Logistics, cost and official standards are needed for the dogs to fulfill their potential in medical fields.
Logistics, cost and official standards are needed for the dogs to fulfill their potential in medical fields.
Cash is the predominant method of sending and receiving payments in the Middle East. If you owe someone a cup of coffee or a trip over a long period, repaying via cash is your best bet. This is one problem out of many financial issues that haven’t been addressed in the region.
The good news is that startups are springing up to provide solutions. Last month Telda, a now two-month-old startup in Egypt, raised an impressive sum as pre-seed to offer digital banking services. Today, Ziina, another startup based in Dubai, has closed $7.5 million in seed funding to scale its peer-to-peer (P2P) payment service across the Middle East and North Africa.
Ziina has managed to enlist top global investors and fintech founders in the round. Avenir Growth and Class 5 Global led this latest tranche of financing. Wamda Capital, FJ Labs, Graph Ventures, Goodwater Capital, Jabbar Internet Group, Oman Technology Fund’s Jasoor Ventures, and ANIM also participated.
The founders who took part include Checkout CEO Guillaume Pousaz via his investment fund Zinal Growth; Krishnan Menon, BukuKas CEO, as well as executives from Paypal and Venmo. This adds to a roster of executives and early employees from Revolut, Stripe, Brex, Notion, and Deel that joined Ziina’s round.
According to the company, it has raised over $8.6 million since launching last year. This includes the $850,000 pre-seed raised in May 2020 and $125,000 secured after going through Y Combinator’s Winter batch early this year.
Ziina was founded by Faisal Toukan, Sarah Toukan, and Andrew Gold. It’s the latest addition to the Middle East’s bubbling fintech ecosystem and is capitalising on the region’s rapid adoption of fintech friendly regulation.
The company allows users to send and receive payments with just a phone number —no IBAN or swift code required as is the de facto method in the UAE and some parts of the Middle East. It also claims to be the country’s first licensed social peer-to-peer application “on a mission to simplify finance for everyone.”
After meeting during a hackathon in the U.S., Faisal and Gold began exchanging ideas on how to build wallets, wanting to mirror the successes platforms like WePay, Paytm have had. At the time, VCs seemed to be interested in how the wallets ecosystem intersected with banking.
“The lines between wallets and banking have become really blurred. Every wallet has a banking partner, and people who use wallets use them for their day-to-day needs,” CEO Faisal Toukan said to TechCrunch.
On the other hand, Sarah, who is Faisal’s sister, was on her personal fintech journey in London. There, she attended several meetups headlined by the founders of Monzo and Revolut. With her knowledge and the experience of the other two, the founders decided that solving P2P payments issues was their own way of driving massive impact in the Middle East.
So how far have they gone? “We launched a beta for the market but it’s restricted for regulatory reasons and basically to keep ourselves in check with the ecosystem,” Toukan remarked. “Since then, we’ve gotten regulated. We’ve got a banking partner, one of the three largest banks in the UAE, and we’ve set a new wallet a month from now. That’s also what we were working throughout our period in YC. So it’s been quite an eventful year.”
The fintech sector in MENA is growing fast; in terms of numbers, at a CAGR of 30%. Also, in the UAE, it is estimated that over 450 fintech companies will raise about $2 billion in 2022 compared to the $80 million raised in 2017. Fintechs in the region are focused on solving payments, transfers, and remittances. Alongside its P2P offering, these are the areas Ziina wants to play in, including investment and cryptocurrency services.
According to Toukan, there’s no ease of making online investments, and remittances are done in exchange houses, a manual process where people need to visit an office physically. “So what we’re looking to do is to bring all these products to life in the UAE and expand beyond that. But the first pain point we’re solving for is for people to send and receive money with two clicks,” the CEO affirmed.
Starting with P2P has its own advantages. First, peer-to-peer services is a repeat behavioural mechanism that allows companies to establish trust with customers. Also, it’s a cheaper customer acquisition model. Toukan says that as Zinna expands geographically — Saudi Arabia and Jordan in 2022; and Egypt and Tunisia some years from now — as he wants the company’s wallet to become seamless across borders. “We want a situation where if you move into Saudi or Dubai, you’re able to use the same wallet versus using different banking applications,” he added.
To be on the right side of regulation is key to any fintech expansion, and Toukan says Ziina has been in continuous dialogue with regulators to operate efficiently. But some challenges have stemmed from finding the right banking partners. “You need to make a case to the banks that this is basically a mutually beneficial partnership. And the way we’ve done that is by basically highlighting different cases globally like CashApp that worked with Southern Bank,” he said.
Now that the company has moved past that challenge, it’s in full swing to launch. Presently, Ziina has thousands of users who transacted more than $120,000 on the platform this past month. In addition, there are over 20,000 users on its waiting list to be onboarded post-launch.
Ziina has already built a team with experience across tech companies like Apple, Uber, Stanford, Coinbase, Careem, Oracle, and Yandex. It plans to double down on hiring with this new investment and customer acquisition and establishing commercial partnerships.
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Released in 2011 “Start-up Nation: The Story of Israel’s Economic Miracle” was a book that laid claim to the idea that Israel was an unusual type of country. It had produced and was poised to produce, an enormous number of technology startups, given its relatively small size. The moniker became so ubiquitous, both at home and abroad, that “Israel Startup Nation” is now the name of the country’s professional cycling team.
But it’s been hard to argue against this position in the last ten years, as the country powered ahead, famously producing ground-breaking startups like Waze, which was eventually picked up by Google for over $1 billion in 2013. Waze’s 100 employees received about $1.2 million on average, the largest payout to employees in Israeli high tech at the time, and the exit created a pool of new entrepreneurs and angel investors ever since.
Israel’s heady mix of questioning culture, tradition of national military service, higher education, the widespread use of English, appetite for risk and team spirit makes for a fertile place for fast-moving companies to appear.
And while Israel doesn’t have a Silicon Valley, it named its high-tech cluster “Silicon Wadi” (‘wadi’ means dry desert river bed in Arabic and colloquial Hebrew).
Much of Israel’s high-tech industry has emerged from former members of the country’s elite military intelligence units such as the Unit 8200 Intelligence division. From age 13 Israel’s students are exposed to advanced computing studies, and the cultural push to go into tech is strong. Traditional professions attract low salaries compared to software professionals.
Israel’s startups industry began emerging in the late 19080s and early 1990s. A significant event came with acquisitor by AOL of the the ICQ messaging system developed by Mirabilis. The Yozma Programme (Hebrew for “initiative”) from the government, in 1993, was seminal: It offered attractive tax incentives to foreign VCs in Israel and promised to double any investment with funds from the government. This came decades ahead of most western governments.
It wasn’t long before venture capital firms started up and major tech companies like Microsoft, Google and Samsung have R&D centers and accelerators located in the country.
So how are they doing?
At the start of 2020, Israeli startups and technology companies were looking back on a good 2019. Over the last decade, startup funding for Israeli entrepreneurs had increased by 400%. In 2019 there was a 30% increase in startup funding and a 102% increase in M&A activity. The country was experiencing a 6-year upward funding trend. And in 2019 Bay Area investors put $1.4 billion into Israeli companies.
By the end of last year, the annual Israeli Tech Review 2020 showed that Israeli tech firms had raised a record $9.93 billion in 2020, up 27% year on year, in 578 transactions – but M&A deals had plunged.
Israeli startups closed out December 2020 by raising $768 million in funding. In December 2018 that figure was $230 million, in 2019 it was just under $200 million.
Late-stage companies drew in $8.33 billion, from $6.51 billion in 2019, and there were 20 deals over $100 million totaling $3.26 billion, compared to 18 totaling $2.62 billion in 2019.
Top IPOs among startups were Lemonade, an AI-based insurance firm, on the New York Stock Exchange; and life sciences firm Nanox which raised $165 million on the Nasdaq.
The winners in 2020 were cybersecurity, fintech and internet of things, with food tech cooing on strong. But while the country has become famous for its cybersecurity startups, AI now accounts for nearly half of all investments into Israeli startups. That said, every sector is experiencing growth. Investors are also now favoring companies that speak to the Covid-era, such as cybersecurity, ecommerce and remote technologies for work and healthcare.
There are currently over 30 tech companies in Israel that are valued over $1 Billion. And four startups passed the $1 billion valuation just last year: mobile game developer Moon Active; Cato Networks, a cloud-based enterprise security platform; Ride-hailing app developer Gett got $100 million ahead of its rumored IPO; and behavioral biometrics startup BioCatch.
And there was a reminder that Israel can produce truly ‘magical’ tech: Tel Aviv battery storage firm StorDot raised money from Samsung Ventures and Russian billionaire Roman Abramovich for its battery which can fully charge a motor scooter in five minutes.
Unfortunately, the coronavirus pandemic put a break on mergers and acquisitions in 2020, as the world economy closed down.
M&A was just $7.8 billion in 93 deals, compared to over $14.2 billion in 143 M&A deals in 2019. RestAR was acquired by American giant Unity; CloudEssence was acquired by a U.S. cyber company; and Kenshoo acquired Signals Analytics.
And in 2020, Israeli companies made 121 funding deals on the Tel Aviv Stock Exchange and global capital markets, raising a total of $6.55 billion, compared to $1.95 billion raised in capital markets in Israel and abroad in 2019, as IPOs became an attractive exit alternative.
However, early-round investments (Seed + A Rounds) slowed due to pandemic uncertainty, but picked-up again towards the end of the year. As in other countries in ‘Covid 2020’, VC tended to focus on existing portfolio companies.
Covid brought unexpected upsides: Israeli startups, usually facing longs flight to Europe or the US to raise larger rounds of funding, suddenly found that Zoom was bringing investors to them.
Israeli startups adapted extremely well in the Covid era and that doesn’t look like changing. Startup Snapshot found that 55% startups profiled had changed (or considered changing) their product due to Covid-19. Meanwhile, remote-working – which comes naturally to Israeli entrepreneurs – is ‘flattening’ the world, giving a great advantage to normally distant startup ecosystems like Israel’s.
Via Transportation raised $400 million in Q1. Next Insurance raised $250 million in Q3. Seven exit transactions with over the $500 million mark happened in Q1–Q3/2020, compared to 10 for all of 2019. These included Checkmarx for $1.1 billion and Moovit, also for a billion.
There are three main hubs for the Israeli tech scene, in order of size: Tel Aviv, Herzliya and Jerusalem.
Jerusalem’s economy and therefore startup scene suffered after the second Intifada (the Palestinian uprising that began in late September 2000 and ended around 2005). But today the city is far more stable, and is therefore attracting an increasing number of startups. And let’s not forget visual recognition company Mobileye, now worth $9.11 billion (£7 billion), came from Jerusalem.
Israel’s government is very supportive of it’s high-tech economy. When it noticed seed-stage startups were flagging, the Israel Innovation Authority (IIA) announced the launch of a new funding program to help seed-stage and early-stage startups, earmarking NIS 80 million ($25 million) for the project.
This will offer participating companies grants worth 40 percent of an investment round up to $1.1 million and 50 percent of a total investment round for startups in the country or whose founders come from under-represented communities – Arab-Israeli, ultra-Orthodox, and women – in the high-tech industry.
Investments in Israeli seed-stage startups decreased both absolutely and as a percentage of total investments in Israeli startups (to 6% from 11%). However, the decline may also be a function of large tech firms setting up incubation hubs to cut up and absorb talent.
Another notable aspect of Israel’s startups scene is its, sometimes halting, attempt to engage with its Arab Israeli population. Arab Israelis account for 20% of Israel’s population but are hugely underrepresented in the tech sector. The Hybrid Programme is designed to address this disparity.
It, and others like it, this are a reminder that Israel is geographically in the Middle East. Since the recent normalization pact between Israel and the UAE, relations with Arab states have begun to thaw. Indeed, Over 50,000 Israelis have visited the United Arab Emirates since the agreement.
In late November, Dubai-based DIFC FinTech Hive—the biggest financial innovation hub in the Middle East—signed a milestone agreement with Israel’s Fintech-Aviv. Both entities will now work together to facilitate the cross-border exchange of knowledge and business between Israel and the United Arab Emirates.
Perhaps it’s a sign that Israel is becoming more at ease with its place in the region? Certainly, both Israel’s tech scene and the Arab world’s is set to benefit from these more cordial relations.
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A coalition of companies have filed an amicus brief in support of a legal case brought by WhatsApp against Israeli intelligence firm NSO Group, accusing the company of using an undisclosed vulnerability in the messaging app to hack into at least 1,400 devices, some of which were owned by journalists and human rights activists.
NSO develops and sells governments access to its Pegasus spyware, allowing its nation state customers to target and stealthily hack into the devices of its targets. Spyware like Pegasus can track a victim’s location, read their messages and listen to their calls, steal their photos and files, and siphon off private information from their device. The spyware is often installed by tricking a target into opening a malicious link, or sometimes by exploiting never-before-seen vulnerabilities in apps or phones to silently infect the victims with the spyware. The company has drawn ire for selling to authoritarian regimes, like Saudi Arabia, Ethiopia, and the United Arab Emirates.
Last year, WhatsApp found and patched a vulnerability that it said was being abused to deliver the government-grade spyware, in some cases without the victim knowing. Months later, WhatsApp sued NSO to understand more about the incident, including which of its government customers was behind the attack.
NSO has repeatedly disputed the allegations, but was unable to convince a U.S. court to drop the case earlier this year. NSO’s main legal defense is that it is afforded legal immunities because it acts on behalf of governments.
But a coalition of tech companies has sided with WhatsApp, and are now asking the court to not allow NSO to claim or be subject to immunity.
Microsoft (including its subsidiaries LinkedIn and GitHub), Google, Cisco, VMware, and the Internet Association, which represents dozens of tech giants including Amazon, Facebook, and Twitter, warned that the development of spyware and espionage tools — including hoarding the vulnerabilities used to deliver them — make ordinary people less safe and secure, and also runs the risk of these tools falling into the wrong hands.
In a blog post, Microsoft’s customer security and trust chief Tom Burt said NSO should be accountable for the tools it builds and the vulnerabilities it exploits.
“Private companies should remain subject to liability when they use their cyber-surveillance tools to break the law, or knowingly permit their use for such purposes, regardless of who their customers are or what they’re trying to achieve,” said Burt. “We hope that standing together with our competitors today through this amicus brief will help protect our collective customers and global digital ecosystem from more indiscriminate attacks.”
A spokesperson for NSO did not immediately comment.
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