By Entrepreneur ME Staff / Entrepreneur ME - Image Credit: Careem
In yet another sign of the growing maturity of the region’s entrepreneurial ecosystem, the MENA ride-hailing enterprise Careem (which now refers to itself as a "technology company") announced in February the acquisition of the Dubai-headquartered RoundMenu, a restaurant discovery startup launched in 2012 and now has a presence in eight cities across nine Arab countries.
As a company that has set its sights on emerging as the MENA leader in transportation tech, and with a network spanning across over 90 cities, Careem confirmed in a statement that the acquisition (the financial details of which remain undisclosed) marks the company’s entry into food delivery, and is “part of a wider investment into the food delivery category.” Careem added that it intends to begin testing food delivery capabilities for RoundMenu customers on a small scale later this month.
While Careem declined to comment further on the deal, Entrepreneur Middle East asked a few regional investors about the significance of the acquisition for the company as well as the region. For Omar J. Sati, co-founder and Managing Director of Dash Ventures, the Careem-RoundMenu deal is particularly exciting, with the hope that more regional startups will focus on such acquisitions as they continue to raise large rounds. “It is the beginning of what I hope will be many more intra-regional acquisitions," he said. "When we no longer have to depend on the Yahoo’s and Amazon’s of the world for exits, we can confidently say we have built a strong, sustainable startup ecosystem."
Abdulaziz B. Al Loughani, Managing Partner, Faith Capital Holding, considers the deal to be "an important milestone" to the MENA economy. "[Firstly], it expands the role of corporate development from traditional activities to more inorganic growth ones (M&A), and [second], provides a more tangible liquidation/exit route to regional investors versus international strategies cherry-picking the best internet/software properties and acquiring them," he noted.
Wamda Capital Managing Partner Khaled Talhouni too counts this as a huge positive for the regional ecosystem. “We are beginning to see more liquidity events happening at different stages, which further accelerate the growth of the ecosystem as a whole," he said. "It's also great validation to show how Careem -once a startup itself- is now large enough to participate in the M&A market to fuel it's own growth." On Twitter, BECO Capital’s co-founder and CEO Dany Farha voiced a similar sentiment, saying: “A great e.g. of a win-win-win, investors get an exit, RoundMenu team get to build out their vision, Careem enters a core vertical with strength.”
And it’s this aforementioned potential to enter a new vertical that makes Careem's acquisition of RoundMenu an appealing one for Sati, who believes that the deal will allow Careem to diversify its business into a new and complementary segment of food delivery by leveraging its existing infrastructure, and hence “go head-to-head” with Uber Eats. “We will likely see more acquisitions from Careem in the future as well as other startups with similar war chests adopting similar acquisition strategies such as Souq, Noon, Starz Play, Fetchr, etc.” he notes.