The document provides an overview of technology trends globally and regionally with a focus on Central and Eastern Europe, the Middle East and North Africa regions. Key points include:
- Mobile internet and web usage continues to grow globally with 4.4 billion global web users in 2018.
- Software as a Service (SaaS) is becoming more popular for businesses due to benefits like flexible payments and scalability. The global SaaS market is estimated at $175 billion.
- In Central and Eastern Europe, fintech is growing and Poland, Russia and Czechia lead the region's fintech market. The Baltic states like Estonia have found success with startups like Skype and have high numbers of startups
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VC Activity in MENA and CEE
1. Strategy Paper
September 2019
What’s inside?
medium.com/212.vcwww.212.vc
Over the last seven years, MENA and CEE have received total capital investment of more than
$5 billion. We see the results with prominent exits in the regions; some of the big winners are
UIPATH (CEE), Trendyol (Turkey), and Careem (MENA).
There is even more potential for significant returns to come. Check it out inside.
3. As we celebrate the 30th birthday
of web since British scientist Tim
Berner-Lee’s first invention at
CERN, the digital world keeps its
pace of growth with higher
coverage worldwide
7.7
5.1
4.4
Total Population Mobile Users Web Users
Web and mobile penetration in
the world
# of people, bln, 2018
Growth rate (17-18) 1.1% 2% 9%
Penetration n/a 67% 57%
Source: Datareportal, UN, GSMA, Internetworldstats, CIA factbook, Eurostat, Velox
Analysis
● Accelerating growth in web has
experienced a brand new 360 million
new web users in 2018 and reached its
peak at 4,4 bln in 2018
● As of 2018 YE, two-third of the world
population are connected as mobile
users
As we celebrate the 30th birthday of web since British scientist Tim Berner-Lee’s first invention
at CERN, the digital world keeps its pace of growth with higher coverage worldwide
3
World Tech Trends
Total mobile
usage
Average mobile
data per month per
device
22 Exabyte* 7 GB
● Total data consumption has increased
by >10 times since 2013 to 22
Exabyte* at the end of 2018
4. Source: GP Bullhound, Business Insider, 2018 SaaS Industry Market Report financeonline, PR Newswire, The Register.co, TC, Why Nations Fails-
Daron Acemoglu, Velox analysis
4
World Tech Trends
SaaS technology has proved its
functionality than we could possibly refuse,
and is slowly overtaking the leadership
position in the B2B world.
What SaaS provided like modernized
marketing, mobile functionality,
customization/collaboration attracted even
IT professionals who were not intimidated
by on-premise prices and complex
installations. Flexible payment and
scalability options are other motivations for
businesses to give the green light on SaaS
applications.
More and more successful companies will
embark on the SaaS ship to get some of
the full SaaS workspace
Today's online customers put the bar very
high and expect fast delivery to come as
standard.
Amazon, front-runner in LogisticTech, has
expanded its last-mile offerings to free
one-day and paid one-hour delivery (i.e.
Prime Now). In the meantime, established
retailers try leveraging their vast physical
network along with predictive distribution
systems. Some startups rely on
crowdsourcing to take care of last mile
operations.
Delivery market is still so attractive for
investors and more likely to bring new
ventures and technologies of all size.
AI to overthrow white collar society
becomes the common narrative on main
stream media.
As we go back prior to first industrial
revolution, Queen Elizabeth 1 in 1560
refused the first invention of mechanization
of textile production and was feared of
massive unemployment and creative
destruction. However it would only provide
wealth for the mass a fairly 200 years
later.
In the very near future, it is expected to
witness that AI will transform the way
human work and only stamp out repetitive
task in daily routine.
Artificial Intelligence
End of repetitive task, or us?
SaaS
Toward full SaaS workplace
Last mile Delivery
Eyes on the champion
47% of digitally
mature organizations
have AI strategies
4.5x increase in jobs
requiring AI skills
since 2013
38% businesses started
fostering a SaaS exclusive
workspace in US
Gartner estimates
Global SaaS Market
as USD 175 bln
53% of shipping cost
is in the last mile
56% of shoppers expect
same-day shipping
5. Source: GP Bullhound, WSJ, Condesk, Thefinancialbrand, EFMA Innovation in Retail Banking, Forbes, Gartner, Velox
Analysis
5
World Tech Trends
Software
Digitization = software
Digital Banking
All bet on rise
Cyber Security
Awareness scales up
Digital transactions
increased by 24%
last year
Andreessen penned his famous “Why
Software Is Eating the World” essay in the
WSJ 8 years ago. Today, the idea that
“every company needs to become a
software company” is considered almost a
cliché.
Software-based disruption and high-growth
became common practice for new tech
companies. In return, incumbent
businesses draw digital transformation
roadmaps to shift its capabilities into digital.
Independent of business domain, the most
significant success element, and
investment focus, remain to be software in
the next years
The deluge of high profile cyber attacks
like ‘WannaCry’, which left over 200,000
victims and more than 300,000 computers
infected, revealed the lack of awareness
that started to change.
This has already started to play out from a
B2B perspective. According Forbes, 20%
of enterprises will develop data security
and governance programs as a measure
to prevent data breaches and public
clouds.
Beside, along with GDPR, cybersecurity
continues to be an incredibly important
topic for consumer brands and consumer
itself.
Traditional financial institutions are
implementing innovative digital banking
solutions, while start-ups grow at a rapid
rate due to the demand from venture
capitalists to invest in fintech.
Developing new solutions that take
advantage of data, advanced analytics,
digital technologies and new delivery
platforms are among hot topics.
Players to achieve best tailor-made
service to right segments will take pace or
remain its position on top. Digital banking
still evolves and remains its momentum of
change.
World’s 4 out of 5 top
valued companies
are software-based
%57 of CEO in US plans
to build in-house tech
capability
Millennials use digital
2 times higher than
baby boomers
Rate of
unemployment is 0%
Estimated market size is
USD 170 bln
6. Source: Source: GP Bullhound, KPMG Global Retail Trends, Deloitte HR Tech Disruptions, G2 EE Crowd Survey, Pitchbook, Hired, 2017 State of
Global Tech Salaries, BLS, Fast company, Velox analysis
6
World Tech Trends
Traditional bricks and mortar retail still
dominates retail, making up 88% of global
purchases. Tech giants and online start-
ups are even turning their attention to
physical rather than online exclusive retail.
AR/VR is being explored by NanoVR, who
created virtual interfaces and showcases
that customers can interact with. Amazon
has experimented shopping without
cashier and Alibaba is partnering with
brand Guess to better know physical
world.
Extension of digital marketing automation
applications into physical world makes the
new trend in retail.
As the cost of living in key tech hubs soars
and competition for talent becoming
increasingly tough, smaller, even some
large tech companies bases their
operations in other tech hubs around the
world.
The Bureau of Labor Statistics (BLS)
projects that employment specifically for
computer programmers will decline 8% to
302,200 positions over the next decade as
businesses outsource projects (i.e.
outsharing) to less expensive contract
workers overseas.
Thanks to capability enablement by global
software collaboration tools, top talents
seem be hired on-site.
Retail Technology
Where phygital happens
Employee Engagement
Tech touches here too
HR departments are becoming digital &
innovative. Recruiting experience, HR
analytics and process automation are
among few disrupted domains in daily HR
routine.
As GP Bullhound states, M&A activity in
HR tech performed significant increase up
to 76 deals in 2018 with median USD 300
mln deal size in USA.
HR departments, during talent acquisition,
are able to draw insight from their people
to be accurate in next hire. Also, workforce
productivity tools let employees to facilitate
team-based communication and
collaboration in ways email can’t.
International Labor
Talent mobility
58% use smartphones to
research products
whilst in a store
85 percent of all
transactions will be AI
based by 2020.
80% of HR executives,
believes tech improved
employee attitude toward
the company
HR software to diminish
unconscious bias from
their hiring processes
by 30% in 2019
135k - an average
coder salary in
Silicon Valley
Programming jobs are
growing 12% faster than
the market average
8. 8
GEI INDEX
Global Entrepreneurship Index, GEI, is the leading advance research on how countries perform to promote startup
ecosystem through entrepreneurial attitudes, abilities and aspirations
GEI index in CEE, Turkey and MENA
GEI score, #
●On average, MENA performs
higher than CEE due to limited
contribution from Balkans.
●Baltic region and Poland hold
leading position in the CEE.
●Qatar is best-in-class country
among the entire MENA region
and is followed by UAE and
Oman.
●Turkey exhibits higher GEI
score than average but still has
room for improvement.
Source: The Global Entrepreneurship and Development Institute, Washington, D.C., USA / Global Entrepreneurship Index, Velox
Analysis
9. Source: Ipsos MENA Digital Tech Trends 9
MENA Tech Trends
Mena, as a region over 380 million residents and 19
countries, has a very fragmented socio-economic
condition. To reach simplicity, this requires us to divide
the region into...
Smartphone penetration
%80
E-commerce penetration
While the entire region lags behind the Europe’s e-commerce
penetration average of 67%, Gulf has highest adoption by
30%
NA with smartphone penetration by 57% as opposed to GCC
with 96% reflects the difference in technology penetration in
the region
… 3 main sections such as GCC (i.e. Gulf), Levant
(East Mediterranean) and North Africa.
Looking at some statistics among consumer side in
smartphone and e-commerce penetration might best
describe the gap across region
GCC Levant
North
Africa
GCC Levant
North
Africa
%96
%57
Share in population, %, 2017
30%
%18
%5
Share in population, %, 2017
10. Source: IVC Research, Innovationisrael, Israel21c 10
MENA Tech Trends
Each sub-region comes with a prominent players/countries that shape the technology trends. To put Israeli High-tech aside in
Levant, Gulf region focuses on large scale transformative projects and North Africa aims at improving ICT infrastructure to boost
mobile coverage
Region Leading Country
Levant Israel
Overview of Israel High Tech Industry 2015 - 2018
●AI is one of the biggest trends in Israeli
high-tech. More than 1,200 AI companies
have been established in Israel since
2010, of which 79% are still active and 6%
have been acquired. Data science and
chatbots/robotic assistants are
increasingly part of the AI mix.
●Beside, digital health and transportation
are leading in growth rate in terms of
quantity of companies and the capital
invested in, along with the more
established fintech and cyber, which are
continuing to show rapid growth. In
contrast, the field of communications is
showing significant decline.
% of growth in total
company
800
200
% of
companies
11. Source: ZD Net, CIO, Techrepublic, Businessinsider, CNN, BCG 11
MENA Tech Trends
●The tech trends of the Gulf
region rely on the agenda and
future vision of leading oil-rich
countries. There are 3
distinguished agenda items
defining tech efforts such as
Smart Cities, Digital
Government, Diversified
Economy Development
GCC UAE
KSA
Qatar
Bahrain
North
Africa
Egypt
Morocco
Tunus
Region Leading Country
Region Leading Country
●To become less oil dependent in near future, Bahrain bet on fintech
and payment-tech to reboot its economy. Bahrain Fintech Bay, the hub
for new initiative, created sandbox for companies to test any innovation
in the finance industry
●Local startups, such as Careem and Fetchr, and the graduates from
regional startup accelerators, like Flat6Labs, are driving innovation.
Beside, Saudi’s STC has launched a $500m technology fund that plans
to back Middle East ventures
Smart
Cities
●Dubai’s Smart City, Abu Dhabi’s Masdar City and Qatari New City of
Lusail initiatives are among few and leading smart city transformation
in the region.
●As Smart City concept and IoT capability go hand in hand, Gulf
countries are heavily investing launch commercial 5G networks, with
major operators such as Etisalat and Ooredoo already undertaking live
5G trials.
Digital Government
Diversified Economy
ICT | Fintech ●Region’s dedication is to improve ICT infrastructure that will
widespan internet coverage and make software applications
accessible for both businesses and individuals.
●FinTech has gained high economic relevance. Increasing mobile and
smartphone usage gave opportunity to expand mobile app business,
especially bringing financial tools into rural areas.
●As a part of Dubai Wealth Initiative, Dubai wants to become the first
blockchain-powered government. Authorities started a project with
large participation with 32 global IT companies, leading local startups,
government entities and major UAE banks.
●Recent regional and global cybersecurity crisis caused an urgent
need and solution in cybersecurity investments, which is expected to
double market size from USD 12 bln to 22 bln in 2020.
Digital Government
ICT | Fintech
12. Source: McK - Rise of Digital Challengers 12
CEE Tech Trends
●CEE countries put great deal
in converging its digital
capabilities on WE. While
Government and
manufacturing digitization
are overlapping, Finance and
Service industries in CEE
have potential to reach WE
levels
Digitalization level of sectors in CEE and WE*
% of digitalization per sector, 2018
Average High0 3% 10%
WE
Countries
CEE: Bulgaria, Croatia, the Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia;
WE: France, Germany, UK
CEE
Low
13. Source: Deloitte, Analytics.dkv.global, Forbes 13
CEE Tech Trends
●FinTech industry in Central and Eastern Europe is
estimated at $2.7 billion. SME business demands cloud
based and automated finance solutions. When it comes to
individual consumer, market capital raising and
personalized/mobile finance applications are emerging
thanks to region’s in-house startup pool, occasionally hired
by domestic banks. The leadership position is hold by
Poland, Russia and Czecia in overall Fintech market.
AI
●AI is one of the popular High-Tech industry in CEE with
over 500 startups putting effort on it. Though governments
tend to take new initiatives in place to cultivate startup
ecosystem, EU and Multinational agreements, even from
China, underpin development of AI industry.
●Startups have various niche but Intelligent Data Analysis,
Machine Learning and IoT are among the most common
practice.
Fintech
Share of FinTech market
23%
23%
Machine Learning
Intelligent Data Analysis
17% IoT
12% Search Eng & Lang. Processing
11% Robotics
6%
8% Computer Vision
Recommendation Engine
7%
30%
32%
Czechia
Others
Russia
Poland
31%
CEE Major Tech Trends Company breakdown by domain
23%
14. Source: Investinestonia, Digital Entrepreneurship Monitor Talin A City of Future, Valuenex Tech Trends in Estonia, ZDnet, BalticStartupReport,
Startup Estonia
14
Baltic Success Story in CEE
A Baltic
Success
Story
Startup per
100k
Europe Estonia
5 31
Registering a new
enterprise takes
15 mins
(caution: not days!)
Coding starts at kindergarten
Tallinn, where more than half of the Estonian population (1.8 mln) lives, has
managed to build a strong digital entrepreneurship culture throughout the years.
One of the driver of the great success was the capability building in close
cooperation with educational institutions and upward shift in academic research that
concentrated on the subjects of Network Comm,, Electronic/Optic Device, Biotech,
Energy.
However the most meaningful impact was Skype’s buyout to Microsoft for USD 8,5
bln. This created an attractive narrative to bring new investments up to EUR 328
mln in 2018
Total investments into Estonian Startups
Investments to Estonian Startups, EUR mln
Skype’s Exit
16. Source: Crunchbase, Velox analysis 16
B2B SaaS CEE
CEE top 10 investments between 2015-2019Q3
Country Company Industry Stage
Romania UIPath
Process
Automation
Late
Stage
Estonia Pipedrive
Marketing
Tech
Late
Stage
Hungary AImotive AI Automotive
Late
Stage
Czechia Socialbakers
Marketing
Tech
Late
Stage
Hungary Bitrise
Mobile
DevOps
Early
Stage
Poland Docplanner HealthTech
Late
Stage
Russia SeoPult
Marketing
Tech
Early Stage
Poland Booksy Marketplace Early Stage
Estonia Fortumo FinTech Early Stage
Russia
Mango
Telekom
Comm.
Late
Stage
● A total USD 483 mln capital
raised in top 10 deals in the last 3
years
● Romanian UIPath, providing
robotic process automation
software, has closed a record
high Series C deal of CEE in 2018
● 3 out of top 10 deals
concentrates on Marketing Tech
● Startup origin is fragmented in
CEE as 6 countries could fulfill the
top 10 deals
Last funding round, USD mln
265265
17. 17
B2B SaaS MENA (excl. Israel)
Last funding round, USD mln
MENA top 10 transactions between 2015-2019Q1
Overwhelmingly active country in region’s startup
ecosystem is Israel in which its startups rather
address global & complex problems and enjoy high
accessible capital
Insight
Country Company Industry Stage
Saudi Arabia Unifonic MarketingTech Early Stage
UAE Kitopi
Food
Outsourcing Early Stage
Lebanon Inmobiles Telco Early Stage
UAE OfficeRock Ecommerce Early Stage
UAE Altibbi HealtTech Early Stage
Egypt BasharSoft HRTech Early Stage
Egypt MaxAB Ecommerce Early Stage
UAE Bayzat HRTech Early Stage
UAE Invoice Bazaar FinTech Early Stage
Egypt prime linking MarketingTech Seed
Lebanon BSynchro
Process
Automation Early Stage
Source: Crunchbase, Velox analysis
19. 19Source: Crunchbase, Velox analysis
Institutional Investment* Volume and
Numbers by year in CEE
Total Institutional Investment in the CEE region
2013 - 2019Q1
Volume, USD, mln
* Investor Types such as Angel, Individual investors excluded
Investment Types such as Private Equity, Non-Equity, Secondary and Post-IPO transactions, Grants, ICOs excluded
Total Capital invested
between 2013-2019Q1
USD 3,3 bln
377
247
446
527
469
524
# of investments
517
2013 2014 2015 2016 2017 2018 2019Q3
20. 20
Source: Crunchbase, Velox analysis
Others: Lebanon, Qatar, Kuwait, Yemen, Oman, Bahrain
Institutional Investment* Volume and
Numbers in CEE
Total Institutional investment volume breakdown Total number of Institutional investments breakdown
48% 16% 13% 8% 6% 11% 100%
Capital, USD mln, 2013 - 2019Q3 # of investments , #, 2013 - 2019Q3
31% 18% 18% 16% 11% 18% 100%
* Investor Types such as Angel, Individual investors excluded
Investment Types such as Private Equity, Non-Equity, Secondary and Post-IPO transactions, Grants, ICOs excluded
21. 21
Top 10 Exits in Emerging Europe
Country Company Industry Acquirer
Russia Avito E-commerce Naspers
Turkey Trendyol
E-commerce
fashion
Alibaba
Turkey Opsgenie DevOps Atlassian
Turkey
Gram
Games
Game Zynga
Czechia
Avast
Software
Cyber-
security
IPO
Turkey Iyzico FinTech PayU
Russia
United
Media
Content
Distribution
Mail.Ru
Poland OncoArendi HealthTech IPO
Poland
Ten Square
Games
Game Poland
Russia Dotpay FinTech Nets
CEE and Turkey top 10 exits and IPOs between 2018 - 2019Q1
Exit volume, USD mln
Source: Crunchbase, Dataroom, Velox analysis
22. 22Source: Crunchbase, Velox analysis
Institutional Investment* Volume and
Numbers by year in MENA
Total Institutional Investment in the MENA region
2013 - 2019Q1
Volume, USD, mln
* Investor Types such as Angel, Individual investors excluded
Investment Types such as Private Equity, Non-Equity, Secondary and Post-IPO transactions, Grants, ICOs excluded
Total Capital invested
between 2013-2019Q1
USD 2.6 bln*
524
# of investments
*Souq and Careem makes more than
half of the total volume
2013 2014 2015 2016 2017 2018 2019Q3
72
68
81
123
154 175
100
23. 23
Source: Crunchbase, Velox analysis
Others: Lebanon, Qatar, Kuwait, Yemen, Oman, Bahrain
Institutional Investment* Volume and
Numbers in MENA
79%
Total Institutional investment volume breakdown
7% 4% 5% 3% 3% 100%
Total number of Institutional investments breakdown
Capital, USD mln, 2013 - 2019Q3 # of investments , #, 2013 - 2019Q3
38% 21% 13% 13% 12% 3% 100%
●MENA has UAE, and UAE has Souq and Careem. %81 of total investment volume in MENA comes from
UAE, where almost 60% of UAE’s investment volume generated by consecutive Souq and Careem
fundings in recent years.
*Investor Types such as Angel, Individual investors excluded
Investment Types such as Private Equity, Non-Equity, Secondary and Post-IPO transactions, Grants, ICOs excluded
24. 24
Top 10 Exits in MENA excl. Israel
●UAE’s local startups brought a
new vision to regions’s startup
ecosystem by recent
acquisitions of which Uber to
buy Careem and Amazon to
buy Souq for USD 3,1 bln and
0,6 bln respectively
●Moreover, UAE plays a leading
role in the region to flourish
startups. İt has 8 out of 10
deals on the list.
●MENA exits has a diversified
portfolio of companies mainly
focusing on transportation and
commercial activities.
Country Company Industry Acquirer
UAE Careem Transportation Uber
UAE Souq e-commerce Amazon
UAE
Destinations
of the World
Travel
Webjet.
com
UAE Zomato UAE Food Delivery Talabat
Kuwait Talabat Food Delivery
Rocket
Internet
UAE Maktoob Social Media Yahoo
UAE Namshi e-commerce
Emaar
Malls
Jordan Sky Software HRTech
Tribal
Group
UAE
MEED Media
FZ LLC
Business News GlobalData
UAE Babil Games Game
Stillfront
Group
Exit volume, USD mln
MENA top 10 exits since 2012
Source: Crunchbase, Dataroom, Velox analysis
26. Fin-Tech
Payment
Marketing
Tech
212 at a glance
212 empowers teams with global aspirations. We are based in Istanbul, Doha, and San Francisco.
2011
Fund I $30 m
2018
Fund II € 50 m
www.212.vc
Startups
12
Invested
$23m
Value Created
$550m
Hotel Channel
Manager
Logistics
Tech
Geography
CEE, Turkey, MENA
Strategy
Test Local & Go Global
Team
Global Ambition
Stage
Scale-up
Sector
B2B Tech
26
Invested
€4.5m Software as a
Service
Marketing
Tech
MALL
Software as a
Service
27. iyziPOS
VirtualPOS with AI enabled fraud
prevention and PCI-DSS auth.
iyziBazaar
Marketplace payment provider for
businesses of all sizes.
iyziLink
Payment issuer w/out a shopping
medium.
iyzico App
Online shopping assistant for consumers .
Source: TC, 212, Iyzico press publications, crunchbase
Region’s Leading Payment Platform
DevOps - SaaS
Incident Management
Platform
FinTech - SaaS
Simple, seamless, secure payment solutions for online
businesses to maximize conversion rates and accept
payments in their local currency.
HQ Istanbul 140 Employees
Op. 15 Countries 30k+ Merchants
2013
Seed
USD 1,4 mln
2014
Series A
USD 1,4 mln
2015
Series B
USD 6,2 mln
10 mln valuation
2018
Eastern Europe Exp.
USD 4 mln
>150 mln valuation
2017
Series C
USD 15 mln
~45 mln valuation
Previous Investors
27
2019
Exit
USD 165 mln
valuation
28. Source: TC, 212, Insider case studies, crunchbase, e27
Born Local, Go Global
Insider Growth Management Platform (GMP) empowers marketers to deliver personalized journeys across
web, mobile web, mobile apps, and ad channels. Thus helping digital marketers drive growth across the
funnel, from Acquisition to Activation, Retention, and Revenue.
DevOps - SaaS
Incident Management
Platform
MarketingTech - SaaS
The first integrated Growth Management
Platform (GMP) for online marketers
HQ Singapore 400 Employees
R&D Turkey & Ukraine 20 Active Markets
2005
Angel
USD 900k
2016
Series A
USD 2.5 mln
USD 10 mln
valuation
2018
Series B
USD 8 mln
USD 40 mln valuation
Global brands from diversified industries that trusted Insider’s technology.
Unparalleled growth followed by best-in-class VC back-up
28
2020
+USD 300 mln valuation
30. Source: Datareport, UN 2018, GSMA 2019Q1, Turkstat 2018, Velox Analysis 30
212 has access to extensive network of
VCs for co-investment opportunities
32. medium.com/212vcwww.212.vc
A good player plays where the puck is.
A great player plays where the puck is going to be.
– Wayne Gretzky
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