Are Middle Eastern startups doomed to lose their identity after they get acquired by gigantic international companies?
According to Omar Al Ashi, Founder of Urent, a peer-to-peer vehicle sharing platform, Careem which was acquired by ride-hailing company Uber for $3.1 billion, has managed to keep its local identity, while Souq on the other hand, has entirely blended with Amazon after the world’s e-commerce giant acquired the Gulf company in 2017 for $580 million and rebranded it as Amazon.ae.
“One of the conditions Careem put in place was that they maintain their identity, which I respect so much. When Amazon acquired Souq, Souq just dissolved and became Amazon. But here, you can see Careem doing bigger things in the future and maintaining their name and identity,” Omar Al Ashi discussed with Arabian Business.
“They are growing onwards but in the back end, Uber acquired Careem. That doesn’t defeat the purpose that they are a UAE born entity and they will continue to grow as a UAE born entity and maintain their identity” he added.
Mergers and acquisitions is trending in the region and goes back to 20009 when Yahoo! acquired Jordanian company Maktoob.com. According to Janardan Dalmia, founder of Trukkin, a logistics and transportation company, more and more global brands are acquiring local startups and this phenomenon echoes perfectly the growing strength and credibility of the UAE startup ecosystem.
“This shows the maturity of the market and that international companies and investors have started taking the region seriously, which encourages the whole ecosystem,” he said.
“With all the M&A happening, it shows that all the regulators, government and financial markets are supporting it”.
But Dalmia doesn’t believe that exits are a finality for every startup in the region: “We believe in ourselves as a truly local company, trying to solve local problems. So we would like to be one of those companies that goes international rather than someone else coming here”.
If you wish to know more about M&A, MAGNiTT has held a dedicated webinar on 5 reasons why Exits are hot in the Middle East and North Africa right now. You can watch the replay video here.