The Middle East is a tough area to navigate for technology startups. With political instability, high tariffs, and widely differing national laws between the countries in the region, many tech companies—particularly online retailers—have floundered. That’s why it's big news that Souq, which has been called the "Amazon of the Middle East" has just received a $275 million round of funding from international investors, reports the New York Times. The investment is a vote of confidence in the company that is operating in a space where so many others have failed.
Souq launched in 2005 with an eBay-like online auction business model. The word "souq" means "market" in Arabic. Its auction-based model, however, later evolved into a more traditional online retailer outfit, closer to that of Amazon. Since that time the company has held its own and expanded in the traditionally tough region. It now ships hundreds of thousands of products across Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Not only is Souq’s latest investment, from Tiger Global Management, Standard Chartered Private Equity, and the International Finance Corporation (an arm of the World Bank), a vote of confidence in the company, it’s also the largest ever investment disclosed by a tech startup in the Middle East and North Africa, says the Times.
Much of the $275 million investment will go to improving the company’s mobile application, Souq’s CEO Ronaldo Mouchawar told the Times, explaining that 70% of Souq sales in Saudi Arabia were made on phones. The investment will also go toward improving payment processing, logistics, employee recruitment, and introducing new product categories related to beauty and fashion.
But Mouchawar says that Souq’s latest funding isn’t only good for the company, but for startups in the region as a whole. "The startup scene has changed so much since Souq launched over 10 years ago," Mouchawar told the Times, "and the size and scope of this kind of funding is encouraging for entrepreneurs."