Founder Philip Bahoshy says the investment data platform will expand into emerging markets
Magnitt, the start-up for Mena start-ups, secures $1m in funding
The investment data platform Magnitt has secured almost $1 million in seed funding from international and Arabian Gulf-based investors to accelerate its growth across the region and emerging markets.
The funding round for the online start-up community was led by venture capital company 500 Startups, along with other regional VCs and angel investors including Middle East Venture Partners, KISP Ventures, Financial Horizon Group and iNet.
“As a start-up ourselves, it was critical to get buy-in from investors from within Magnitt’s ecosystem,” said Philip Bahoshy, Magnitt’s founder, who has self-funded the Dubai company’s set up and platform development to date.
“The fundraise will also help us further improve the platform and scale the product into new markets. This in turn will further support and help educate stakeholders on the start-up ecosystem as it continues to develop.”
Magnitt has been providing investors, entrepreneurs and corporates in the Middle East with investment data since it first launched in November 2014. While its initial aim was to connect start-up founders with investors and offer start-ups guidance on how to approach the entrepreneurial space in the Mena region, it has since evolved into a data house, acting as a reference point for the start-up ecosystem. This pivot in direction has helped to secure interest from investors.
Sharif El Badawi, a partner at 500 Startups, which led the funding round, said it values data and transparency, which is why “backing Magnitt made good business sense”.
“At the heart of understanding an industry or building a nascent, fast-evolving ecosystem, is knowing who the actors are and the activity taking place. Accurate data and objective transparency for start-ups, investors and enablers was almost non-existent before Magnitt. Now it is the defacto source for researchers and reporters within and outside the Mena region,” Mr El Badawi said.
Walid Mansour, partner and chief investment officer at Middle East Venture Partners, said Magnitt was a strategic investment on several levels. "Firstly, the platform brings much needed reliable and trustworthy information and analysis to our ecosystem," he said. "Secondly, we feel that Philip's vision for Magnitt, to foster and help accelerate entrepreneurship in the Mena, is aligned with our vision and will help many other start-ups successfully secure funding and in turn be part of the transformation of our region."
While the investment will be used to deepen Magnitt's relationship with organisations across the Mena region this year, Mr Bahoshy said next year it will look to expand its services into other countries, such as Turkey and Pakistan.
Sixty per cent of the funding came from regional VCs, said Mr Bahoshy, with 40 per cent allocated to strategic angel investors that “can provide support above and beyond capital for the growth of the Magnitt platform across the region”.
The entrepreneur said the funding process took over nine months, with a critical part of it securing the lead investor.
“One unforeseen challenge was that we signed our first term sheet officially in mid-July last year. Unfortunately, in the region the summer is very quiet and this proved to be a big challenge getting in front of investors,” he said.
“Fundraising is all about building momentum. This is very hard to do over the summer when many investors are away and you are unable to get meetings."
Despite the delay, the final amount raised was higher than expected.
“We actually exceeded our initial fundraise target,” said Mr Bahoshy. “The fundraise process made many of the challenges faced by entrepreneurs from across the region more tangible and real. It also provided inspiration to solve pain points around the fundraise process itself that can be supported through data like what are average deal terms, how long does it take to raise, which investors should you be speaking to for your company, VCs versus angel investors etc.”
Mr Bahoshy said the company plans to grow its current team of seven with hiring a key focus.
“We will grow our technology team by onboarding new tech experts to focus on product developments and enhancements to benefit our customers,” he said, adding that the focus will be on building the database, as well as data analytics and the research capabilities of the website.