MENA Venture Capital Regulatory Framework – Whitepaper

The rate of establishment of startups over the last 15 years in the Middle East has increased considerably, with some of these entrants going on to establish a formidable presence in their respective fields. Although the scale and sophistication of these entities evolved over the course of their first 10 years of operations, the financial infrastructure on which these entities depended on for support was limited in a way that was disproportional to the scale of venture activity.

In the early days of MENA startup activity, most founders relied on bootstrapping or friends and family rounds to capitalize their ventures. Although it served as a reliable stopgap measure early on, the lack of scalability was ascertained from the outset. First off, family funds are notoriously conservative in their investment theses and unlikely to devote considerable resources to untested founders and business plans. Secondly, with financing infrastructure centered around families, funds are less likely to flow toward those without access. This presents a serious challenge to the democratization of startup capital in the region. Finally, forming a consortium of investors across multiple geographies could present a serious legal threat to the ability to expeditiously raise funds, as governing language varies. Therein lies the problem – how does the region establish a formal modus operandi to fund diverse founders without immediate misalignment on terms of governance? The answer – the modern unregulated MENA VC was born.

The battle, however, has not yet been won. The third and final crucial facet, after founders and investors, has not yet been brought into alignment – government regulators. The most labored of regulatory proceedings are those that seek to act without precedent, as was the case in Western markets a few decades ago. The MENA region has the unique advantage, by virtue of not having acted earlier and by observing legislative shifts in other markets, of being able to introduce regulatory frameworks that have already withstood legal challenges and legislative refinement. The purpose of this document is to capture the essence of the laws and regulations that have proven effective in regulating foreign investment bodies without undue burdens on investment activity. The aim of the aforementioned goal is to create an environment welcoming of both local and foreign investment in MENA startups via entirely legally compliant Venture Capital firms.

Special thanks for the MENA Venture Capital Association for inspiring us to publish this paper. Please find below the link for the full whitepaper:

https://www.dropbox.com/s/2ugqxhnrp2fw4ly/Faith%20Capital%20-%20MENA%20VC%20Regulatory%20Framework%20Whitepaper.pdf?dl=0

FAITH CAPITAL CLOSES SEED ROUND INVESTMENT IN FAKESPOT

KUWAIT CITY, 21 OCTOBER 2018 — Faith Capital announced today their recent participation in the $1.3m seed round of Fakespot, a Kuwaiti-founded and New York-based Artificial Intelligence startup that specializes in the protection of online shoppers by authenticating product reviews. This reflects Faith Capital’s continued efforts to back MENA technology founders with multinational ambitions.

Founded in 2016, Fakespot has developed a proprietary artificial intelligence platform to analyze and authenticate online product reviews on Amazon, Yelp, Trip Advisor, and the Apple App Store. Using their technology, consumers no longer have to fear losses associated with purchasing goods and services marketed with deceptive fake reviews. Fakespot’s B2C services are available for free at Fakespot.com, via iOS and Android Apps, and as a browser extension. Additionally, the company offers B2B authentication solutions.

“Online reviews play a critical role in e-commerce by giving products and services a seal of approval from other consumers. Gaming the review systems of e-commerce platforms has become a prevalent practice for both known and unknown companies,” says Saoud Khalifah, the Founder, CEO, and CTO of Fakespot. “It is not uncommon for online shoppers to be misled by what otherwise looks like a high-quality item on a reputable e-commerce site. Fakespot is dedicated to protecting consumers from online deception on an increasing number of international e-commerce and service review platforms.” Rob Gross, COO of Fakespot added, “Fakespot’s mission is to make the internet more trustworthy, starting with consumer reviews. Our platform produces authentic data that benefits both consumers and business by detecting true consumer sentiment, counterfeits and defective products.”

“As a Kuwaiti Venture Capital firm, it is important to us that we back not only technology companies in the MENA region, but MENA founders who have the opportunity and ability to create a product of value with immediate international relevance,” says Abdulaziz B. Al Loughani, the Managing Partner of Faith Capital. “We look forward to aiding Fakespot in their efforts to build an international service.”

“Some of the greatest startups are those that can create truly indispensable products that establish market dominance via technical advantage,” says Abdulaziz Hayat, an Associate at Faith Capital. “We are proud to support the first generation of MENA entrepreneurs capable of such an accomplishment.”

Faith Capital Holding is a Kuwaiti Venture Capital firm specializing in early stage technology startups…

JUSTCLEAN ESTABLISHES OPERATIONS IN THE UAE

DUBAI, 9 OCTOBER 2018 — justclean announced their recent expansion in the United Arab Emirates following the establishment of operations in Dubai and Abu Dhabi. Having been founded in Kuwait in 2016, justclean attained early market dominance as a consumer-facing laundry marketplace after successfully securing an investment from Faith Capital, a Kuwaiti Venture Capital firm. The UAE represents the company’s first international expansionary effort.

Kuwaiti entrepreneurs Nouri and Athbi Al-Enezi set out to create modern and efficient solutions to the problems faced by traditional laundry businesses, including securing order flow, customer loyalty, digital recordkeeping, and logistics management. “We discovered early on that the average Kuwaiti’s laundry expenses constituted the relatively secure revenues of the fairly large and fragmented laundry market,” says Athbi Al-Enezi, a co-founder of justclean. “This market was operating with sustained offline inefficiency at the same time that other sectors were adopting technology as a core part of their operating model,” says Nouri Al-Enezi, a fellow co-founder of justclean. “Laundry businesses stood to greatly enhance revenues and cut costs by adopting technology, but there was no such tech company in the GCC market two years ago.”

“In the past two years, we’ve seen significant increases in the sophistication of the average Kuwaiti laundry business, which correlates with the increased sophistication of your average laundry customer,” says Mohammad Jaffar, the Deputy Chairman and CEO of Faith Capital and CEO of justclean. “Consumers have grown accustomed to digital orders, tracking, and responsive customer service thanks to the F&B industry. Similarly, laundry owners and investors now demand operations oversight and order management applications for their business. justclean’s core mission is to give both consumers and laundry owners precisely the tools they need for a successful modern laundry experience. God willing, justclean will soon become the solution provider of choice for the entire region.”

FAITH CAPITAL CLOSES MULTI-TRANCHE SEED ROUND INVESTMENT IN SNAPBOOK

KUWAIT CITY, 2 OCTOBER 2018 — Faith Capital announced the close of a multi-tranche $1.5m seed round of financing in Snapbook, a Kuwaiti photo printing startup, in order to bolster its ongoing operations and impressive growth with the aid of the Faith Capital team’s expansive professional resources and regional expertise.

 

Having been founded in 2016, Snapbook has dominated the GCC photo printing market, becoming a notable regional leader in the market for photo books, photo prints, phone cases, gift items, home décor, apparel, and wall art. Snapbook’s base of operations is in Kuwait, while recognizing international sales in Saudi Arabia, the United Arab Emirates, Bahrain, Qatar, Oman, and over 40 other countries.

“Snapbook intends to attain pre-eminence in the field of photo printing, and we’ll work alongside Faith Capital to achieve a lasting global presence as a company with technology driving its core value proposition and operating efficiencies,” says Abdullah Boodai, the Founder and CEO of Snapbook.

“As the first institutional investor in Snapbook, we have long believed that the regional e-commerce sector is ripe for new entrants and product offerings, and we are proud to partner with Kuwaiti founders to pursue this unique market opportunity,” says Abdulaziz B. Al Loughani, the Managing Partner of Faith Capital. “We look forward to further developing our professional relationship in the years to come.”

“Faith Capital partners with founders who truly understand the value of technology in creating sustainable operations. Snapbook’s investment in building such technologies demonstrates their long-term commitment to mastering their platform’s scalability,” says Abdulaziz Hayat, an Associate at Faith Capital. “Together, we’ll expand the reach of MENA’s first truly scalable custom photo printing startup.”

Faith Capital Holding is a Kuwaiti Venture Capital firm specializing in early stage technology startups…