Coronavirus crisis creates opportunities for venture capital entrepreneurs

A number of sunrise sectors have emerged in response to coronavirus-linked business and lifestyle challenges, according to Fady Yacoub, co-founder and managing partner at the global technology investment firm HOF Capital. (Supplied)
Short Url
Updated 08 August 2020
Follow

Coronavirus crisis creates opportunities for venture capital entrepreneurs

  • A number of sunrise sectors have emerged in response to pandemic-linked business and lifestyle challenges
  • In the GCC bloc, funding to MENA startups was up 2 percent in the first quarter compared with a year earlier

DUBAI: A resource crunch and the expansion of new economic sectors in the wake of the coronavirus pandemic could have a major impact on the availability of venture capital (VC) for entrepreneurs in the Middle East.

Yet, even as startups in the region, like their global counterparts, face significant challenges to fundraising, a number of sunrise sectors have emerged in response to coronavirus-linked business and lifestyle challenges, according to Fady Yacoub, co-founder and managing partner at the global technology investment firm HOF Capital.

“While angel investors and family offices accounted for a record-breaking amount of the capital deployed in the region in 2019, COVID-19 has made this source of funding scarce,” Yacoub said. “This is similar to trends abroad, but it is most acutely felt in the region as family offices have historically represented a significant share of invested dollars.”

Global VC funding has plunged 20 percent since the coronavirus outbreak in December last year, data from Startup Genome shows.




Global VC funding has plunged 20 percent since the coronavirus outbreak in December last year, data from Startup Genome shows. (Supplied)

In the Gulf, funding to MENA startups was up 2 percent in the first quarter compared with a year earlier, although the number of venture capital deals fell 22 percent, principally because of a steep drop in March, according to the regional data platform Magnitt.

Given the interruption to business schedules, VCs are doubling down on their holdings, Yacoub said.

“Most VC dollars are being spent on putting out fires at existing portfolio companies rather than on new investments.”

Winning VC funding is now a challenge, even for companies growing in double or triple digits week on week, he said.

“Rounds that were once oversubscribed have had investors walk away, forcing companies to mark down valuations and raise at lower levels per share than their previous round. We have seen this play out with quite a few firms.”




Winning VC funding is now a challenge, even for companies growing in double or triple digits week on week, Yacoub said. (AFP/File Photo)

Yacoub, an Egyptian, teamed up with compatriots Onsi Sawiris and Hisham Elhaddad to found HOF Capital in 2016. The firm is backed by more than 70 influential families and organizations, including leading brands such as Morgan Stanley, Etihad Airways and BNP Paribas.

Its investors have $350 billion of assets under management. HOF focuses its investments on nascent technologies with the potential to solve major social problems, backing entrepreneurs in areas including artificial intelligence software, next-generation finance, and genetics and computational biology.

Yacoub and his colleagues believe the downturn offers an opportunity to launch category-leading businesses. Challenging times present new problems to be solved, creating new market prospects.

Given the widespread changes to lifestyles around the world, Yacoub pinpoints four possible growth sectors:

Remote work: “Beyond tools enabling remote work, we are excited about how this trend will alter the distribution of tech talent. Clusters beyond expensive central locations will emerge in places offering better quality of life or that are closer to home for migrants, even in the MENA region.”

Electronic sports and gaming: As alternatives to live sporting events and other in-person experiences, e-sports and video games have seen player activity levels rise. Yacoub predicts exciting times ahead for the sector, particularly with localized Arabic-language products.




Lockdowns and social distancing have forced consumers to shop online, with regional platforms Noon and Souq enlarging their workforce even as companies in other sectors have laid off staff. (AFP/File Photo)

Telemedicine: Telehealth claims in the US rose by more than 4,000 percent in the year to March 2020. “A similar trend may follow in other countries, which was part of our motivation for investing in Helium Health. Its telemedicine service has seen rapid growth during the pandemic.”

E-commerce: Lockdowns and social distancing have forced consumers to shop online, with regional platforms Noon and Souq enlarging their workforce even as companies in other sectors have laid off staff. “Overall, e-commerce has grown in the GCC and Egypt at a 30 percent compound annual growth rate. Investors will be keen to find the next e-commerce winner in the region.”

With a number of factors expected to affect consumer spending in the medium term, VC funding could be affected accordingly. Yacoub said that founders should expect longer fundraising cycles as VCs look more closely at all aspects of a company’s business model and operating market.

“VC investors are generally exposed to hundreds or thousands of startups each year, so it’s important to stand out from the crowd in a good way, such as having a world-class team, a best-in-class or unique product or technology, market-leading traction, and being able to convey an interesting and compelling story to investors,” he said.

* This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.


Syrian army closes airport and roads as rebels sweep into Aleppo

Updated 5 sec ago
Follow

Syrian army closes airport and roads as rebels sweep into Aleppo

  • Opposition fighters carried out surprise sweep through government-held towns this week
  • Russia, a key ally of Assad, has promised Damascus extra military aid to thwart the rebels

AMMAN: Syrian authorities closed Aleppo airport as well as all roads leading into the city on Saturday, three military sources told Reuters, as rebels opposed to President Bashar Assad said they had reached the heart of Aleppo.
The opposition fighters, led by the Islamist militant group Hayat Tahrir Al-Sham, carried out a surprise sweep through government-held towns this week and reached Aleppo nearly a decade after having been forced out by Assad and his allies.
Russia, one of Assad’s key allies, has promised Damascus extra military aid to thwart the rebels, two military sources said, adding new hardware would start arriving in the next 72 hours.
The Syrian army has been told to follow “safe withdrawal” orders from the main areas of the city that the rebels have entered, three army sources said.
The rebels began their incursion on Wednesday and by late Friday an operations room representing the offensive said they were sweeping through various neighborhoods of Aleppo.

They are returning to the city for the first time since 2016, when Assad and his allies Russia, Iran, and regional Shiite militias retook it, with the insurgents agreeing to withdraw after months of bombardment and siege.
Mustafa Abdul Jaber, a commander in the Jaish Al-Izza rebel brigade, said their speedy advance this week had been helped by a lack of Iran-backed manpower in the broader Aleppo province. Iran’s allies in the region have suffered a series of blows at the hands of Israel as the Gaza war has expanded through the Middle East.
The opposition fighters have said the campaign was in response to stepped-up strikes in recent weeks against civilians by the Russian and Syrian air force on areas in rebel-held Idlib, and to preempt any attacks by the Syrian army.
Opposition sources in touch with Turkish intelligence said Turkiye, which supports the rebels, had given a green light to the offensive.
But Turkish foreign ministry spokesperson Oncu Keceli said on Friday that Turkiye sought to avoid greater instability in the region and had warned recent attacks undermined de-escalation agreements.
The attack is the biggest since March 2020, when Russia and Turkiye agreed to a deal to de-escalate the conflict.

CIVILIANS KILLED IN FIGHTING
On Friday, Syrian state television denied rebels had reached the city and said Russia was providing Syria’s military with air support.
The Syrian military said it was fighting back against the attack and had inflicted heavy losses on the insurgents in the countryside of Aleppo and Idlib.
David Carden, UN Deputy Regional Humanitarian Coordinator for the Syria Crisis, said: “We’re deeply alarmed by the situation unfolding in northwest Syria.”
“Relentless attacks over the past three days have claimed the lives of at least 27 civilians, including children as young as 8 years old.”
Syrian state news agency SANA said four civilians including two students were killed on Friday in Aleppo by insurgent shelling of university student dormitories. It was not clear if they were among the 27 dead reported by the UN official.
Kremlin spokesman Dmitry Peskov said on Friday that Moscow regarded the rebel attack as a violation of Syria’s sovereignty.
“We are in favor of the Syrian authorities bringing order to the area and restoring constitutional order as soon as possible,” he said.


What to know about sudden rebel gains in Syria’s 13-year war and why it matters

Updated 30 November 2024
Follow

What to know about sudden rebel gains in Syria’s 13-year war and why it matters

  • It was the first opposition attack on Aleppo since 2016, when an air campaign by Russian warplanes helped Syrian President Bashar Assad retake the northwestern city
  • The roughly 30 percent of the country not under Assad is controlled by a range of opposition forces and foreign troops, including Turkish and US forces and their allies

WASHINGTON: The 13-year civil war in Syria has roared back into prominence with a surprise rebel offensive on Aleppo, one of Syria’s largest cities and an ancient business hub. The push is among the rebels’ strongest in years in a war whose destabilizing effects have rippled far beyond the country’s borders.
It was the first opposition attack on Aleppo since 2016, when a brutal air campaign by Russian warplanes helped Syrian President Bashar Assad retake the northwestern city. Intervention by Russia, Iran and Lebanon's Hezbollah militia and other groups has allowed Assad to remain in power, within the 70 percent of Syria under his control.
The surge in fighting has raised the prospect of another violent front reopening in the Middle East, at a time when US-backed Israel is fighting Hamas in Gaza and Hezbollah in Lebanon.
Robert Ford, the last-serving US ambassador to Syria, pointed to months of Israeli strikes on Syrian and Hezbollah targets in the area, and to Israel’s ceasefire with Hezbollah in Lebanon this week, as factors providing Syria’s rebels with the opportunity to advance.
Here’s a look at some of the key aspects of the new fighting:
Why does the fighting at Aleppo matter?
Assad has been at war with opposition forces seeking his overthrow for 13 years, a conflict that’s killed an estimated half-million people. Some 6.8 million Syrians have fled the country, a refugee flow that helped change the political map in Europe by fueling anti-immigrant far-right movements.
The roughly 30 percent of the country not under Assad is controlled by a range of opposition forces and foreign troops. The US has about 900 troops in northeast Syria, far from Aleppo, to guard against a resurgence by the Daesh group. Both the US and Israel conduct occasional strikes in

 

Syria against government forces and Iran-allied militias. Turkiye has forces in Syria as well, and has influence with the broad alliance of opposition forces storming Aleppo.
Coming after years with few sizeable changes in territory between Syria’s warring parties, the fighting “has the potential to be really quite, quite consequential and potentially game-changing,” if Syrian government forces prove unable to hold their ground, said Charles Lister, a longtime Syria analyst with the US-based Middle East Institute. Risks include if Daesh fighters see it as an opening, Lister said.
Ford said the fighting in Aleppo would become more broadly destabilizing if it drew Russia and Turkiye — each with its own interests to protect in Syria — into direct heavy fighting against each other. 

The US and UN have long designated the opposition force leading the attack at Aleppo — Hayat Tahrir Al-Sham, known by its initials HTS — as a terrorist organization.
Its leader, Abu Mohammed Al-Golani, emerged as the leader of Al-Qaeda’s Syria branch in 2011, in the first months of Syria’s war. His fight was an unwelcome intervention to many in Syria’s opposition, who hoped to keep the fight against Assad’s brutal rule untainted by violent extremism.
Golani early on claimed responsibility for deadly bombings, pledged to attack Western forces and sent religious police to enforce modest dress by women.
Golani has sought to remake himself in recent years. He renounced his Al-Qaeda ties in 2016. He’s disbanded his religious police force, cracked down on extremist groups in his territory, and portrayed himself as a protector of other religions. That includes last year allowing the first Christian Mass in the city of Idlib in years.
What’s the history of Aleppo in the war?
At the crossroads of trade routes and empires for thousands of years, Aleppo is one of the centers of commerce and culture in the Middle East.
Aleppo was home to 2.3 million people before the war. Rebels seized the east side of the city in 2012, and it became the proudest symbol of the advance of armed opposition factions.
In 2016, government forces backed by Russian airstrikes laid siege to the city. Russian shells, missiles and crude barrel bombs — fuel canisters or other containers loaded with explosives and metal — methodically leveled neighborhoods. Starving and under siege, rebels surrendered Aleppo that year.
The Russian military’s entry was the turning point in the war, allowing Assad to stay on in the territory he held.
This year, Israeli airstrikes in Aleppo have hit Hezbollah weapons depots and Syrian forces, among other targets, according to an independent monitoring group. Israel rarely acknowledges strikes at Aleppo and other government-held areas of Syria.


As Syrian rebels sweep into Aleppo, army closes airport and roads, sources say

Updated 30 November 2024
Follow

As Syrian rebels sweep into Aleppo, army closes airport and roads, sources say

AMMAN: Syrian authorities closed Aleppo airport as well as all roads leading into the city on Saturday, three military sources told Reuters, as rebels opposed to President Bashar Assad said they had reached the heart of Aleppo.
The opposition fighters, led by the Islamist militant group Hayat Tahrir Al-Sham, carried out a surprise sweep through government-held towns this week and reached Aleppo nearly a decade after having been forced out by Assad and his allies.
Russia, one of Assad’s key allies, has promised Damascus extra military aid to thwart the rebels, two military sources said, adding new hardware would start arriving in the next 72 hours.
The Syrian army has been told to follow “safe withdrawal” orders from the main areas of the city that the rebels have entered, three army sources said.
The rebels began their incursion on Wednesday and by late Friday an operations room representing the offensive said they were sweeping through various neighborhoods of Aleppo.

HIGHLIGHTS

• Rebels opposed to Assad return to city after nearly a decade

• Aleppo airport has been closed, military sources say

• Damascus expects Russian hardware to arrive soon, sources say

They are returning to the city for the first time since 2016, when Assad and his allies Russia, Iran, and regional Shiite militias retook it, with the insurgents agreeing to withdraw after months of bombardment and siege.
Mustafa Abdul Jaber, a commander in the Jaish Al-Izza rebel brigade, said their speedy advance this week had been helped by a lack of Iran-backed manpower in the broader Aleppo province. Iran’s allies in the region have suffered a series of blows at the hands of Israel as the Gaza war has expanded through the Middle East.
The opposition fighters have said the campaign was in response to stepped-up strikes in recent weeks against civilians by the Russian and Syrian air force on areas in rebel-held Idlib, and to preempt any attacks by the Syrian army.
Opposition sources in touch with Turkish intelligence said Turkiye, which supports the rebels, had given a green light to the offensive.
But Turkish foreign ministry spokesperson Oncu Keceli said on Friday that Turkiye sought to avoid greater instability in the region and had warned recent attacks undermined de-escalation agreements.
The attack is the biggest since March 2020, when Russia and Turkiye agreed to a deal to de-escalate the conflict.

CIVILIANS KILLED IN FIGHTING
On Friday, Syrian state television denied rebels had reached the city and said Russia was providing Syria’s military with air support.
The Syrian military said it was fighting back against the attack and had inflicted heavy losses on the insurgents in the countryside of Aleppo and Idlib.
David Carden, UN Deputy Regional Humanitarian Coordinator for the Syria Crisis, said: “We’re deeply alarmed by the situation unfolding in northwest Syria.”
“Relentless attacks over the past three days have claimed the lives of at least 27 civilians, including children as young as 8 years old.”
Syrian state news agency SANA said four civilians including two students were killed on Friday in Aleppo by insurgent shelling of university student dormitories. It was not clear if they were among the 27 dead reported by the UN official.
Kremlin spokesman Dmitry Peskov said on Friday that Moscow regarded the rebel attack as a violation of Syria’s sovereignty.
“We are in favor of the Syrian authorities bringing order to the area and restoring constitutional order as soon as possible,” he said.

 

 


2 migrants dead, one missing off Tunisia: reports

Updated 30 November 2024
Follow

2 migrants dead, one missing off Tunisia: reports

  • Tunisia and neighboring Libya have become key departure points for migrants
  • Each year, tens of thousands of people attempt to make the crossing

TUNIS: Two unidentified bodies were recovered off Tunisia’s eastern coast after a migrant boat capsized, local media reported on Friday, with one person still missing and 28 rescued.
Most of the passengers were Tunisian, according to the reports, which said that the boat had set sail from Teboulba, a coastal town some 180 kilometers south of the capital Tunis.
Tunisia and neighboring Libya have become key departure points for migrants, often from other African countries, who risk perilous Mediterranean Sea journeys in the hopes of reaching better lives in Europe.
Each year, tens of thousands of people attempt to make the crossing. Italy, whose Lampedusa Island is only 150 kilometers (90 miles) from Tunisia, is often their first port of call.
In late October, the bodies of 15 people believed to be migrants were recovered by authorities in Monastir, eastern Tunisia.
And in late September, 36 would-be migrants — mainly Tunisians — were rescued off Bizerte in northern Tunisia.
Since January 1, at least 103 makeshift boats have capsized and 341 bodies have been recovered off Tunisia’s coast, according to the interior ministry.
More than 1,300 people died or disappeared last year in shipwrecks off the North African country, according to the Tunisian FTDES rights group.
The International Organization for Migration has said that more than 30,309 migrants have died in the Mediterranean in the past decade, including more than 3,000 last year.


Iraq tries to stem influx of illegal foreign workers

An Iraqi policeman checks the ID of a driver at a checkpoint in Mosul on February 22, 2018. (AFP)
Updated 30 November 2024
Follow

Iraq tries to stem influx of illegal foreign workers

  • The Labor Ministry says the influx is mainly from Syria, Pakistan, and Bangladesh, also citing 40,000 registered immigrant workers

KARBALA: Rami, a Syrian worker in Iraq, spends his 16-hour shifts at a restaurant fearing arrest as authorities crack down on undocumented migrants in the country better known for its own exodus.
He is one of hundreds of thousands of foreigners working without permits in Iraq, which, after emerging from decades of conflict, has become an unexpected destination for many seeking opportunities.
“I’ve been able to avoid the security forces and checkpoints,” said the 27-year-old, who has lived in Iraq for seven years and asked that AFP use a pseudonym to protect his identity.
Between 10 in the morning and 2 a.m. the next day, he toils at a shawarma shop in the holy city of Karbala, where millions of pilgrims congregate every year.
“My greatest fear is to be expelled back to Syria, where I’d have to do military service,” he said.

BACKGROUND

Authorities are trying to regulate the number of foreign workers as the country seeks to diversify from the dominant hydrocarbons sector.

The Labor Ministry says the influx is mainly from Syria, Pakistan, and Bangladesh, also citing 40,000 registered immigrant workers.
Now, the authorities are trying to regulate the number of foreign workers as the country seeks to diversify from the currently dominant hydrocarbons sector.
Many, like Rami, work in the service industry in Iraq.
One Baghdad restaurant owner admitted that he has to play cat and mouse with the authorities during inspections, asking some employees to make themselves scarce.
He said that not all those who work for him are registered because of the costly fees involved.
Some of the undocumented workers in Iraq first came as pilgrims. In July, Labour Minister Ahmed Assadi said his services investigated information that “50,000 Pakistani visitors” stayed on “to work illegally.”
Despite threats of expulsion because of the scale of the issue, the authorities, at the end of November, launched a scheme for “Syrian, Bangladeshi, and Pakistani workers” to regularize their employment by applying online before Dec. 25.
The ministry says it will take legal action against anyone who brings in or employs undocumented foreign workers.
Rami has decided to play safe, even though “I want” to acquire legal employment status.
“But I’m afraid,” he said. “I’m waiting to see what my friends do, and then I’ll do the same.”
Current Iraqi law caps the number of foreign workers a company can employ at 50 percent, but the authorities now want to lower this to 30 percent.
“Today we only allow qualified workers for jobs requiring skills” that are not currently available, Labor Ministry spokesman Nijm Al-Aqabi said.
It’s a sensitive issue — for the past two decades, even a foreign workforce has dominated the robust oil sector. But now the authorities are seeking to favor Iraqis.
“There are large companies contracted to the government” which have been asked to limit “foreign worker numbers to 30 percent,” said Aqabi.
“This is in the interests of the domestic labor market,” he said, as 1.6 million Iraqis are unemployed.
He recognized that each household has the right to employ a foreign domestic worker, claiming this was work Iraqis did not want to do.
One agency launched in 2021 that brings in domestic workers from Niger, Ghana, and Ethiopia confirms the high demand.
“Before, we used to bring in 40 women, but now it’s around 100” a year, said an employee at the agency.
The employee said it was a trend picked up from rich countries in the Gulf.
“The situation in Iraq is getting better, and with higher salaries, Iraqi homeowners are looking for comfort.”
A domestic worker earns about $230 a month, but the authorities have quintupled the registration fee, with a work permit now costing more than $800.
In the summer, Human Rights Watch denounced what it called a campaign of arbitrary arrests and expulsions targeting Syrians, even those with the necessary paperwork.
HRW said that raids targeted both homes and workplaces.
Ahmed — another pseudonym — is a 31-year-old Syrian who has been undocumented in Iraq for the past year and a half.
He began as a cook in Baghdad and later moved to Karbala.
“Life is hard here — we don’t have any rights,” he said
“We come in illegally, and the security forces are after us.”
His wife did not accompany him. She stayed in Syria.
“I’d go back if I could,” said Ahmed. “But life there is very difficult. There’s no work.”