The anatomy of an exit in the Middle East

Following the high profile exit of Careem, and the launch of multiple startups in the region have given rise to curiosity. To understand the anatomy of an exit, one needs to remember that there are many factors that play a role.

For one, there are many more companies in the region today with revenues upwards of $10 million. This is the result of larger scale operations, which naturally attract acquirers. Moreover, the tech startups are changing the business dynamics for traditional industries, which is forcing the later to take notice, and perhaps even merge or acquire these startups to maintain their leading positions.

On the other hand, the growth of the startups is also attracting international interest, as the Middle East remains one of the few untapped markets with immense growth potential. Moreover, some of the world’s largest sovereign wealth funds are from the region, who have so far been relatively inactive, are looking to make the most of the growth potential of scalable startups.

Furthermore, VC investors generally sent up in the region between 2012 and 2015, which means they are now entering their harvesting period following their 5-year investment period. As they come under pressure to give back the money to the fund investors, VCs typically actively market the startups it invested in, along with increasing the pressure on these companies to exit.

However, there are other ways in which investors can exit, such as secondary fundraising rounds, whereby it can sell its shares to another investor. Read more about the anatomy of an exit in the Middle East here.