How Enabling Future Is Viewing MENA’s Entrepreneurial Culture

Taking three new early stage startups in its umbrella; closing nearly four deals in the last three months and going aggressive in identifying startups that make a difference to the society — for Enabling Future, it has been a very busy year.

The investment firm has increased focus in topics such as blockchain, agritech, fintech and in particular the crypto-space through its ties to Crypto Valley in Switzerland, the hub for quality ICOs worldwide. “We see a lot of potential in bringing this experience to the UAE in the near future, which has all requirements for becoming a future world leader in the crypto-space, said Hubertus Thonhauser, Managing Partner, Enabling Future.

Hubertus Thonhauser

Mr Thonhauser and Co-Founder Saad Umerani lead the firm that provides entrepreneurs with early stage capital and active support. The company has managed to build an international portfolio with its local capabilities, with the partners becoming members to various international investors networks. “Both myself and Saad Umerani have strong international professional backgrounds and experience. Through our previous work, we’ve established connections in four continents and became members of different international investors networks,” he said.

It is through these networks that the company aims to bridge the gap between regions and enable the transition of international startups to the GCC market and vice versa. “We have an ambitious and global approach and we coach the founders of the startups we invest in to be open to other markets than the ones they are initially based in,” informed Mr Thonhauser.

An example of this initiative is the addition of two startups based out of USA and Pakistan to its portfolio. Thrive Market is an American e-commerce membership-based retailer offering natural and organic food products at reduced costs, while Cowlar is a Pakistani startup (selected by Y Combinator, San Francisco) which offers smart collars for dairy cows.

Focus On Real Time Problems

The role of entrepreneurship is changing and now many startups are proposing sustainable solutions for real world problems in the field of digital healthcare and urban farming. “The most fascinating aspect of entrepreneurship is the impact it can have on the world in a very short period of time. Entrepreneurship and social entrepreneurship are a mindset. Entrepreneurs and investors should be well advised to respond to huge secular trends, like healthy nutrition, clean energy, financial inclusion and decentralization, just to name a few of the major global issues that impact us on a large scale,” expressed Mr Thonhauser.

From an investor viewpoint, Mr Thonhauser says that impact investments, in average, achieve higher returns due to large values proposition, loyal customers and employees, leading to higher CLV (customer lifetime value) and lower CAC (customer acquisition cost).

Mr Umerani and Mr Thonhauser identify startups and invest in those that solve a real problem rather than just producing a gadget. “Saad and I have different personalities and together we apply both an intuitive and analytical evaluation. The founders-teams professional background, their way of thinking and their analysis of the market and competitors are essential to us. After this first step, we apply a thorough methodology and an extensive checklist developed over time and constantly updated to look at past performance and future plans,” he said.

Tech First

Almost all the startups with Enabling Future have a strong tech component in the solutions they propose. Entrepreneurs are using technology and naturally integrating it in their solutions, making it more a means rather than an end goal. “If you take the example of UAE startup Alem Health, it provides telemedicine and AI based radiology solutions designed and optimized for frontier markets. At the beginning, the software developed was the key component. However, the implementation of their service in a specific market required the development of a hardware product. The transition came naturally to them because their focus remained on the end solution, not on the type of technology used to implement it.”

Similar case if that of blockchain where its use is becoming more diversified, expanding beyond the financial industry. “The reason is blockchain and cryptocurrency are responding to greater needs: cutting out middlemen and toll-takers, improving security, decentralizing services, financial inclusion of the unbanked and creating a level playing field among stakeholders,” explained Mr Thonhauser.

The startup ecosystem in MENA is changing but it still lacks enough angel investors due to the limited number of exits in the region. “It’s an evolving ecosystem, driven by passion, ongoing networking, support from the community, leadership and vision from the government, especially as far as the UAE is concerned. The ecosystem can use a larger number of solvent angel investors with entrepreneurial background, who provide education throughout the process and are able to provide smart money. The region needs a more stable position granted not only by big acquisitions, but also by smaller exits, of below USD 50 million which constitute over 80 percent of the tech-company exits even in the US,” he said.

Shift In The Entrepreneur Mindset

According to Mr Thonhauser, the changing mindset of the entrepreneur is an opportunity for the region. More entrepreneurs are taking the risk, which is the pre-condition for any startup ecosystem. “International programs such as Dubai Future Accelerators and accelerators such as 1776, Techstars or 500 startups will help to develop and educate the ecosystem. We observe a lot of ambition and passion, driven usually by new, exciting ventures and industries such as crypto-technologies, space travel etc. In addition, there are new ways of VC funding made through token-sales, although it takes a lot of skill to identify real and sustainable business opportunities in the booming Crypto space.”

While there is an opportunity, there are challenges too. “The biggest challenge – besides the need for more angel investors – is too much focus on what is visible to everyone and less focus on the white zones. Entrepreneurs and investors need to look behind the hype and understand which are the less explored areas of a space and understand the business potential,” concluded Mr Thonhauser.


E-commerce startups in the Middle East search for their identity.

With its acquisition of Dubai-based online retailer Souq for $580 million, Amazon is building a regional logistics powerhouse.

Souq may add a handful of local fulfillment centers to Amazon’s arsenal, but that investment can only add fuel to the fire in the $4.9 billion and rapidly growing Middle Eastern e-commerce market.

As Amazon grows its presence in the Middle East, the region’s e-commerce startups need to differentiate and focus to maintain their footing in a rapidly evolving market.

But at the end of the day, none of this is really new. The best e-commerce startups in the region have been focused on mastering a single defensible market for some time.

Rather than competing with Amazon, savvy founders realize that the Middle East offers unique opportunities for products that are designed for specific markets.

Startups that can offer goods tailored to substantive, yet niche, customer segments will see growth as agility continues to dominate scale in these verticals.

Meanwhile, without differentiation, more horizontal plays like Noon will struggle to find their edge against Amazon —the US’s Jet.com being something of an M&A-driven aberration.

At Enabling Future, it’s our job to find the white space, regardless of what decisions big tech companies make. And one of the most exciting areas for growth we see is in B2B e-commerce.

To sell to other businesses, you need to painstakingly build up corporate relationships.

But in return for the effort, you gain a moat around your business that can’t be quickly bought with money. And the high volume and regular cadence of purchases doesn’t hurt either.

OfficeRock.com, a Dubai-based commerce startup backed by Wamda, Jabbar Interest Group and Enabling Future, is executing this thesis for the online sale of office supplies.

The company is experimenting with B2B sales tactics for furniture, paper, equipment and more. This is more than a sales decision, it’s a strategic investment to build the tools and operations necessary to interact with corporates.

“THERE HAS BEEN A LOT OF TALK ON B2C BUT NOT B2B, WHICH IS TWO TIMES THE SIZE OF B2C GLOBALLY,” CHRISTOPER QUEITSCH, FOUNDER OF OFFICEROCK.COM EXPLAINS. “IT’S A LOT MORE COMPLICATED WITH CREDIT APPROVAL PROCESSES ETC, SO IT’S IMPORTANT TO BUILD THE TOOLS AND OPERATIONS NECESSARY.”

Stepping back from B2B, plenty of other startups are working to excel at sales in specific verticals.

Namshi.com is executing at a similar level in the fashion space and Trolley.ae is making inroads for grocery. Online retailers that can aggregate formerly inefficient, decentralized, brick and mortar stores into a single one-stop shop hold a particular advantage.

Brandless is following this aggregation model with its own generic spin to keep costs low.

There’s also a strong cohort of startups looking to democratize e-commerce to narrow the advantage of tech giants.

Startups like ClueTap are building tools that will allow up and coming merchants to compete without needing to forge their own payment and logistics solutions from scratch.

This is a big deal for a region where 50% of sales are still done with cash on delivery.

With ClueTap, sellers can quickly create their own online store and advertise with Google and Facebook. The startup has demonstrated traction in tough markets like India and the team is looking to expand into the Middle East in the near future.

And the best part about this approach is that ClueTap can actually work side-by-side with Amazon, enabling small merchants to list their own products on the site.

“WE DO NOT COMPETE WITH THE LIKES OF FACEBOOK, EBAY OR AMAZON,” ASSERTS HEMANG KAPUR, FOUNDER OF CLUETAP. “WE SEE OURSELVES MORE AS COMPLEMENTARY TO THEIR CORE BUSINESS.”

Details play a big role in the success and failure of e-commerce startups. Serious players need to have strong sales teams and robust product catalogs. But they also can’t forget to treat customers right and invest in intangibles like user-friendly online interfaces.

At the end of the day, Amazon and Souq are more market makers than market breakers. If anything, the consolidation only makes existing white space more clear. And what ultimately fills the void will be of as much value to investors as it will be to Amazon.