Fadi Ghandour’s willingness to seek out new opportunities as an entrepreneur and to invest in developing the entrepreneurship sector throughout the MENA region has made him a household name, both as an expert renowned for his strategic business acumen and as a mentor to young innovators.
Having played a founding or leading role in many substantial initiatives, including of course Aramex, of which he is the Founder and current Vice Chairman, his current focus is on supporting the emergence and growth of new technology, as well as reducing inequality and marginalization through investment in microbusinesses and micro-entrepreneurs.
Mr. Ghandour’s work as the Founder and Chairman of Ruwwad for Development and as the Managing Partner of MENA Venture Investments speak to his commitment to reducing social inequality and supporting the emergence of early-stage tech initiatives and innovation, both of which he writes about regularly.
The Executive Chairman of Wamda Group, Mr. Ghandour speaks to Law Today about the work of Wamda Capital, a new venture capital fund focusing on technology investments in the Arab World.
LT: Could you give us a brief overview of Wamda Capital and its main areas of focus? What are the core goals you have achieved so far and that you hope to achieve in the future with this venture?
FG: Wamda Capital is a multi-stage, sector agnostic venture capital firm; we are focusing on digitally enabled startups. In 2016, we completed our fundraising with a total of $70M in commitments and, to date, we have invested in a total of 20 entities. We have been able to support the growth of some of the region’s leading companies including Careem, Kharabeesh, Step Group and Mumzworld.
We hold a strong belief in startups being the creators and catalysts of new sources of wealth and, as such, our objective is to invest (and keep on investing) in remarkable entrepreneurs who are building companies that positively impact the region’s economy, and will continue to change its landscape in a meaningful way.
If you look at one of our partner companies, Careem, for example, it has successfully raised $350M from global and regional investors, and has become Wamda’s first $1B company and another unicorn for the region. In Saudi Arabia, Careem will hopefully be playing its part in the national plan to increase the female workforce to 28% in the next five years, by helping the country’s working women circumvent the challenge of transportation. Careem as a business is also aiming to employ 70,000 Saudi nationals in 2017. So its collective regional impact is substantial.
Our approach as Wamda has always been to be community-oriented and to be more than just a financial investor. As a platform, Wamda offers entrepreneurs educational content as well as a variety of community programs, bringing together diverse stakeholders in the startup ecosystem across the region. Building on these interactions, a number of startups have found partners, investors, clients, and talent – and we aim to continue to serve as a go-to resource and platform for entrepreneurs.
LT: How would you characterize the technology entrepreneurship ecosystem in the MENA region at the moment? How has it been growing?
FG: This is a very exciting time to be part of the MENA startup ecosystem. Over the past five to six years, the number of companies valued at over $50M has significantly increased (from 1 in 2010 to around 20 today). However, the landscape has also changed. While only a few years ago many companies were based in Jordan and Egypt, our research has shown that the ecosystem has been witnessing a geographic shift.
Most new companies gaining traction in revenues and users are based in Dubai or Saudi Arabia, or have moved to those two locations to scale, accelerate growth and boost revenue. Many of these startups, however, still look at Jordan, Lebanon, and Egypt as sources of talent.
LT: What is your vision for this ecosystem and how would you like to see it developing? What do you see as being the most exciting present and future developments?
FG: Across the region, there is a general move towards embracing the role of entrepreneurship in building dynamic and diversified economies. And we’ve seen different stakeholders becoming more active. In the last five years, the number of supporting institutions has grown over twofold. Just to give a few examples, during this time the Arab world has witnessed the launch of its first Cloud accelerator (backed by Amazon), its first Fintech accelerator (backed by PayFort) and, more recently, its first agritech accelerator (backed by the Embassy of the Kingdom of Netherlands and Berytech).
Corporations have an increasing appetite to work with or support startups, with the telecom industry being one of the first drivers of this type of collaboration in the MENA region in 2013, and others following suit shortly after. Governments are becoming more supportive as well, with the UAE recently serving up a new entry visa scheme to attract talent, and Bahrain relaxing foreign ownership restrictions. Universities, and to a broader extent academia, are launching or collaborating on initiatives to boost creation, support innovators and encourage entrepreneurship.
With both the private and public sector injecting more capital and providing better infrastructure for the startup world, the entrepreneurship ecosystem will witness an increase in activity set to guide the region into the fourth industrial revolution. So we’re very optimistic.
LT: What would you say are the main factors supporting entrepreneurship in the MENA region?
FG: The increase in support extended to startups is promising and encourages would-be entrepreneurs to begin working. But the MENA region also has attributes that make it a very appealing market globally. The region’s population is young, digitally connected and very active online. For example, Saudi Arabia leads the world in the consumption of digital content per capita across other channels. For entrepreneurs, opportunities like this are massive.
LT: And what would you term the main impediments or barriers to the growth of the entrepreneurship ecosystem in the region?
FG: We must directly acknowledge that entrepreneurs pursue opportunity in taxing circumstances. Although support for entrepreneurs has increased, there is still some work to be done on the policy and regulation side in order to create a more enabling, entrepreneurship-friendly environment. Startups, by nature, need to remain nimble and flexible, therefore overly stringent labor laws prevent them from rapidly scaling their operations or from relocating teams across the region.
Furthermore, many legal jurisdictions across the region do not recognize employee stock options as a valid financial instrument, therefore offering equity to key team members to encourage long-term commitment becomes difficult and more complicated to structure.
The absence of bankruptcy laws in some MENA countries discourages banks from lending to startups at fragile yet strategic points in their journeys. This could, as a result, affect investment activity.
In addition, expanding into and entering new, neighboring markets remains a challenge. The overall regional market remains fragmented, with differing regulations in each jurisdiction.
Regulations and restrictions such as those on foreign ownership remain a significant obstacle to the free movement of capital and talent.
LT: How could law firms, lawyers and legislators better help entrepreneurs and the venture capitalists who are supporting them?
FG: I think law firms could be more supportive of early stage companies, by offering services tailored to their needs and at startup-friendly price points. As those companies grow, their business will provide more and more revenue to the law firms that supported them early on, so it is a sound approach that would have multiple beneficial results.
LT: Could you talk a little about your experiences of mentoring, advising and guiding aspiring and existing entrepreneurs? How do these advisory relationships work most effectively?
FG: We have always believed that a strong mentorship system is core to supporting entrepreneurship. In 2012, we launched Mix N’ Mentor, a community-centric event that brings entrepreneurs together with industry experts and investors to discuss specific startup opportunities, address challenges and share advice. For us, engaging the community whenever possible, inviting experts outside of the usual selection of mentors, and evaluating the event’s impact through interviews and surveys were essential components leading to the format’s success.
During the last five years, as we have been hosting Mix N’ Mentor, we have also been able to observe a number of entrepreneurs crossing over and taking on the role of mentors themselves. We have had startups come back to contribute as partners, most recently with Lunch:on catering for Mix N’ Mentor Dubai. Entrepreneurs have a great sense of ownership of their future and a strong sense of community, because these are the things that have inspired and helped them along their journeys; consequently, they are often the first to give back.
A few years ago, we noticed that there was significant interest amongst corporations in engaging with startups at our events, so we launched the Marketplace edition of Mix N’ Mentor, where entrepreneurs could look for partnerships with corporations. The extent to which both the corporations and the startups were motivated to work with one another was striking, but so was the lack of proper communication between them. Although many corporations are incentivized, their efforts are sometimes disparate and mostly CSR-driven. Corporate-startup collaborations are a very exciting space to explore, and we urge more corporations to dedicate resources to building strong relationships with up-and-coming startups. PayFort is an example of an entity that has done this well.