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By John Lee.

Iraq Venture Partners (IVP) has identified four main areas as untapped investment opportunities in the Iraqi market:

1. Fintech: Limited access to formal banking creates demand for mobile payment solutions and digital financial products. There is room for growth in areas like peer-to-peer lending, microfinance, and digital banking solutions that enhance financial inclusion, particularly among young adults and rural communities.
2. E-commerce: Rising smartphone usage and internet access are fueling demand for online marketplaces and delivery services platforms like Miswag and Orderii.
3. Agritech: As agriculture remains a cornerstone of the economy, there is immense potential for technology-driven transformation in this sector. Startups are beginning to introduce technology to improve crop management, increase yield, and optimize resource use.
4. Edutech: Iraq's demand for education technology is growing and Edutech can make quality education accessible, especially in regions where physical infrastructure is limited.

The report, prepared by Hady El Samra and Mohammed Azzam, also gives an overview of the start-up ecosystem in Iraq, and concludes with a list of areas for improvement.

Click here to download the full report.

By John Lee.

Five Iraqi start-ups are reported to be among the 24 new businesses selected to take part in Flat6Labs' StartMashreq Growth Track programme.

The programme, which started in June and will run until December 2024, is part of StartMashreq's broader vision to inspire and support displaced entrepreneurs and empower female-led startups in the Mashreq Region.

According to WAMDA, the five start-ups are:

• KESK: which describes itself as a "green solutions company".
• Lezzoo: offers delivery, e-commerce and payment services.
• Midient/Padash: According to Daily News Egypt, a cloud kitchen platform that enables food entrepreneurs to launch online brands.
• Orderii: An online marketplace.
• Toolmart: An e-commerce platform that sells tools and hardware products.

StartMashreq was founded to create economic opportunity and facilitate growth through focused entrepreneurship support programs. The initiative is a partnership between Egypt-based Flat6Labs and the International Finance Corporation (IFC), who joined efforts to create an accessible ecosystem that factors in the socioeconomic realities of communities across the Mashreq, with displaced and marginalized people and minorities at the center.

(Sources: Daily News Egypt, WAMDA)

From Five One Invest. Re-published with permission by Iraq Business News.

ECOSYSTEM OVERVIEW

The Iraqi startup ecosystem started with a bang this year. In Q1 of 2022, we witnessed an unprecedented $10.5M investment round (Baly) and $5M (TipTop). The excitement revolved not only around investment value but also around the investor profile.

Specifically, Baly's round was a testament to regional and international investor appetite in Iraq. The investors were diverse - from China (MSA Novo), UAE (March Holding), and Sweden (Vostok Ventures). Another interesting attribute is that both startups were early stage.

Unfortunately, the initial thrill of Q1 seemed to fizzle out by mid-year. The expected ripple effect of those two initial deals did not materialize. During Q2 of 2022, there was no publicly reported investment activity. The remainder of 2022's rounds were six-figure or less. With only one public round in 2022 (Nakhla), Euphrates Ventures seemed to have disappeared from the scene.

Although the dollar amounts of 2022 surpassed last year, 2021 displayed consistency in value, investor profile, and disbursement of funds across all four quarters. So, what happened to the investment buzz? Were Baly and TipTop just one-off anomalies?

BENCHMARKING AGAINST INVESTMENTS IN MENA

For a more holistic view, let us dig deeper and see how Iraq's investment trends stack up against MENA's. According to Wamda and Digital Digest's October 2022 report, the value of deals in the region witnessed a 331% year-on-year increase compared to October 2021. As of today and based on our conservative estimates, Iraq is on a similar positive trajectory. Iraq's year-on-year investment value increased by around three-quarters (72%) - mainly attributed to Baly's and TipTop's groundbreaking rounds. While seed and pre-seed activity witnessed a drop in the MENA region, the value and number of seed-stage rounds in Iraq remained relatively stable.

MENA investors poured money into two main industries - cleantech and fintech. Fintech startups received the most attention, with startups such as MoneyFellows ($31M), Telda ($20M), and MaxAB ($40M). Meanwhile, cleantech startup, Yellow Door Energy, led the biggest raise with a mega-round of $400M. Iraq's investment landscape observed very divergent sectoral inclinations. Ecommerce continues to reign as king. Historically, cleantech in Iraq received its share of attention.

New contenders have sprouted, notably agritech (Nakhla) and edtech (IoT Kids). This sectoral interest is consistent with social and economic needs. Fintech, on the other hand, is still nascent. Mohammed Koperly from Al Nesoor Law firm attributes this to "complex ambiguous laws and regulations applying to banks, financial institutions, and insurance companies if they carry out such regulated activities." And that is why we notice a proliferation of wallet and prepaid solutions. Interestingly enough, ecommerce platforms are exploring new and innovative methods of circumventing the lack of fintech solutions, particularly startups such as Orderii, Simma, and ToolMart.

LOOKING FORWARD: SOLUTIONS AND NEXT STEPS

Last month, Five One Invest buckled down and organized a roundtable session to uncover the gaps facing investors...what were the missing pieces of the puzzle? The online roundtable invited fifteen international, regional, and local investors to discuss investment barriers and potential solutions.

The discussion uncovered four main steps to be taken to facilitate involvement in the Iraqi ecosystem:.

• Addressing startups' investment readiness gaps such as basic accounting.

• Contextualizing Iraq's ecosystem by providing a holistic overview of the investment and entrepreneurial landscape.

• Presenting Iraq's startups at regional events (such as Step, Rise Up, Gitex, etc.).

• Building trust among regional and local investors through investor networking, relationship building, and knowledge sharing.

• Supporting the survival of later-stage startups by increasing the ticket size and de-risking through co-investment and the participation of larger investors.

Quite a few ecosystem players have taken measures to champion the ecosystem further. Earlier this year, Iraq Venture Partners (IVP) and Five One Invest launched a joint pilot investment readiness program. The joint pilot program provides startups tailored support through Five One Invest that addresses gaps before the IVP investment transpires. The type of support includes financial modeling, pitch deck readiness, due diligence, and customer experience evaluation. Other entities in the market run similar programs, such as The Station, Kapita, and Cross-Boundary. However, there is still space for development.

Within Iraq, there is no shortage of educational and informative content. Local players such as Iraqi Innovators, Kapita, and Five One Invest produce articles, reports, and content with in-depth analysis of the ecosystem landscape. Engaging the international and regional content houses, however, is what warrants attention. A few regional players, such as Wamda and Magnitt, report on Iraq's entrepreneurial scene, but it is still insufficient to attract regional attention.

These past two years have presented Iraq's startups with regional and international exposure. In 2021, Rabee Securities, a well-established Iraq-based securities brokerage firm, hosted five Iraqi startups (Miswag, AlSaree3, KESK, IQ Cars, and Zaytoon) to represent at the Iraq Pavilion EXPO 2020. Earlier this year IQ Cars, an automotive marketplace app, flew out to Websummit, an annual technology conference in Portugal. Also, four startups, JobStudio, Orderii, STEMile, and Eduba ايدوبـــا, showcased and networked with regional investors during the MENA ICT Forum, a two-day forum focused on tech in the MENA. It is refreshing to see opportunities opening up, albeit slowly and far between.

The two other main challenges, developing relationships between regional and local investors and supporting later-stage startups through co-investment, remains tricky. But that is what we are here for...watch this space!

Orderii, a cross-border e-commerce platform closed a 6-figure pre-seed round in October 2022. The platform provides logistics services for sought-after goods only available on foreign sites.

Founder and CEO of Orderii, Shakir Ayad Al Jammas (pictured below), commented:

"We have been serving the Iraqi customer for several years now, enabling them to purchase products from brands that they cannot find in Iraq. We are eager to take Orderii to the next level with funding from investors and grow the business to serve the Iraqi customer even better than before.

"With this funding, Orderii will increase its presence in key markets like Turkey, China, and the US to provide Iraqis with more variety. We will also improve the customer's experience on our mobile app through the integration of more features which will enable a seamless checkout and package tracking experience."

Iraq Venture Partners (IVP) raised the investment round and plans to continue to support Orderii in fundraising for future rounds. Zahi Hilal, Investment Manager at IVP, commented:

"Shakir has what it takes to grow a business in Iraq. He is operationally savvy and knows the Iraqi consumer. He has built a strong team and shown impressive traction without any external funding thus far. Now with funding, we look forward to seeing him take Orderii to the next level."

KAPITA's Iraqi Angel Investors Network (IAIN) facilitated the investment. Mujahed Waisi, CEO of KAPITA, said:

"Orderii is one of the alumni startups of Orange Corners Baghdad and Scaleup Academy, We are happy to see startups going through the pipleline we started to train them and make them investment ready to IAIN.

"We are glad to see this investment and to have an investment firm like IVP in the ecosystem."

Shakir originally founded Orderii seven years ago under the name "Shakir Amazon" in Baghdad. Recently, Orderii expanded its infrastructure and team to cater to a growing demand from Iraqi consumers for foreign products. This increase in demand stems from the increase in digital literacy and adoption of smartphones occurring among Iraq's young population within the past several years.

Orderii has strong logistics relationships with key providers, enabling it to offer competitive shipping rates and shorter delivery times than its competitors. Unlike traditional e-commerce platforms, Orderii facilitates online shopping from foreign sites, offering authentic products which are inaccessible to the typical Iraqi consumer, and delivers them to the customer's door.

(Source: Iraq Venture Partners)

By John Lee.

Nine business start-ups have been chosen as the second cohort of Kapita's ScaleUp Academy:

• Zuqaq
• Eduba
• Orderii
• Mishwar
• Hili
• ENKI
• ServicePoint
• Dentmart
• 3asal Shop

After graduating at the end of the training program in September, they will present their pitches to the KAPITA Seed Fund and Iraq Angel Investors Network.

(Source: Kapita)