SEED Group to invest in viable startups or companies in the Tech Domain
UNLOCK Blockchain interviewed Mr. Hisham Al Gurg, Chief Executive Officer, SEED (Sheikh Saeed Bin Ahmed AL Maktoum) Group SEED Group, a company of the Private office of Sheikh Saeed Bin Ahmed Al Maktoum, which dates back to the inception of the UAE. It is a diversified group of companies doing business in hospitality, healthcare, technology, real-estate, media and oil and gas in the GCC among other sectors.
Recently SEED Group invested and partnered with Jibrel Network, a Blockchain startup from the MENA region providing currencies, equities, commodities and other financial assets and instruments as standard ERC-20 tokens on the Ethereum Blockchain.
What is SEED Group?
According to Al Gurg, SEED Group is an entity that is looking to grow by investing in niche companies big or small, newly created or well established across the globe. As he states, “We want to be unique in our investments and partnerships that is why we have seven offices across the globe, (UAE, Australia, UK, USA, Latvia, Switzerland, and Thailand) that scope looking for niche companies with viable product offerings that can scale globally.”
He adds, “We look at products and services that are either working extremely well in other markets but currently are not in the UAE or not well scaled in GCC and we provide them with a gateway into the MENA region through Dubai. We do not invest in concepts, but in actually working models small or established and come in as either seed investors, business development partners or both.”
Where is the next investment?
While Al Gurg believes in keeping an open mind when it comes to the next investment, he strongly advocates technologies pertaining to virtual reality, subsets of Artificial intelligence technologies, Blockchain and anything in the digital realm. As he explains, “As a computer Science graduate, I was always intrigued with artificial intelligence and robotics, yet today even after 20 years it has yet to become a commercialized offering. This does not mean it won’t be so in the future but it will take time. In the meantime Virtual Reality solutions that allow users to virtually visit vacation spots, hotels, and even hotel rooms to choose, or allow them to virtually carry out meetings is a very promising technology that we are monitoring closely. We are interesting in investing in viable offerings in this realm.”
Other interesting investment areas for SEED are anything that will increase the speed, efficiency and ease of transactions. As Al Gurg commented, “We are investing in products and companies that will support UAE government vision of making governmental transactions quicker, efficient and user friendly. We want to facilitate the ability of people to carry out their dealings with government from their homes or work place either through mobile or computers. As such we will be meeting soon with Dubai Future Accelerator to discuss some of the companies they are working with around 15-16 of them and we will be investing in 2 to 3 that are appealing to us. This is a good way of not only supporting the UAE government but also a good investment as these are sound startups that already have a client and already know what they will be offering.”
In addition SEED Group offices around the world continuously scope opportunities that feed into H.H Sheikh Mohammed Bin Rashid’s and H.H Sheikh Hamdan Bin Mohammed Bin Rashid’s vision for Dubai and the UAE. As Al Gurg states, “it is very difficult to keep up with the continuous developments that our leadership is availing but through our offices we try to focus on as much of them as we can.”
SEED Group is also currently creating a fund of $10 billion with investors from Asia and the MENA region. Al Gurg, “Today in the region there is anywhere between $2 trillion to $12 trillion worth of private assets that are looking for investments. We are creating a fund that will invest in well established companies that are considering IPOs. We will invest in them prior to the IPO and exit within 2 to 3 years.”
SEED’s History of Investments and Partnerships
Over the years, SEED group, which allocates 15% of its available cash yearly for investments, investing in around 20-30 companies per year, has invested in over 52 companies in the Silicon Valley and has partnered with many other companies who have been interested in scaling in the region. As Al Gurg explained, “Silicon Valley has been a hub for successful startups because of its strong ecosystem. In most instances they have not needed actual money but have required our expertise in the region to allow them to scale and reach successful deals. As such we have partnered with these startups as well as sometimes invested in them because we are gate openers with our contacts, our understanding of the culture, and local market.” He adds, “It is always better to partner with local partners because it expedites sales, and increases success rates. We have always looked to invest in startups or companies that have successfully proven that their products work in other markets whose products can be localized. We sometimes start with a small investment to test the waters and then if we see potentially good results in 6 months to a year we invest more.”
SEED Group has created SEED MENA for the sole purpose of partnerships and joint business development projects. Al Gurg states, “For companies that don’t require investments or for companies we are still not sure about investing in, we work with them on developing their market in the UAE and the region with our team at SEED MENA. Sometimes for example big companies are bidding for a tender and we assist them in the bid, the operation, and even collection of payments. We usually have revenue or profit arrangements with them in case they win.”
Since the inception of SEED Group success rate of investments has varied. According to Al Gurg, “startups usually have a fail rate of 50% while established companies have a fail rate of 10%. Our investment committee comprised of seven members carry out due diligence before we invest using a systematic rating system.”
Today SEED Group reinvests 70% of its yearly profit into new ventures and has diversified its investments since 2008 from reliance on brick and mortar to more digital investments. AL Gurg, “ We only give 25-30% of our profits to our shareholders and reinvest the rest because the times today are tough and we believe it is a good opportunity to invest and expand as you are paying less for everything be it rent or others. Our investment strategy has changed over the years from investing 70-80% in brick and mortar which now only comprises 20% of our portfolio. We believe that the time is for digital where success is quicker, products and services are much easier to scale and investments can be made anywhere in the world with a click of a button or credit card transaction. For example we will soon be launching after Ramadan a company that builds on data from telecom operators to provide permission based advertising to users either through voice messages or videos on brands that they are interested in, in return for free data or voice calls. We believe that this will help SME businesses because it is low cost advertising to a targeted segment and it also provides users with value added benefit.”
Investing in Blockchain with Jibrel Network
As for SEED Group recent investment in Jibrel Network, Al Gurg is happy to have invested in one of the first market trail blazing Blockchain startups. Al Gurg states, “We are investing in Jibrel network and partnering with them. We believe that Blockchain is a promising new platform and as it grows in the region it will be more successful. This is not a one off investment in Blockchain adds al Gurg, however any future investments in Blockchain entities will have to have no objection from Jibrel.
Al Gurg concludes and invites any company, or startup that believe they have an amazing product or service, be they in the UAE or elsewhere and who feel the GCC market will be an amazing market for them. As he states, “Company size doesn’t matter, what we are interested in is your product and service and your ability to cater to the needs of the GCC entities and governments. In the end If you operate I the tech domain, we are interested.”