Elissa Freiha, angel investor and founder of WOMENA, spoke to Inc. Arabia about entrepreneurship in the MENA region. Shot at Step Conference 2016 in Dubai.
Source: Inc Arabia
Elissa Freiha, angel investor and founder of WOMENA, spoke to Inc. Arabia about entrepreneurship in the MENA region. Shot at Step Conference 2016 in Dubai.
Source: Inc Arabia
When you think of Silicon Valley what do you think of? Maybe you think of Elon Musk going to space or Peter Thiel searching for immortality. Maybe you think of scrappy entrepreneurs using breakthrough technologies to change the world. In Silicon Valley, entrepreneurs benefit from networks that provide insider information, venture capital, human capital, mentorship, and support resources galore. It has a sprinkling of hippie counterculture in there to encourage outside-the-box thinking.
Now what do you think of when you think of an emerging startup ecosystem, such as the one in Dubai? What is Dubai’s brand as a startup ecosystem? What kind of startups come out of here? I’d argue Dubai has some advantages to leverage:
Startups in emerging ecosystems have major opportunities where they can be competitive by specializing where they have competitive advantages. At the same time, there are enough resources for ecosystem builders to develop down one vertical where there are significant, existing advantages which make it make sense to focus on a specific market. Look at London and fintech. Or Tokyo for robotics. A startup should be where it has the highest chances of success and in some cases that’s Dubai.
Questions related to startup success are overlooked in startup education available now because this education is created from Silicon Valley experiences most of the time. Based on the emerging ecosystem advantages and disadvantages, I’ve outlined questions a founder starting in an emerging startup ecosystem should answer in assessing feasibility in addition to the basics. This can also be used by investors interested in startups in emerging markets:
A few of my favorites that answered these questions well are:
They cater to local problems, are scalable regionally, and use technology to beat out old systems currently in place. These are the types of startups which will build the startup ecosystem in Dubai and give it a respected brand.
Successful startups are being built here now and will be built in Dubai in the future. The ecosystem has a lot to offer and I look forward to seeing it evolve and grow.
Contact us if you want to talk investment or startup growth strategies.
Originally posted on Medium.
Startups in the MENA region received over $870M investments last year. That is a good indicator that there is a growing interest in the startup ecosystem and investors are getting comfortable investing in technology and not just in the traditional asset class such as real estate.
At WOMENA, we’ve reviewed over 900 pitch decks and funded six startups to date which translates to 0.6% funding success. If you are a startup that is fundraising in the region, how will you stand out from the crowd?
If you are most startups that search for investors through Google, you’ll end up with about 500,000 search results for “MENA tech investors.” After combing through each of them, you will get an ample hit list of investors to spam your pitch deck with. Spamming does not make a good impression, because like any normal person, investors favor more not just brilliant ideas but also those that they have an established relationship with.
So if you are a resourceful fundraiser, you will follow this tip from Silicon Valley VCs Brad Feld and Jason Mendelson, “engaging a VC that you don’t know via social media can be useful as a starting point to develop a relationship.”
By following investors on social media, it will not only give you good insight into how they think and their investment thesis but it will also enable you to assess their fit for your startup. This will increase your odds of success during a pitch meeting as you will be able to tailor fit your pitch to hit their sweet spot.
To give you a jumpstart, we’ve curated a comprehensive list of interesting VCs, angel investors, and notable high net worth individuals from the MENA region:
Did I miss someone that should be on the list? Ping me at @dulcelada. I will be updating this list regularly.
WOMENA, a Middle East based angel group has recently completed two more investments in companies Bayzat and Souqalmal, bringing the total amount invested since launch to $462,000. With these two deals, WOMENA has increased the value of investments made in 2016 by 400% compared to 2015’s investments.
Bayzat is a cloud-based platform that targets the UAE’s $9.1 billion insurance industry by offering a technology solution that simplifies the process of finding the most suitable medical insurance. WOMENA joined in on a $3.5 million funding round led by VC firm, Beco Capital.
Souqalmal is the Middle East’s leading financial comparison website, allowing users to compare a wide range of products and services from credit cards to nurseries. WOMENA participated in Souqalmal’s bridge round.
Speaking about WOMENA’s new investments, WOMENA co-founder Elissa Freiha commented, “WOMENA and its investors are very proud of our participation in these new rounds, not only because they are both great companies situated in fast growing markets, but also because they are the latest stage deals that we’ve participated in this far. These investments demonstrate our maturing investor base, and gives us confidence that we’ll continue to increase the number and value of our investments in 2017.”
The urgent need for angel investors in MENA’s ecosystem has been recently been highlighted in MAGNITT’s finding that 47% of registered startups are looking for angel funding, a need which WOMENA aims to meet through its membership platform, regular pitch meetings and investor education events.
WOMENA is a UAE based group of investors working to support innovation diversity and economic growth in the MENA region through encouraging women to invest in early stage tech companies. WOMENA hosts an angel investment membership platform that provides high net worth women and investors a supportive, professional network and dependable guidance to invest where we facilitate the investment process from sourcing to close. Our goal is to change the trend and empower Middle Eastern women to become investors rather than consumers.
“Most female angel investors are currently, or have been, founders of a startup. So, I believe that having female venture capitalists and angel investors onboard positively impacts the investment process, because they have walked in our proverbial shoes and they understand how we think, what we need and how to give it to us. By increasing the number of women in the sphere of investment, I believe that the number of investment funds founded and staffed by female investors in the region will increase. Unfortunately, at the moment, there are very few well-known female-run investment funds in the MENA. However, over time, I know that this will change. Thus, providing Arab female entrepreneurs with more financing options and eliminating the need to seek investment abroad.” Rola Fayyad, Founder and CEO of Jordan-based startup Friendture.
A recent survey of more than 220 early stage digital startups based in the UK revealed “that male entrepreneurs are 86% more likely to be VC funded than their female counterparts and men were 59% more likely to secure angel investment.” To make matters worse, only 6% of global VC partners are women1, leaving female entrepreneurs at a considerable disadvantage. Especially in the MENA region, where the legal, cultural and economic barriers are numerous. Thus, making the presence of “home-grown” female angel investors and VCs even more vital.
What are the two main benefits of having more female investors in the MENA region?
Firstly, the more angel investors there are, the more angel investor dollars there will be. So, by encouraging more women in the MENA region to join the investment scene, we will increase the amount of financing available to entrepreneurs in the Arab world.
Secondly, by increasing the number of “home-grown” female investors and investment funds, we can unleash more of the amazing talent and knowledge that is hidden in the region’s women.
So the question remains, what can we do in the MENA region to promote “female investment?”
Outside of lists such as Arabian Business’ The World’s 100 Most Powerful Arab Women2 it can be difficult to find literature that highlights women’s contributions within various industries in the MENA- especially in the field of investment. While some link this lack of recognition to the Arab world’s conservative attitudes towards female participation in the public sphere, others link it to women’s general lack of need to receive public acknowledgment for their contributions. Either way, we believe that there should be more platforms that inspire women in the region to aspire to greatness. In an effort to do just that, we established “Women Crush Wednesday” on our Instagram account to highlight and celebrate some of the world’s most awesome boss ladies and their accomplishments.
One of WOMENA’s main missions is to educate female investors on how they can invest their angel dollars in MENA-based startups. By hosting investment workshops, webinars and events, WOMENA aims to build a base of empowered female angel investors in the Arab world, who can effectively invest their capital in the region. However, the Arab world still needs more institutions to craft educational programs to help female startup founders develop the strategies that they need to navigate, and overcome, some of the deeply entrenched gender-biases that prevent them from accessing the capital that they need to survive.
This is the second part of my recent trip to Tunisia and Morocco. Check out the first part of this travel series: Challenges and Opportunities for Startup Investors in Tunisia and Morocco – Part I.
Next we flew to Morocco. There is a special customs procedure between Tunisia and Morocco and it took us an hour to get through. The officer was quite convinced that I wasn’t really me. I got taken to a side room to be questioned. I cracked a joke in garbled French, “Why, you don’t think it’s me cause I’m too pretty to be the girl in the picture?” They chuckle and let me through. If all else fails, make them laugh.
We stay in downtown Casablanca and are right next to the main souk downtown and I tear through it and discover Moroccan shoes, pottery, woodwork. It is fantastic and cheap. Why aren’t they exporting this and charging five times as much? Because licensing is difficult and they are poor, uneducated street merchants. It’s sad to see so much potential being strangled.
Kenza Lahlou from Startup Your Life was in charge of organizing and she did a great job. We were so busy I wouldn’t be able to tell you everything we did, but I left very impressed and excited to come back to Morocco. My main takeaways from Morocco are that they need to do more to publicize what they have to offer, and I need to brush up on my French. We met entrepreneurs that I’m still in contact with as potential investments. We met investors whom I will be happy to co-invest with in the future. We met ecosystem players who work hard and have their hearts in the right place. We met government officials who blew my mind with their strategic preparedness; they had a brilliant answer for everything I threw at them.
A few of the startups I’ve kept in touch with are OmniUp, Ma-Navette, and DabaDoc in Morocco. I met private angels in telecom and… horse racing. All guys, unfortunately no ladies coming from the investment side, but at least they were brilliant guys!
I think my favorite session was in a mini outdoor majlis on the rooftop of a co-working space in Rabat with government officials. Watch Morocco. There was a French-English live translation and I found it amusing to listen to the translator through the headphones impassionedly arguing with himself in different languages. I asked “What does it feel like to fight with yourself?” He said, “I feel crazy!” Poor guy.
Similar to Tunisia, capital controls were cited as a problem and bankruptcy and licensing could be easier, but the decision makers I met were well aware and have great plans to deal with structural and regulatory hurdles. And similar to Tunisia, founders should be thinking bigger, regionally if not globally, and I’d like to see a higher volume of startups. In order to address volume, change is needed at a policy and macroeconomic level to bring the brilliant Moroccan diaspora home from France. And Morocco shouldn’t aim to just utilize their own talent and resources but to become a gateway between Africa and Europe for startups with lower startup costs. They really have the conditions to become that hub. But they’re on the right track at high levels. Watch Morocco.
I had an extra morning after everyone left, so I went to King Hassan mosque – beautiful. When I left I had an hour before I had to be back at the hotel to pack so I thought I would visit one more souk. I hailed a taxi and asked to be taken back to the souk and the driver offered to take me to an exposition filled with even better arts and crafts than I would see at the souk. Intrigued, of course, I agreed. He took me to his friend’s store called Exposition. So I wasted a very precious half hour before my flight out and almost missed it and remembered an important lesson I seem to have forgotten over and over: when your friendly taxi driver says he’ll be your guide and take you somewhere better than where you wanted to go, he is taking you to his friend’s store, which is actually worse. I learned it in Egypt, in Lebanon, in Brazil, and again in Morocco.
It was an amazing learning experience and I built links with the decision makers and entrepreneurs in these countries where I previously had none – I’m sure business will get done from this trip. This is a really fantastic initiative by the US State Department and I hope it continues. I’m happy to see foreign policy focused on leading change by example and education rather than force.
Obama administration created the office of Special Representative to Muslim Communities in the State Department in order to promote economic development and combat extremism. I was fortunate enough to be invited to be part of a delegation promoting entrepreneurship in Tunisia and Morocco.
The delegation was myself, representing the WOMENA – Angel Investment Network, Yasmeen Turayhi, Global Product Marketing Lead at AdRoll, and Sharif El Badawi, Partner at 500 Startups. We interfaced with entrepreneurs, investors, and government officials, in order to come up with policy recommendations to promote entrepreneurship in Morocco and Tunisia.
In Tunisia, a nice man named Sami from the Embassy ushered us past the lines, and we got into a bulletproof SUV. And there is a file with my name waiting on the seat inside and a camera in the car. Pretty badass. From what I saw looking out the window, it is a beautiful country and I enjoy seeing it on the way to the hotel. I was working the rest of the time so didn’t see much but I think Tunisia could get a lot of tourism.
The trip started with an informal lunch and we get to know the embassy staff and State Dept representatives. This is followed by workshops given by Yasmeen and Sharif, both well-received. Next we heard pitches from Tunisian startups. Most are from Founder Institute. One company builds pre-fabricated houses. One does AI for cultural heritage sites to bring them to life for tourists. One is a loyalty program. One is a platform connecting pet owners with vets. All in all we see about ten pitches.
I was really impressed with the quality of the pitches, as coached by the Founder Institute. I could see how bright and passionate the founders are. A lot are asking for a seed round of $15k USD. $20k. $50k. And when these brilliant people are asking for a $20k seed round that will last them a year, a small part of me just wants to hand them a fistful of cash and say follow your dreeaaaaammmms!!! And run off laughing. But I’ll save that for when I’m old and rich and slightly insane. Seriously, #goals.
The thing is, Tunisia is a country of 11 million people and regulation is not conducive to startup investment. Market matters to startup growth and to startup investors. I would advise founders in Tunisia and places like it to think globally, or at the least, regionally. Plan to scale outside your country. Consider global competition as relevant. The late stage entrepreneurs I met in Tunisia became late stage by growing into France.
The next day, we were part of a roundtable hosted by Carthage Business Angels “World Class Startups, MENA Ecosystem and Women Entrepreneurship Development.” It was a closed session for ecosystem players.
Among our discussions, the common themes were:
Capital controls: They were cited as a main barrier. Liberalizing regulation around this will encourage more foreign direct investment and more startup activity.
Foreign ownership regulations: Tunisian startups cited that they could not have a holding company on top of their local incorporation. Tunisian regulation should change to allow full foreign ownership. This, of course is a bandaid, the real solution being a regulatory environment friendly to startups and startup investment activity, but even if that was undertaken, it would take the international community seeing precedent of fair enforcement over years to come around, so these two should be pursued concurrently.
I look forward to coming back to Tunisia when inroads are made in these areas.
Up next is the second part of this trip: Challenges and Opportunities for Startup Investors in Tunisia and Morocco – Part II.
Three years ago, WOMENA began as an idea formed on a boat between two friends in the middle of the Greek isles under the stars. One year later, WOMENA launched as a platform to encourage women to start angel investing. Two years later again under the stars, WOMENA celebrated our anniversary and announced milestones such as 40 active angel investors, nearly 2 million AED invested in 6 portfolio companies, with an audience of 500,000 reached!
On November 2nd, over 120 investors and ecosystem members gathered at La Cantine du Fauborg to celebrate the impressive impact that female investors have made in the local ecosystem through WOMENA.
At the event, we not only celebrated WOMENA’s progress but also the tremendous growth we’ve seen in the ecosystem. We’re most proud of the successes of our two first portfolio companies, Melltoo and AlemHealth who have seen nearly 10x growth since we’ve invested in them a year a half ago. We’re also excited to announce two new portfolio companies, Bayzat and Souqalmal, who we expect to see great things from in the future.
But we’re not content to just stop there. In 2017, we aim to double the number of angel investments we make and double the number of active investors in our networks–that’s 40 more angels investing in the ecosystem.
We also want to work with governments, corporates and institutions to create a new generation of educated investors through education and awareness.
And our work has never been more urgent. MENA startup database MAGNITT has just released a report highlighting the major funding gap that early stage startups in MENA experience. According to the report, although 47% of MENA startups on MAGNITT are seeking to raise angel rounds, there are only an estimated 200 angels actively making investments. This coming year, WOMENA will work even harder to bridge that funding gap by developing a new generation of angel investors and encouraging women to invest in tech startups.
This is what we and you all have the opportunity to change, as angel investors. And the way we change that is: WE WRITE CHEQUES. And our cheques provide jobs, drive innovation and provide a place for the Middle East in the global innovation economy.
In the coming year, we hope we will see many more of you join us as angel investors! If you’re interested in trying it out, send us a line at email@example.com and we’ll invite you to our upcoming pitch event!
Check out the full photos on WOMENA’s Facebook page. Here’s to another year of #WOMENTUM.
In the news:
From October 16-20th is GITEX Technology Week— the world’s gathering place for all who thrive on the business of technology. In 2015, more than 146,000 attendees from across the globe gathered amongst one million net square feet of exhibit space.
This year, GITEX is getting in on the startup movement, bringing GITEX Startups, the largest global startup movement to Dubai, gathering 400 exciting startups from 40 countries. The GITEX Startup Investor Conference will be held in parallel, featuring over 30 international speakers and 450 members of the global investment community. WOMENA will be partnering with GITEX Startups Investor Conference to bring the attention of investors and technologists to the impact angel investors can have on building an ecosystem.
With ICT spending in the region to hit $260 Billion in 2016 and Dubai ranked second globally in government procurement of advanced, next-gen technology products, the region is strategically transitioning itself with growing appetite for smart and innovative solutions. WOMENA’s participation in the conference will aim to showcase that angel investors are needed more than ever to fund innovation and startups.
This GITEX, WOMENA will be hosting two panels:
Elissa Freiha, co-founder of WOMENA will be hosting a panel called ‘Gender Diversity in Investment’. Speakers will include:
Chantalle Dumonceaux, co-founder of WOMENA will be hosting a panel discussion on ‘Angel Investors and Their Place in Ecosystem Building’, where successful angel investors will be discussing the impact that angels can make on building an ecosystem. Speakers include:
Wrappup is an award winning, innovative startup that is revolutionizing the way people take notes. The app they developed is a meeting productivity tool that uses smart voice recording to build playable summary notes and make meeting discussion instantly searchable. At the push of a button, users tag and organize the most important points of discussion as contextualized notes. Decisions and action items are captured, annotated, and stored in a collaborative work-space for future review.
The company was founded by techies Rami Salman, Ayush Chordia, and Rishav Jalan at a Hackathon and is growing fast. After winning the grand cash prize at Angelhack’s Demo Day in Silicon Valley, Wrappup has been partnering with some of the most well-known enterprises to deploy the product, including IBM and Microsoft (they even demonstrated their product in a meeting with Satya Nadella!). Wrappup pitched at our March pitch event, and WOMENA angel investors invested in Wrappup alongside Arzan Venture Capital, Beco Capital, Silicon Oasis Founders and Dubai Angels.
At our recent webinar on the topic of ‘How to Pitch to Investors’, we invited Wrappup co-founder Rami Salman to share his experience and insights of raising capital in MENA and how he got funded by WOMENA and answer questions from entrepreneurs. We’ve summarized his interview here.
Q: How did you get in contact with WOMENA?
WOMENA is a contact we got through one of our lead investors. This concept is really important for entrepreneurs—find that one lead investor and if you get that one champion behind you, you can come in with so much more firepower to any following investment meetings.
Q: Was seeking investment from angels and necessity or a strategic decision?
Anyone seeking investment is going to want to talk to angels first and foremost. These are the kinds of people that will tend to go outside the bounds of what might make sense on paper and are willing to take a bet on you as a person and your team. Angels are a good place to test the waters of investment and understand some of the questions that you’ll be receiving the bounds of what you might be able to receive. VCs are going to be a lot more structured and targeted in terms of what they’re looking for in terms of their strategy and what they’re looking for, whereas you can wow angels with some piece of technology or your passion for the product or business.
Angel groups, such as WOMENA, probably sit closer to a VC level, with a range of experience and perspectives. You’re going to probably have to answer a lot of deep questions from a group of intelligent investors like WOMENA. So definitely try both individual angels and angel groups, but keep in mind that angels are savvy investors as well so you have to be prepared when you approach them.
Q: How long does the due diligence and the pre-investment process take?
You have to understand that when you’re raising your round, unless you’re really exploding and gaining a lot of traction, you’re not in the driver’s seat when it comes to timeframe. It’s always going to be to the investor’s advantage to take their time, understand your business and evaluate you throughout the process. So in our case, we got a verbal agreement in November, and we actually closed the round and received the money in the bank on June 2016—a six month span. But WOMENA’s investment process was quick—only two months.
The important thing is to use that time to your advantage. We kept on building and delivering and getting things to update the investors with, whether it was a new functionality or a new contract signed, and that keeps the momentum alive, and that makes you look like a hot deal.
Q: How do you negotiate or discuss your valuation?
In negotiation, it’s all about leverage. So if you don’t have leverage, you have to manufacture it. Our leverage at the time was all about Silicon Valley. We were flying out there, we had offers to stay there, these offers were within a certain range of valuation and the only reason we would come back is if investors here would match that. So that leverage was there and we managed to take advantage of that. But in a case where no one is really fighting for you, you have to make it seem like they are—you want the investor to feel like he or she might be missing out.
As far as choosing the exact number, regionally there are some standard ranges. Companies at the seed are going to be in the $1-3 million dollar valuation range, and Series A can be between $5-10 million. Entrepreneurs can expect to give up 15-30% of the company with every funding round.
But the most important thing when it comes to valuation is for you to accurately evaluate how much you need to survive until the next round. The only thing in your control is how much you’re going to spend to make your business worthwhile. It’s important for you to know what you need, and then negotiate equity and valuation within that range.
Q: What kind of traction did you have before approaching investors and WOMENA in particular?
As we’re a SAAS product, our traction was based on the types of companies we could secure. We focused on companies that would be high-risk, high-reward and big names that would make us look great. So we had agreements with Emirates Airlines to deploy the app in their internal app store. We also struck partnerships with IBM and Microsoft, and we hustled like crazy. Every person that I know that worked in a large enterprise got an email from me asking them to test out Wrappup in a meeting, so we got a lot more traction than if we had just released it on the PlayStore. So it’s really about knowing what metrics matter to your investor and then showing traction in that metric.
Q: How much USP do you disclose to investors without giving away information to a competitor?
In Wrappup’s case, our USP was our technology, so I presented everything that our algorithm does, but that doesn’t necessarily explain how the technology is built, so our case is a bit different. But I would say that if you’re scared of sharing your USP, then stop being scared. Every idea has been had before. It’s not about the idea, it’s about the execution. Your USP should be very public and very clear. You should own it enough that you’re not afraid to talk about it. The real question should be, ‘what barriers to entry exist and what is your competitive advantage’ so that others cannot do it better than you.
Q: How do you know when you’re ready to fundraise?
I think you need to have milestones, accomplishments that you’ve hit, to really get the value you want. You want to get your investor on board right before or after you hit a very important milestone. That’s when you can get the best terms.
Angel investors look for proof of concept, traction and customer validation, because angel investing and venture capital is by nature risky, so they need those metrics. If you don’t have proof of concept, don’t bother. You should ask yourself, how urgent is it to fundraise in terms of holding off your competitors? When you get money from investors, you’re in a much better position in the market. If you’re in a very competitive market, you’re going to want to have as much money in your arsenal as possible.
Also keep in mind that if you’ve never raised funds before, you have no idea how much effort it takes and it will take longer than you expect. Talk to any entrepreneur in the region and they will tell you it’ll take at least six months to fundraise in the Middle East. And because you don’t know how long it’s going to take, you gotta keep your ears to the ground and make sure you start well before you’re in desperate need of the capital.
Q: What was the best piece of advice you got from any of your investors?
Once I got asked this question from an investor,”What is the one metric that would define your growth?” That question was so hard for me to answer, and to this day it nags at me that I can’t define one metric. So I think the best piece of advice is actually the one question that you don’t know how to answer. Becuase that’s what you’ll learn from your investors. Although the questions that you know how to answer, or the encouragement that they give you makes you feel good, but I personally like to do the things that I suck at, and that’s how I learn.
So I think trying to find out the answer to that question that you don’t know the answer to is what will be the most helpful to you in the end, even though it’s not advice ‘per se’. The best investors ask the hardest questions, because that is really the best way to help a founder.