Let's build great big companies together

This is not an article. It’s a proposal.

I am writing this from the confines of my home. I say confine intentionally because I have come down with a cold (not COVID-19, thankfully) and it felt like the appropriate use of words for the times.

On a regular day, you can find me jumping from call to meeting to discussion, starting from 8 in the morning until about 10 in the evening. My weekends are no different: a call with a portfolio founder, followed by a meeting with a prospective startup then an internal review of our pipeline. Rarely, if ever, do I get the down time to spend simply reflecting at home.?

This confinement has refreshingly allowed me to pause and think about what is happening in the Middle East and Africa’s booming start-up scene: new investors vying for a piece of the action, bigger rounds closing and records being consistently broken on a quarterly basis. Simply looking at the performance of our own portfolio of companies, they are generating real revenues and reporting substantial numbers, year in and year out. We are no longer seeing thousands of dollars allocated, but millions, many of which in the double digits. We are witnessing unparalleled monthly growth rates of 30% quickly becoming the norm. The region is digitizing at an extraordinary rate.

At the same time, an undeniable reality is also emerging: not all of these companies can be funded to profitability. It’s simple: this type of growth requires substantial investments, and the dollars are simply not available in commensurate amounts. It’s ironic, but true. High growth, it turns out, is just as difficult as slow and steady growth. Identifying, attracting, and retaining talent is time-consuming and expensive. Gaining market share requires capital. It is becoming increasingly evident that, while some countries in the region have large, deep and rich markets, the majority of start-ups will need to expand geographically (and often more than once) to achieve the economies of scale necessary for viable and long-term sustainability. And that too, requires investment. Unlike our counterparts in Europe, the United States or China, the region does not benefit from single, large and open markets.

How do we begin to think of a solution? How do we build scalable businesses in an environment with limited funds, fierce global competition and high barriers to entry into markets with great potential? My answer is simple; together.

We need to start merging companies to build stronger ones, in collaboration. It is high time we turn the startups in the region into undeniable contenders on the global innovation stage.

I have met one too many early-stage companies with a solid idea, but an incomplete team. I have also come across strong founding teams that lack the scale to handle competition. In many cases, they are based in different countries and every time, I am left with the same thought: why not merge when the synergies are too beneficial to ignore – scale, resilient and complete teams and improved operational efficiency?

Going into 2022, the Global Ventures strategy will include substantial M&A support for our portfolio. It will be surely be a feat, but we are prepared to work with all thoughtful founders to bring this strategy to life by providing the human and financial capital required for these deals in a fair manner for all stakeholders, from investors to founders.

In our view, if the region is become the tech powerhouse we believe it has the potential to become, we must build larger, more powerful, companies together.