By Amir Farha
I’m sure everyone has had enough time to absorb the news that the Saudi Public Investment Fund invested $3.5bn into Uber, making it the largest growth investment in any private tech company in history.
Now that’s a lot of money from a country that is going through a restructuring driven by the need to diversify away from oil and create jobs for their people.
It’s hard to describe my emotions when looking at such an investment, especially when my livelihood is intertwined with the success of the region’s entrepreneurs, rather than the success of the ones outside it. At first, I was extremely disappointed; thinking how this is yet another example of how Arabs continue to follow others, turning to the West for inspiration instead of their own.
I then took some more time to think about it and understand the motives behind this investment. My conclusion is that whilst it’s great to see governments investing in technology, I feel that the capital deployed could have been put to better use and/or invested in other assets in a way that creates a win-win situation for everyone. Sadly, it wasn’t.
Why, I ask myself? Why not invest in Uber AND Careem? What impact could Uber have on the Saudi population that Careem wouldn’t? What is the difference in diversification between both companies? Is it a way to hedge their investments by not being involved with a regional player, but global one instead? Couldn’t they just invest in another company like AirBnB, Palantir, etc? Why choose a direct competitor to a local player? Are they trying to move money outside the region? Are they looking to flex their muscles and signal to the market that they are influential on a global scale?
Don’t get me wrong, I am not criticizing the move, but re-emphasizing the need to support our local startups — not just with infrastructure, but with capital, and not just with “noise” but with action.
I’ve spent the past 4 years building a venture capital firm with my partners and colleagues, where our mission is to empower regional entrepreneurs and give them access to the knowledge, capital and resources they need to succeed. We define success by creating wealth and jobs, driving economic growth, and building role models and mentors for our future generations of entrepreneurs. It’s a long-term game, and a tough one at that. When we started, and as we continue to grow, we have had to raise capital to execute our plan, and that capital comes from investors both inside and outside of the region.
When speaking to potential regional investors and explaining the case to invest in the early stage technology space in the Middle East, it’s always a struggle, and much more so than when speaking to international investors, who are more knowledgeable of the technology sector and are excited by emerging markets. Most of the regional investors don’t believe in their people, the entrepreneurs, or the region’s potential. They want to invest in Silicon Valley where they think they’re going to land on the next Uber — who typically will not raise money from a Middle Eastern investor with limited value-add, unless they’ve exhausted all of their funding options. These investors are often obsessed by financial returns and don’t have the foresight to imagine the huge impact these startups will have in the future generations of our turbulent region.
Most of these investors have amassed their wealth in the Middle East, but few of them want to invest it back into their countries to support the next generation of entrepreneurs. Don’t they believe in “giving back”? Such a disappointment, and one that could have huge consequences on our future.
While Saudi Arabia and the UAE are doing some exciting things for the entrepreneurial ecosystem, there still is much more they can do. Setting up incubators and accelerators is one thing, investing capital to help grow these companies is another. If our own government funds are not being invested into local startups or VC firms, which are the biggest proponents of job creation at a time when the region has some of the highest unemployment rates in the world, then who will?
What jobs will Uber create vs Careem in the region, when Careem has its headquarters in Dubai and employs hundreds of people (thousands if you include the drivers), far more than Uber in the region, today and in the future? Let’s not discount the fact that making Careem a success would do wonders for the region. It will create a whole host of new entrepreneurs and role models. It will create a large pool of capital that will likely be invested back into the regional ecosystem in the form of capital in companies (much more than the capital from any of the returns that Uber will generate since it’s ultimately owned by stakeholders from outside the Middle East). It will create more jobs. It will create a success story that will resonate across the community of entrepreneurs and give them the belief that they can and will succeed.
These things alone transform the value and impact that Careem has over Uber, and any local startup has over its international equivalent. This isn’t something new. Take the infamous Paypal Mafia, or Facebook, Google, Twitter and hundreds of other companies, who have created many role models and entrepreneurs that have gone on to build more amazing companies that employ thousands of people.
We all know that the region is going through various challenges. Conflict is ever-present across our borders, and outsiders are exploiting our weaknesses to ensure that this conflict continues into the future. They will never solve our problems. This has to be done from the inside; the solutions will have to come from the Arab people themselves. For decades, we have been at conflict with one another, for various reasons, and often trivial ones. Unity across Arab countries has never been successful and doesn’t look like it will be anytime soon. Greed, self-interest, power and control are now of the utmost importance from some of the investors, corporates and leaders of our countries.
This culture has to change and we need to realize that we are responsible for our own future and the future of generations to come. We are the only ones that are able to keep our countries alive and prosperous, providing for our children and supporting those that are living in poverty and refuge today.
Our cause at BECO is a just one. We want to create opportunities for current and future entrepreneurs. We want to build a platform for people to fulfill their dreams of building something truly innovative and impactful for the region and beyond. Arabs are inventors. We are creative. We will solve the conflicts and issues today if we are given access to the right resources, starting with talent and capital.
People think that Silicon Valley is the only place for innovation. That’s just not true. I’ve met a growing number of Arab entrepreneurs over the years that have the potential to truly innovate and attack global problems through technology. There are many examples of this today, and growing in number each year. This is what drives me at BECO and gives me the belief that our region will be in a much better place in the future.
If we are to employ the unemployed; If we are to give opportunities to our children and our children’s children; If we are to rebuild our countries; If we are to educate ourselves and keep our traditions and innovations, what should people of privilege and power do? They should support us and everyone in our region. Period.
Disclaimer: BECO Capital is an investor in Careem.