Dubai-based e-commerce platform Souq.com said it has raised more than Dh 1 billion ($275 million), bringing Souq’s funding total to $425 million, and its valuation to a reported $1 billion.
Investors in this round include New York-based Tiger Global Management and South Africa’s Naspers Ltd. (JSE: NPN.SJ; LSE: NPSN), both of which had invested in Souq.com in earlier funding rounds.
Just a few days ago, Naspers agreed to make a new $250 million investment into Indian online travel platform Ibibo, a joint venture it owns with Chinese Internet giant Tencent (HK: HK700).
Souq.com, which operates a business model similar to Amazon, also added new strategic investors including Standard Chartered Private Equity, IFC (a member of the World Bank Group), Baillie Gifford, and many reputable regional and tech-focused financial institutions.
Allen & Company LLC served as financial advisor to Souq.com on this latest round of financing.
“The funding will be used to drive further growth by investing in technology, scaling our marketplace operations, launching new product categories and recruiting the best talent,” said Ronaldo Mouchawar, CEO & co-founder of Souq.com. “The e-commerce market in the Middle East is growing very fast and is expected to reach $20 billion this year. As the largest e-commerce platform in the region, we focus on the value we bring through technology and job creation. We connect people to products through our retail and marketplace model. Through cutting edge technology, we enable our consumers to make smarter choices and access to mobile commerce is further empowering them.”
Mouchawar founded Souq.com in 2005 as an auction site linked to internet portal Maktoob, which had been founded in 1998 by Samih Toukan and Hussam Khoury as a webmail service. Mouchawar, who was born and raised in Aleppo, Syria, was educated in the U.S. and returned to the Middle East, joining Maktoob in 2000. He holds a Master’s degree in Digital Communications and a Bachelor degree in Electrical and Computer Engineering from Northeastern University in Boston.
Maktoob was acquired by Yahoo in 2009, becoming its official arm in the MENA region. Following Maktoob’s acquisition, Toukan and Khoury decided to spin-off the brands that were not acquired by Yahoo, namely souq, cashu, and ikoo and to form the Jabbar Internet Group, a new incubator to house these brands, focusing on consumer e-commerce in the region. Jabbar currently employs over 300 people at various offices in UAE, Jordan, Saudi Arabia, Egypt and Kuwait, and became one of the leading investors in Internet and technology companies in the region. Jabbar continued to fund Souq.com until it was adequately scaled up.
In a recent report published by Dubai-based integrated communications agency IHC, Souq.com ranked number five for brand awareness in the UAE. This latest round of financing makes Souq.com “the most valued internet company in the Middle East,” says the company.
Consulting firm Frost & Sullivan expects the GCC ecommerce market to be worth $41.5bn (Dh152bn) in 2020, with 53 per cent of this in the UAE.
“Last month, Mumzworld.com, an e-commerce site geared towards mothers and baby products, raised a multi-million dollar Series B round from Wamda Capital, twofour54, and Endeavor Catalyst,” said Elmira Bayrasli, co-founder of Foreign Policy Interrupted, and a TechCrunch contributor. A few weeks ago, “Wadi.com, an Amazon-like e-commerce platform operating in the Middle East, raised $67 million in a Series A round for an undisclosed valuation. The Saudi based Al Tayyar Travel Group led the round. Both face stiff competition,” she added.
“Several new players have cropped up in the UAE’s online retail space over the past few years, with many of them focusing on the most popular gadgets segment to boost sales,” says Vicky Kapur, of Emirates247. “Some of the newer players include JadoPado, Wamli, MumzWorld, Little Majlis, MarkaVIP, Awok, and AlShop, among others.”
“These are besides the omnichannel sites – online platforms of existing brick-and-mortar retailers – that are fast trying to catch up,” added Kapur. “These include the likes of Landmarkshops.com, SharafDG.com and Jumbo.ae, among others.”