Careem has become the Middle East’s second ‘unicorn’, after investment from Japan's ecommerce giant Rakuten Inc and Saudi Telecom Company (STC). The investment marks the first time the Tokyo-based internet giant backs a MENA company.
The ride-hailing startup, formed in March 2012, is the definition of the kind of fast-growth technology company venture capitalists look for: it operates in 47 cities from Turkey through MENA to Pakistan, has over 90,000 drivers and four million users registered on its app, and competes hard with global industry leader Uber.
“The MENA region has a growing, connected, urban population with great potential for ride-hailing and other e-commerce services,” said Oskar Mielczarek de la Miel, Executive Officer at Rakuten, in a statement released Monday.
“This investment directly aligns with Rakuten’s vision for global innovation as Careem has demonstrated its ability to scale to one of the largest shared economy platforms in the region, and to accelerate the adoption of new transit solutions,” he added.
STC, which bought a 10 percent stake for $100 million, is already a shareholder in Careem via its venture arm STC Ventures, joining a roster including Wamda Capital and Saudi Arabia’s Al Tayyar Travel Group.
The deal is to be financed from STC’s internal resources, the company said in a statement to the Saudi stock exchange.
Careem raised $60 million in November last year to expand further into the Middle East, and according to Bloomberg wants to raise $500 million. Uber announced also in November last year that it would spend $250 million on expanding in MENA alone.
The UAE startup faces rising headwinds in this region, however. In Jordan, regular cabbies and the authorities are forcing the government to either regulate or ban all ride-hailing apps (which are currently illegal in that country). In Egypt the company is needing to be decidedly flexible in the way it operates, in order to win over recalcitrant politicians who want to protect the taxi industry there.
Souq.com, MENA's biggest ecommerce company, is the region's first unicorn. Earlier this year, the company raised $275 million, the largest disclosed fundraising round secured by a tech startup in the Middle East at the time.
Feature image via Dubai Taxi.