A growing ecosystem has made it easier to set up businesses in the region, particularly in the last two years, according to Souq.com founder and CEO Ronaldo Mouchawar.
Speaking at the Arabian Business Start Up Academy in March, the chief executive said that the business environment has massively changed since 2005, when he launched his Dubai-based e-commerce website, which was acquired by global online retailer Amazon last year.
“When I started Souq, there was not a single [investor]… It was really hard to get seed funding. [But] the ecosystem has changed. The number of start-ups [has increased], because most of them run on mobile, so the ability to deliver a market has gotten easier, creating ideas has gotten easier, and there is now a seed funding environment,” he said.
Souq alone has invested in eight start-ups, including grocery app InstaShop and logistics firm Wing, which helped the website double its sales during White Friday last year.
“Our journey used to be that we have to go abroad to raise funding. Most of the capital we raised for Souq was from all over the world. I think there was a whole year that I spent all on a plane, because I was trying to get our funding round.
“Now, we have local support. And the good thing about locals is that they know the environment, so you don’t have to explain the Middle East. You can just explain your business. When we went abroad, we had to explain, ‘here is the Middle East, here is the opportunity, here is what can happen in the region, and here is the business that we run.’ And some people would say, ‘We love your business, but we’re not sure about the Middle East. Is it safe? How is the corruption in your areas? How is the adaptation of technology?," he said.
Mouchawar said proof that the environment has ‘drastically’ changed can be seen in Saudi Arabia’s bourgeoning start-up community.
“While it used to be only Jordan and the UAE, I see start-ups coming out of Saudi, something we’ve never seen before. Egypt has many now too. So we’re seeing that ecosystem evolve,” he said, adding, “[These] are amazing times for the region.”
The availability of connectivity and the fast development of technology in the region has also prompted more companies to invest in regional start-ups, with many funds particularly targeting the Middle East.
Furthermore, the Souq story has largely affected the region’s e-commerce industry, with the entry of global player Amazon encouraging businesses and investors to put their money in the region.
“The speed of investments even since the announcement of our [Amazon] deal has changed significantly,” said Mouchawar.
The founder initially set up Souq as an auction site, but ended up changing its business model to turn it into a B2C e-commerce platform.
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