The United Arab Emirates has finally approved the $3.1 billion Uber-Careem deal. With proper regulatory approval, the deal has been finalized. That’s $1.7 billion in convertible notes and $1.4 billion in cash – the most successful startup exit ever in the Middle East & North Africa. The early investors, such as STC Ventures, got 100x returns on their original investment.
MENA’s entrepreneurial ecosystem is bound to see severe changes in the aftermath of the acquisition. The former biggest rival in the Middle East can now offer a strong foothold in the region for Uber. Mudassir Sheikha, the co-founder, and CEO of Careem offered his take on the deal, noting it’s probably a significant lift-off moment for the Middle Eastern market.
Uber is to acquire Careem’s delivery, mobility, and payments business across the entire region. Luckily, Careem is allowed to maintain its brand identity and merely become Uber’s subsidiary. The co-founder and CEO Mudassir Sheikha will remain in the leading position, and all three co-founders are staying with the company.
Uber will cut its losses in the Middle East by taking over its main competitor. They will also gain unique access to Morocco, Iraq, and Palestine, making use of the existing infrastructure.
Back in 2012, Careem started as a corporate chauffeur service. In 2012, McKinsey consultants Mudassir Sheikha and Magnus Olsson, two former McKinsey consultants, created their first mobile app. With high ambitions for the future, Careem initiated their first round of external investment. They went for around $600,000, too much for some investors. Luckily, some angel investors as well as STC Ventures, and Oqual Investment Network raised $1.7 million, more than three times the original sum.
Scaling quickly became an issue for this astonishingly successful company, and the simple pitch deck continued to evolve. Their innovative, local solutions took on quickly in the Middle East, changing the urban mobility landscape.
In his letter to Careem employees, Mudassir Sheikha said that “A transaction of this magnitude puts the region’s emerging technology ecosystem squarely on the map of regional and foreign investors. It will radically and irreversibly enhance the support and funding opportunities for local entrepreneurs. Every ecosystem needs a landmark transaction, and we hope this will be ours.”
Still, the deal is not without minor inherent setbacks. Back in 2017, when Careem was to expand to the Egyptian market, government officials agreed to allow access to users’ location data. Uber declined the offer, and Careem provided real-time access to the Egyptian government. As a result, 14 million users were affected in a 2018 data breach.
Uber will assist Careem in solving the issue, offering advice and counseling to Careem’s security and legal teams.
With Uber by its side, Careem is likely to expand their business at a faster pace, overcome past mistakes, and launch the region into a brighter digital future.