Read MAGNiTT founder Philip Bahoshy's take on the acquisition HERE
Uber, the US-based ride-hailing giant, today announced that it acquired Careem, the seven-year-old Dubai-based start-up, for $3.1 billion, marking the first unicorn exit in the Middle East and North Africa (MENA). The acquisition comes several months after the last fundraise by Careem, who raised $200M as part of the first tranche of its Series F in October 2018. At the time, the reported valuation of the company was around $2 billion, indicating an increase of more than 50% in value over the last 5 months.
Founded in June 2012 by two ex-McKinsey & Company consultants, Careem raised a total of $771.7 million to date from a variety of investors, including regional investors such as Kingdom Holding, BECO Capital, STV, and Wamda Capital, as well as international corporations such as Rakuten, Didi Chuxing and Daimler. The start-up first obtained unicorn status in 2016, when it raised its $350M Series D funding round around a $1 billion valuation, led by Saudi corporate venture capital firm STC Ventures and Japanese e-commerce giant Rakuten.
The acquisition of Careem by Uber marks another blockbuster acquisition in the region by an international acquirer, showcasing the international appetite for Middle Eastern start-ups.
According to MAGNiTT data, there have been 43 acquisitions of MENA-based start-ups by non-MENA acquirers, accounting for more than 40% of all the exits that have taken place in the region. One of the first of such exits was Maktoob, an Arabic web portal, which was acquired by Yahoo in 2009, followed by the acquisitions of business intelligence platform Zawya (by Thomson Reuters), classifieds platform dubizzle (by Naspers), and food delivery platform Talabat (by Rocket Internet), among others.
More recently, aside from the acquisition of Careem, one of the largest acquisitions was the acquisition of Dubai-based Souq.com, the e-commerce platform, which sold to Amazon for a reported $580 million in 2017, marking one of the largest exits to date.
Now, with the $3.1 billion acquisition of Careem, the region is another success story richer, which will inspire future entrepreneurs to start their own businesses, as well as cement the view that home-grown start-ups are capable of competing and scaling effectively in the region, even in the presence of larger international rivals. Not only that, local governments and international players, who have already shown significant interest in the entrepreneurship space, now have another case study that points to the importance and effectiveness of a flourishing local start-up ecosystem – even though it takes years to cultivate.