Dubai-based grocery delivery marketplace InstaShop’s USD 360 million sale to Delivery Hero is one of the biggest exits in the Middle East and North Africa. If we exclude Turkey, where Delivery Hero acquired Yemeksepeti for USD 589 million in 2015, it is Delivery Hero’s biggest acquisition in the region.
The deal has also resulted in a big win for the company’s founders and investors. InstaShop, which was established in 2015, had raised USD 7–10 million in total before its acquisition by Delivery Hero. (The exact total is unknown as the firm had raised money in rounds that were never announced publicly.) TechCrunch had reported that InstaShop’s total raise was USD 7 million and a recent interview with co-founder Ioanna Angelidaki published in Forbes Middle East noted that the startup had raised USD 10 million in total.
In 2015, the company started with USD 365,000 from Dubai-based Jabbar Internet Group and Greek venture capital firm VentureFriends. The following year, the two investors put in another USD 750,000, and then continued to write checks for InstaShop. One other name that lived on InstaShop’s cap table was the e-commerce company Souq. It had invested an undisclosed amount in InstaShop in October 2016. It is not immediately clear if Souq, which was acquired by Amazon in 2017, had divested its stake in InstaShop or owned a portion of the startup at the time of the sale to Delivery Hero.
What’s clear is that Jabbar and VentureFriends have scored a home run with InstaShop. The USD 360 million price tag also includes USD 90 million in earnouts that are linked with InstaShop meeting growth and profitability goals over the next few years. Even if the agreement is structured so that all the money from earnouts goes to founders and investors only receive their share from USD 270 million, it is still a hefty price tag for a company that had raised just USD 10 million. This means that Jabbar and VentureFriends exited InstaShop at very healthy multiples.
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Here’s some extra context: Souq, which was acquired by Amazon for USD 580 million in 2017, had raised USD 460 million—including a USD 275 million investment that gave the company unicorn valuation—in 2016. Careem, which was acquired by Uber for USD 3.1 billion, had raised close to USD 800 million in total.
Looking at these numbers alone can be misleading when we’re assessing the returns of investors. What’s also important to note is the startup’s valuation when an investor wrote a check. Without that exact information, knowing when the investment was made could lead to useful conclusions. In InstaShop’s case, its two main investors, Jabbar and VentureFriends, have been with the company since the very beginning. It is safe to assume that the first funds that they put into InstaShop was invested at a low seven-figure (USD) valuation.
Jabbar was co-founded by Samih Toukan and Hussam Khoury after they sold Maktoob, the leading Arabic online portal that they had co-founded in 2000, to Yahoo for USD 164 million in 2009. Jabbar invests in tech startups in the Middle East and North Africa. Scoring big exits is nothing new for the two investors—aside from Maktoob’s sale to Yahoo, the eBay-style auction site Souq sold for USD 580 million to Amazon—but InstaShop is Jabbar’s first big exit as an investor.
Samih Toukan, announcing the acquisition in a tweet, said, “Congratulations to Jabbar’s portfolio company [InstaShop] which we backed since launch in 2015. This marks Jabbar’s third major exit after Maktoob and Souq.”
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Greek VC VentureFriends was started by Apostolos Apostolakis and George Dimopoulos in 2016 with a USD 20 million fund to back seed-stage startups in Greece. Apostolos is an entrepreneur who had previously co-founded and led different startups, including efood, which was acquired by Delivery Hero in 2015. Even though VentureFriends’ website says the firm was formally founded in 2016, the investors have been backing InstaShop since 2015.
VentureFriends primarily makes investments in Europe, and their first investment in the MENA region was InstaShop. At the time, they probably wouldn’t have invested in Dubai startups, but since both founders of InstaShop, John Tsioris and Ioanna Angelidaki, are Greek, VentureFriends decided to examine the startup and eventually invest. InstaShop had also set up its main engineering office in Athens, and their acquisition has been celebrated widely in the European country.
The Greek investment firm has since invested in Dubai-based on-demand cleaning service provider Justmop as well.
Apostolos Apostolakis, the founding partner of VentureFriends, spoke to a local media outlet in Greece and attributed the success of Instashop to its team. “They worked hard to meet the significant need of the international market in online sales.” He also said that the pandemic accelerated the increase in the company’s valuation.
In addition to the investors, the founders of InstaShop also scored a big win with the exit. As the startup had not raised a lot of money, it is safe to assume that the founders still owned double-digit stakes in the company at the time of the sale. But that’s a story for another day.
This article first appeared in MENAbytes.