Kushal Shah, Managing Director of e& Capital, discussed the opportunities in the MENA startup ecosystem with Inc. Arabia.
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00:00Hi, my name is Koush, I run the VC arm of EAN, which is EAN Capital.
00:17Typically investors look at telcos as utility companies which generate yields, but as the
00:23world moves on, and as customer expectations, whether it's an individual or a business,
00:28they need to move with the technology trends, they need to be moving with the productivity
00:33that these technology trends bring.
00:35Who provides that in a trusted way?
00:37That's where we as a telco, or a techco, need to come in.
00:41We cannot just provide connectivity services, we have to provide a whole bunch of adjacencies,
00:46which connectivity is a key component of, but trust, subscriptions, data, all of those
00:55other elements that allow us to participate in the other side of the economy, but bring
01:00and push the customer base to work faster, and adopt these ideas faster.
01:11We have to do things that EAN cannot do inside the house, we don't want to burn the house
01:14down.
01:15So we go into the barn, let's say, inside the farm.
01:18We go to the barn and we play with multiple barns.
01:21We look for entrepreneurs that we couldn't internally build.
01:25We look for business models that we cannot build internally.
01:28We look for disruptions that might disrupt us, or the economies, and we help support
01:33it and we invest a little bit.
01:36The investment is the capital side, but we also provide go-to-market parts and other
01:42ways of bringing synergies and support to the ecosystem.
01:46We don't do very early stage, so we're not seed, we're typically post-A, so normally
01:51the entrepreneurs should have a revenue north of $5 million.
01:56Normally the business already has a lot of momentum on the product, on the customer base,
01:59so there's enough proof.
02:01That's when we typically invest.
02:02Of course, we build the relationships in both ways around beforehand, we sometimes watch.
02:08We typically like to lead, so consider us as a lead investor when you're looking for
02:13a Series B or a lead Series A. We typically inject $10 million as our average ticket,
02:20so $40 million.
02:22So when you're raising and you feel you have the confidence and the product has traction,
02:27that's when you come to us.
02:34There's always a fluctuation, the good and the bad, and the fluctuation is driven by
02:40the pace at which technology is moving, the pace at which regulations support that and
02:44allow it, and the pace at which capital supports investments into the growth of this.
02:51So those three are not always synchronized, and I think this region has been lucky enough
02:56that there's more synchronization in other regions, where all three are happening at
03:00the same time.
03:01There's adequate capital, there's adequate acceptance that technology needs to happen,
03:05and the regulators in all the fields, whether it's blockchain, whether it's AI, whether
03:09it's fintech, the regulators are all very supportive in the region, or wanting to be
03:14progressive in this.
03:16So I think it's a good time to be an entrepreneur.