The first unicorn could soon be spotted in the Middle East after the retailer Souq.com secured Dh1 billion in fresh financing. In the venture capital industry, a unicorn refers to any tech start-up company that reaches a US$1bn market value as determined by private or public investment.
Souq.com, the Middle East’s largest online retail platform, announced today that it has completed a funding round of more than Dh1bn, the largest financing of an e-commerce business in the Middle East. It did not disclose how much this investment valued the company at, but reports last year said that Souq.com had been seeking up to $300 million in funding at a $1bn valuation.
“The funding will be used to drive further growth by investing in technology, scaling our marketplace operations, launching new product categories and recruiting the best talent,” said Ronaldo Mouchawar, the chief executive and founder of Souq.com. “The e-commerce market in the Middle East is growing very fast and is expected to reach $20bn this year.”
Investors in this round include New York-based Tiger Global Management and South Africa’s Naspers, both of which had invested in Souq.com in earlier funding rounds.
Souq.com also added new strategic investors to diversify its investor base, including Standard Chartered Private Equity, IFC (a member of the World Bank Group) and the investment manager Baillie Gifford.
Internet retailing had its highest levels of growth in 2015 – 36 per cent – thanks to rising internet and smartphone penetration.
Souq.com, which sells a wide range of electronic goods but leans towards smartphones, with more than 300 models for sale, averaged 45 million visitors a month last September compared with 30 million in March. It also hosts other online retailers as a marketplace platform.
Figures from the tech consultancy Gartner show that smartphone shipments to the Mena region increased by 40 per cent year-on-year during the second quarter of last year.
With smartphone penetration at 74 per cent in the UAE and the value of mobile commerce reaching $3bn last year, according to Euromonitor, the online opportunity for retailers is growing.
Mr Mouchawar recently told The National that his new push for the online retailer was into Saudi Arabia, adding 200 new pickup locations in the country.
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