March 27, 2019
I would have liked Careem to go public and remain independent because that is how you make the biggest statement about the maturity of the regional tech ecosystem. But unfortunately, the region is not mature and wouldn’t have been able to support such an initial public offering (IPO) due to regulatory, liquidity and other hurdles that the regional regulators have not yet been able to resolve.
This is my first and most important message here, you want companies to stay here to open the markets, change the regulation on foreign ownership and allow companies that don’t have a track record of profitability to list and let the market decide whether it values these companies rather than let regulators artificially interfere.
So I started with the challenging news, but here is the fantastic news for the ecosystem.
This sale to Uber proves that the region can have a unicorn that maintains and increases its value.
It also says that when you scale and prove that you can compete, you will be able to attract global investors whether strategic or any other kinds of investors. Uber in this case, General Atlantic in the case of Property Finder.
This means that the doom and gloom about the regional political and economic environment applies to certain sectors but not to tech and digital disrupters. They will thrive and grow and deliver stellar results regardless of the economic environment in the bricks and mortar economy.
Moreover, this acquisition marks the first substantial exit for the venture capital (VC) community in the region, most big VCs including STC Ventures, BECO, Wamda Capital and STV to name a few, invested and are going to reap massive returns to their limited partners.
Then there are the big conglomerates and families in the region, such as Kingdom Holdings and Al Tayyar. These are all regional investors who are at the core of supporting and investing in homegrown companies. They invest early and reap the benefits.
And all the amazing McKinsey and Company colleagues and angel investors who bet on Careem co-founders Mudassir Sheikha and Magnus Olsson early before the launch, they are going to do 10s of multiples on their investments. Go Angels!
Most importantly, this liquidity event will generate wealth to so many Careem employees like the region has never seen before. Not only will the founders get huge infusion of funds, but the generous stock option plan of the company means there will be tens if not hundreds of people who will either get millions or hundreds of thousands in paychecks.
This matters, because that is what entrepreneurship is all about – creating value and generating new wealth away from the traditional wealth generation in the region from inheritance or family businesses. This is completely new and unprecedented in its scope.
Last but not least what this means for the ecosystem is that so many massively talented people will leave their work at Careem and become new entrepreneurs, innovating and wanting to replicate what they saw at Careem, or become co-founders of already established startups or invest in startups.
This will be what the Maktoob sale to Yahoo did to the region in 2009 to the factor of 10s of X… a new era has arrived and this is going to be the era of the Careem graduates taking the region to the next level of innovation and company creation – creating new jobs, and new wealth.
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The Careem sale to Uber and how it affects the Mena startup ecosystem