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[StartupRecipe] Cultural Understanding Influences Business success in MENA Region

#Weekly Funding Overview

[Oct. 18~ Oct. 22]

The total funds raised by Korean startups of this week is KRW 101.1billion.

H RoboticsBio/Healthcare12 billionSeries BHana Financial Investment, DSC Investment,Schmidt, BNK Venture Investment, L&S Venture Capital, Open Water Investment
MOBILTECHProphtech-Series A bridgeWe Ventures
SGMAFishing Platform-GRANTTIPS
IngkleSmart Factory-GRANTTIPS
RealfarmSmart farm-M&AGreen Labs
TechtakaLogistics system12.5 billionSeries AMirae Asset Venture Investment, Mirae Asset Capital, Murex Partners, DSC Investment, NaverD2SF, Kakao Ventures, Shinhan Capital, Lotte Ventures
VillageBabyKids Content800 millionBigbasin Capital, SBA, Crypton, Hyundai Marine & Fire Insurance
LevitEcommerce500 millionSeedKlim Ventures
EmotivDigital therapeutics400 millionSeries AHyundai Motors, Info Bank, MYSC
Gloent GroupLifestyle20 billionAarden Partners
LANE4 COMPANYMobility3 billionPre-Series ASJ Investment Partners, Humax
BALAANLuxury Platform32.5 billionSeries BCompany K Partners, Shinhan Capital, KTB Network, Naver, Kolon Investment, SBI Investment, Mega Investment, K-Growth
Common ComputerAI Cloud12 billionSeries BKB Investment, HB Investment, Posco holdings, K2 Investment, NAU IB Capital
MirnyBlockchain-SeedSpring Camp
ErsatzMetaverse-SeedIGIS Investment Partners, Archidraw
TaleverseContent2.3 billionSeedGarena Ventures
AFIGame1 billionSeries AGU Investment, Bluepoint Partners
Travel Wallet3 billionSeries BShinhan Capital, Shinhan Investment,
MeumMetaverse-SeedNew Paradigm Investment
ConexuslabEducation1.1 billionSeedRadcomm, Value Add Venture

Major Funding

  • BALAAN, an online luxury shopping platform, secured 32.5 billion won series B investment. The company will expand product categories and strengthen the fulfillment system with funding. It also plans to launch a BNPL service with Shinhan Capital.
  • Blockchain cloud company Common Computer received 12 billion won investment. The team develops technologies to share large-scale computing resources in real-time and serves blockchain testnet AI Network and Ainize.
  • H Robotics drew 12 billion won in Series B investment. It provides a rehabilitation solution Rebless that integrates a robotic rehabilitation exercise device and a platform capable of remote health consulting. The company plans to move forward with the IPO next year.
  • Contemporary lifestyle company Gloent Group raised 20 billion won investment. It plans to enhance innovative brand capabilities and launch a lifestyle brand competent in the global market.

#Trend Analysis

Cultural Understanding Influences Business success in MENA Region

“People in the Middle East spend longer time making decisions than in Korea. Understanding these cultural differences makes business easier.” Tarek Fouad, Head of Growth at Shorooq Partners, advises that understanding the country’s culture is the most critical factor and the first step in advancing overseas.

The MENA region is somewhat unfamiliar to Korean startups. Founded in 2016, Shorooq Partners is a professional investor specializing in this region and plays a link between the Middle East and Korea. Thanks to its Korean co-founder, it has been active in the Korean market for the last year or two based on its understanding of the two regions, actively nurturing and discovering startups as well.

Middle East has a big VR market

Shorooq Partners is highly interested in the Korean market. The firm participated in the Launchpad program run by KOCCA because it is an opportunity to meet many Korean startups. There are three main criteria for Shorooq Partners to evaluate startups: team, product, and market fit. It focuses on the relevance with the Middle East in particular and deems it necessary to have an understanding of cultural aspects and language skills.

In the selection of startups that will advance into the Middle East through Launchpad, five companies were finally chosen in line with these criteria. Most of them are startups belonging to the growing sector in the Middle East. Among the selected companies, Fouad selected Letsee as the first company to succeed in the Middle East market. Letsee provides WebAR SDK; a web-based augmented reality software. The AR market is growing in the Middle East, and companies are using VR in various ways, increasing the possibility of Letsee’s success. He also commented that Doubleme, which has hologram and avatar technology and aims to target the VR market, and a travel startup Globaleur have the potential for growth in response to the growing demand for travel in the Middle East.

In the oil-rich Middle Eastern countries, there is a recent trend of innovation centered on technology companies. In order to become a technology powerhouse, the national level of support has been provided for the technological environment. Fouad explained the Middle East startup ecosystem by saying, “The government is providing support to technology companies to reduce initial costs such as housing, licensing, and medical support.” He added, “Various initiatives are taking place between MENA countries, so it is time for VC members like us to play a meaningful role.”

Entering the Middle East market is not easy. It is because not all countries have a common policy. In other words, it is a difficult market to challenge without a partner who knows the local area well. Shorooq Partners emphasized the importance of local connections and recommended finding a local partner, whether a Korean company based in the Middle East or whoever.

He also added that participating in events like GITEX is a good way to secure a local network. There are no cultural rules or laws that must be followed in the Middle East. However, the way they work is different. “I feel that Korea has different deadlines because of its hasty culture,” said Fouad. “In order not to be stressed due to these cultural differences, understanding the culture of each market will be helpful.” Shorooq Partners plans to further strengthen its position in Korea in the future as it creates a fund for Korean startups. “So far, we have invested directly in two startups, and we plan to invest in two more startups if possible within this year,” said Fouad.

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