Companies that lack revenue generating business models will not be able to back up their value should they choose to go public, says Seafood Souq CEO Sean Dennis
Tech companies should “create a real business model rather than worry about it later”, according to the CEO of Dubai-based online marketplace Seafood Souq.
The B2B platform is looking to tackle seafood fraud, product mislabelling and high pricing by connecting international sellers with regional buyers through a 100 percent traceable supply chain in partnership with Emirates SkyCargo.
Speaking to Arabian Business, chief executive Sean Dennis - who is also the founder of US blockchain start-up Loyyal and e-commerce platform Century 21 - said what differentiates Seafood Souq from other tech companies is its profitability-focused business model.
The start-up’s low monthly costs allow it to generate revenue through low commission fees which could range from as low as zero percent to as high as 12 percent, depending on the type of fish.
“I started numerous tech companies in my life. I’ve had good experience doing this to a certain level… with both these last two companies [Loyyal, Century 21] getting to profitability, there has been a major aim which differentiates us from a lot of tech companies: it’s creating a real business model rather than worrying about it later.
“In [Seafood Souq] in particular, four of our founding team [members] are multi-start up founders. This isn’t our first time and we’re not going to this blind thinking that we’ll figure it out later. It’s done as a legitimate business need and there’s a legitimate way for us to actually make sure we cover our costs and hopefully make money at some point, very soon, as opposed to saying we’ll figure it out later,” he said.
Dennis said the start-up could breakeven in the next 12 months depending on the level of its expansion, as it aims to grow from Dubai to the rest of the UAE and GCC by 2020.
“Unlike most tech companies, who just go on data or market share, as a marketplace, we are within reach of being able to get to profitability. I think within 12 months, I will be looking to get very close to break-even point. That can change if we decide to go for more market share rather than a breakeven point, but we have the capability to get to cover our costs,” Dennis said.
He said investors are cautious when investing in tech companies as many do not adopt a revenue generating business model.
“It’s what makes it hard to invest in a lot of tech companies because again, even guys going for IPO in the [United] States, they get there, they float, everyone does very well for the first day, and then when they get actual people valuating their share values, they drop massively because they can’t possibly back up their value as lossmaking companies. I don’t ever want to be that,” Dennis said.
Seafood Souq was launched in June by Dennis and friends Ramie Murray (Middle East shellfish farm Dibba Bay Oysters), Denis Konoplev (UK-based AI platform Disperse) and Sheikh Fahim al Qasimi (UAE corporate advisory and investment firm AQ&P and department of government relations for the emirate of Sharjah).