mudassir Sheikha told Hadley Gamble as part of the virtual CNBC Evolve Global Summit.
The change came as a result of acquisitions by large U.S. companies and an acceleration in digital adoption spurred by the pandemic, he said.
U.S. e-commerce giant Amazon bought UAE-based online retailer Souq.com in 2017.
Meanwhile, Careem became the Middle East’s first unicorn — a start-up with a valuation of at least $1 billion — when Uber purchased the company for $3.1 billion in 2019. There are 16 unicorns in the Middle East and North Africa as of April this year, according to data from Statista.
“All of a sudden you have top talent choosing to do entrepreneurial activities, and you have investors realizing that this is a big opportunity, funding these entrepreneurs,” Sheikha said.
“It’s a magical combination,” he added.
“We’re not very far from having a few more unicorns in the region,” he said. “The momentum in the ecosystem is just incredible.”
In addition to funding and talent, another factor that could help create “a lot more unicorns” in the next few months and years is that the Middle East has “no shortage” of opportunities, said Sheikha.
“Even the services that we currently have on (Careem’s) super app such as ride hailing, food delivery, grocery delivery … most of these services have single-digit percent adoption of the entire market,” he said.
But there is also a gap in last-mile logistics and payment platforms for businesses, and Careem is focused on that opportunity with its delivery service Careem Express and digital wallet Careem Pay.
Some aspects of becoming an entrepreneur in the region have been made easier, but scaling a business will still be difficult, Sheikha said.
“Fundraising is becoming easier, which is a huge, huge blessing,” he said. “Finding top talent to build these products and build these businesses is starting to become easy, because top talent sees the value in building these entrepreneurial ventures.”
Previously, many people preferred to work for multinational companies rather than start their own firms, he said.
Growing and expanding a business, however, will still be hard, Sheikha said. That involves new markets, gaining trust and loyalty from customers, while dealing with the “operational complexities” of running a technology company in the Middle East, he said.
“It’s not easy,” he said. “My sense is that funding is going to be solved, initial talent will be solved.”
But growing that talent pool and finding people who are able to expand the business will be “the next frontier,” he said.
