Having promised so much for so long, the technology startup space in the Persian Gulf is now seemingly gaining traction. A bevy of announcements in the past week point to an increasingly healthy e-commerce, web and mobile application market, driven by international and local investors’ desire to access untapped countries and sectors. On Monday, Rocket Internet, the controversial Berlin startup investor company that raised $1 billion in funding last year, signed a partnership agreement to expand one of its internet companies into the Middle East as it looks to invest in new internet businesses and bring its own tech-focused concepts to the region. With a $6.5 million investment from iMENA Holdings, a recently formed start-up investor in the Middle East and North Africa, Rocket Internet plans to roll out its Hellofood online food delivery service to 10 countries in the coming months. The website aggregates restaurants’ delivery menus and allows customers to order online or through an app. That deal follows a small $1.7 million investment by STC Ventures, backed by Saudi Telecom Co., in Careem, a car-booking service similar to San Francisco-based Uber. Saygin Yalcin, the founder of Middle East online shopping club Sukar.com, last week launched a new venture called Sellanycar.com, while Rocket Internet says it plans to launch two new web companies in the Middle East in the near future. Meanwhile, Souq.com, the Middle East’s answer to Amazon, has also recently received a fresh round of funding from its investors, New York-based Tiger Global Management and South Africa-based Naspers, according to people familiar with the matter.
The number of startups and incubators is still relatively small, given the size of the population in the region, but investors in the region’s tech space point to the high prevalence of smartphones in the Persian Gulf, its fast telecoms networks and growing tech-savvy young population as all reasons to invest in start-up companies in the broad tech field. Rocket, which has created a reputation for taking successful Western internet company concepts into emerging markets, helped launch online shopping site Namshi.com in 2011 and has canvassed investors to raise more than $30 million for the start up in the past year to invest in staff, logistics and expansion around the wider Middle East. Rocket and iMENA, which was founded in February and has so far invested $15 million in start-ups, predict that the total number of internet users in the Middle East and North Africa will grow from 106 million today to 260 million by 2020. “Here the thing is, once you are ready to get your hands dirty and build operations, to build complex things that American companies are not prepared to do, you will own the market,” says Eyad Alkasser, the founder and managing director in the Middle East and North Africa for Rocket. “Basically we are not just launching websites, we are now building real infrastructure in the region,” adds Mr. Alkasser.