Zest Your Equity | 06-Dec-2023

Zest is digitizing private market transactions, building tools to streamline how entrepreneurs, funds and investors transact. Our platform is designed to save you time and reduce administrative costs, simplifying the end-to-end investment process.

What’s New?

Last edition, we highlighted the differences between pre-money and post-money valuation, which we outlined in a longer blog post on our site.

Most early-stage startups have a minimal history of customer traction, few intellectual property assets, and sometimes no revenue. Because of this, a venture capitalist’s approach to the valuation of a company at this stage is different than how a mature company with consistent cash flows is valued.

We know that calculating a startup’s pre-money valuation takes into consideration many factors, rather than being an exact formula.

But what are these factors? And how should you approach valuing an early-stage company as an investor or a founder?

Omar Billeh of Propeller outlines strategies and considerations you should incorporate into your valuation process as an investor and founder when approaching these discussions.

The Capital Market Authority Calls for Public Consultation on Regulating Secondary Offerings

At Zest, we’re building the tools and technology to digitize private markets.

Secondary offerings in the private markets across the MENA region have historically been underserved by the available tools and the regulatory clarity that’s required for robust private market transactions to flourish.

Recently, the Capital Market Authority released a white paper for public comments on the topic of secondary transactions in the Main Market and Parallel Market.

This regulatory framework aims to address the following core points:

• Regulate the requirements for submitting a notice to the CMA if a shareholder wants to offer all or part of their shares in a listed company as a public secondary offering or a secondary offering in the Parallel Market, and regulate the requirements for appointing the financial advisor

• Regulate the disclosure requirements in secondary offerings, including the offering document

• Stipulate the provisions relating to applying the book-building process and allocation method in the public secondary offering

• Stipulate the provisions relating to applying the price stabilization mechanism in the public secondary offering and secondary offering in the Parallel Market

You can read the full report here.

Hit ‘reply’ and let us know your thoughts on the CMA’s recent proposal.

Who’s Raising? 💰

• UAE-based additive manufacturing startup Immensa, has raised a $20 million Series B funding round, led by Global Ventures, along with new investors such as Endeavor Catalyst Fund and EDGO and existing investors Energy Capital Group (ECG), Shorooq Partners, and Green Coast Investments.

• UAE-based fintech Yabi By Souqalmal, has raised an $8 million round, to invest in product development and accelerate regional expansion.

• Retalio, a Saudi Arabia-based B2B e-commerce company, has raised $15 million from a group of new investors, including Yusuf Bin Kanoo Group, Technology Group, and Majd Digital, as well as returning investors such as Aujan Group Holdings, Shorooq Partners, Abercross Holdings, Graphene Ventures, and others.

• Oman-based foodtech KitchenomiKs, has raised $1.8 million in a pre-Series A funding round from Omani and regional investors, bringing the total funding to date to $3.5 million.

• UAE-based fintech Flow48 has raised $25 million in pre-Series A funding, comprising a mix of equity and debt from several investors, including Speedinvest, Daphni, 212, Blockchain Founders Fund, Unpopular Ventures, Endeavor Catalyst, and TLG, as well as Scott Sandell from NEA. 

• Kuwait-based logistics startup Raha has raised $7 million in a pre-Series A round, led by Soor Capital and PIF-backed private equity fund eWTP Arabia Capital.

• UAE-based Your Compass has participated in Turkey-headquartered cloud kitchen operator Fork N Knife’s $800,000 Seed round.

M&A Activity 💼

• Saudi’s PIF acquires a 10% stake in Heathrow airport. Source. 

• PureHealth, the largest healthcare platform in the Middle East, has acquired 100% of PureCS, a leading cloud and technology services provider, specializing in cyber security, AI information systems, complete end-to-end IT, and digital services. Source.

What We’re Reading 📖

Our Blog 📚

Pre-Money vs Post-Money Valuation, what’s the difference?

When a startup raises money from investors, one of the key considerations that needs to be negotiated is the valuation of the company.

You might be wondering, what does it mean for a company to have a valuation?

Simply put, a company will have a valuation when it issues equity to investors. This is referred to as a “priced equity” round. 

In a priced equity round, investors will give money to a startup in exchange for shares in the company. Each share will have a value, known as “price per share (PPS)”; therefore, the company as a whole will be valued based on the number of outstanding shares and the agreed-upon PPS. 

A company’s valuation has tremendous implications for both the investor and the company’s existing stakeholders affecting how much an investor will acquire for a given investment, as well as dilution of existing shareholders, the company’s future growth trajectory, subsequent financing rounds, and more.

Valuation can be measured in terms of ‘pre-money” or “post-money” valuation – the difference comes down to when to value new investor capital.

Read our blog to understand the difference between pre-money and post-money valuation, which valuation framework is used most often, and why.

Zest Equity Updates 📋

We spent the week at ADFW 2023 listening to UAE and global leaders who collectively manage trillions of dollars in assets, govern regions around the world, and are helping shape the future of economic development in the MENA region.

Zest participated in the conference with a booth to discuss our efforts in digitizing private market transaction infrastructure.

A key takeaway from spending last week surrounded by so many people who are optimistic about the future of the MENA region and the region’s role in the global economy is that there’s a lot of innovation that will be taking place over the coming decade and it’s a great time to be building technology that will advance the MENA region.

If you attended ADFW 2023 and have any pictures of the event, we’d love to see them! Hit ‘reply’ and send us what you have!

Want to learn more? Schedule a time with our team below!