The current macroeconomic environment is challenging for startups, as valuations have come down and capital is becoming more scarce. Zuhair Shamma, Mark Chahwan, Patrick Thiriet, Ankit Sarwahi, and Eyad Latif discuss topics such as consolidation and M&A, valuations, capital pools, secondary transactions and liquidity, and capital markets in the region.
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HIGHLIGHTS
01:02 Macroeconomic environment challenges startups' fundraising.
02:06 M&A activity increasing in 2023.
04:38 Capital still available for well-positioned startups.
07:25 Secondary transactions providing liquidity for startups.
12:10 Secondary transactions may be the future of the ecosystem.
14:39 Pricing of secondary transactions can be challenging.
16:53 Selling in markets with no private equity players is difficult.
21:23 Focus on building companies that can survive the winter.
23:18 Capital markets in the region still active.
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QUOTES
"If you don't need to raise, spare yourself, be in a much stronger position in 18 months or 12 months time."
"Valuations are back more to what we were seeing five, six years ago... on the late stage funding, we had a bigger correction."
"2023 is the year of consolidation and M&A... we saw a lot of this happening in 2022, and we'll see a lot more in 2023."
"There's no liquidity crisis in the market. The Middle East is still open for business."
"Secondaries are becoming more palatable... even for family houses and local limited partners."
"Secondaries are necessary for the ecosystem... it aligns the incentives with the rest of the shareholders."
"The best secondaries take place during primary rounds... a perfect point of exit."
"You can use secondaries strategically in the context of a round to clean up the cap table."
"I think the focus should be on building companies that can withstand the winter... then the exits will flow from there."
"We're quite lucky here in this region to have capital markets that are getting ready... we're going to see those transactions happen."
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