Zest Your Equity | 2-April-2025

This week’s agenda 📜

• Zest’s terms and concepts ✍️

• Who’s raising? 💰

• M&A activity 🤝

• What we’re reading 📖

Let’s dive in 👇

Zest terms and concepts ✍️

Secondary sale: A transaction where existing shares—often from founders, employees, or early investors—are sold to new investors or buyers. Secondary sales can provide partial liquidity without requiring a full company exit or IPO.

Strategic buyer: A company that acquires another for strategic reasons—like expanding market share, acquiring talent, or integrating technology. Unlike financial buyers, strategic buyers often prioritize long-term synergies over short-term financial returns.

Liquidity preferences: Liquidity preferences determine how proceeds from an exit are distributed—specifically, who gets paid first and how much. They’re designed to protect investors, especially in downside scenarios, but can significantly impact what founders and employees receive.

There are a few common types. A 1x non-participating preference means the investor gets either their initial investment back or converts to common and takes their ownership percentage—whichever is more. A 1x participating preference (often called a “double dip”) allows the investor to get their money back first and still participate in the upside like a common shareholder. This structure can heavily reduce the remaining pool for founders and employees. When the market favors investors, they can sometimes negotiate for a 2x or 3x preference, meaning they get two or three times their money back before anyone else gets paid. Others might include a capped participation, where they double dip up to a certain multiple, after which they convert to common.

The impact of liquidity preferences varies dramatically depending on the exit valuation. In a low-value exit, preferences can eat up nearly all the proceeds, leaving little to nothing for common shareholders. In a mid-range outcome, they may still skew the distribution heavily toward preferred shareholders. Only in large, outsized exits do preferences usually “wash out,” with investors converting to common to share in the upside.

Who’s raising? 💰

• 🇦🇪 UAE-based fintech Nymcard has raised $33 miilion in series B funding round, led by QED Investors, and joined by Lunate, Dubai Future District Fund (DFDF), Mashreq Bank, Knollwood, Reciprocal, FJ Labs, Endeavor, Shorooq Partners, and Oraseya Capital.

• 🇦🇪 UAE-based healthtech Valeo Health has raised $12 million in its Series B funding round, bringing total funding to date to $20 million. 

• 🇦🇪 UAE-based fintech ClearGrid has emerged from stealth after raising $10 million in a dual round, pre-seed and seed.

• 🇦🇪 UAE-based fintech enza has secured a $6.75 million seed equity round, co-led by Algebra Ventures and Quona Capital.

• 🇸🇦 Saudi Arabia-based fintech Nayla Finance has secured $4 million in seed funding, led by Sanabil Venture Studio by Stryber.

• 🇦🇪 UAE-based AI startup Lumi AI has closed a $3.7 million seed funding round, led by AgFunder, with participation from Forum Ventures, Abu Dhabi sovereign wealth fund ADQ, Qora71 syndicate, and other angel investors. 

M&A activity

• 🇦🇪 UAE-based entertainment streaming platform OSN+, a subsidiary of OSN Group, has raised $57 million from Warner Bros Discovery for an approximate 30% equity stake in the company. Source.

• 🇸🇦 Aramco completed the acquisition of a 50% stake in Jubail-based Blue Hydrogen Industrial Gases Company (BHIG) from its sole owner Air Products Qudra (APQ). Source.

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