Will Unifonic be the Middle East’s next unicorn?

Unifonic ticks all the boxes in the Son-Misra investment manual

  
The logo of SoftBank Ventures Asia is seen at the company in Seoul, South Korea, March 4, 2019.

The logo of SoftBank Ventures Asia is seen at the company in Seoul, South Korea, March 4, 2019.

REUTERS/Kim Hong-Ji

It took a short while for SoftBank’s Vision Fund to make its first direct investment in a Saudi company, but it was well worth the wait.

The $125 million funding round by Unifonic, in which SoftBank’s Vision Fund 2 was a co-lead investor, was the largest ever Series B deal — second stage cash-raising — by a technology startup in the Middle East.

Vision Fund has invested in other companies in the region, notably in Turkey and the UAE, but has not backed a tech firm to such a degree at this stage of its corporate life.

The deal fulfills a pledge made by Rajeev Misra, CEO of SoftBank Investment Advisers, which oversees the Vision Funds, to use its billions to back businesses in the Kingdom, providing job opportunities and economic growth in Saudi Arabia.

It enhances the relationship between Vision Fund and the Saudi sovereign wealth investor the Public Investment Fund, which put $45 billion into the first Vision Fund, although the cash for the Unifonic deal came from its second (smaller) iteration.

Since some well-publicized past slips, like the WeWork episode, Vision Fund has actually shown a healthy return for PIF, as the hi-tech sectors identified by Misra and his mentor, Masayoshi Son of SoftBank, came good in the rush to remote working and communications at the height of the pandemic lockdown last year. This put a big premium on technology firms, whether at startup stage or in listed markets.

Unifonic ticks all the boxes in the Son-Misra investment manual. It is at the cutting edge of communications technology, and sits firmly at the center of the brave new world we are learning to inhabit as the pandemic slowly recedes.

Post-pandemic, customers will expect brands, governments, banks and other organizations to connect with them over a growing number of channels, like LinkedIn, WhatsApp and Twitter, as well as whatever is the next big thing in digital communication.

Unifonic allows providers an integrated digital platform for communication between customers and suppliers across these varied channels, allowing better communication and enhanced service.

For example, Unifonic is the force behind the system that allows secure one-time passwords between banks and customers, as well as the messages that remind you when your credit card bill is due, amongst other services we all take for granted.

It is the brainchild of entrepreneur Ahmed Hamdan, who in 2006 saw the need to accelerate digital transformation for the public and private sector in the Kingdom and elsewhere. It established a significant market presence first in Saudi Arabia, and then expanded around the region. Now, it has a corporate presence in the UAE, Pakistan and Jordan, as well as Riyadh, and handles 10 billion data events annually

for 5,000 businesses and organizations, including big names like Uber and Aramex

as well as several hospital groups.

Partnering with Vision Fund in the Unifonic investment is Sanabil, the Saudi investment organization owned by PIF, which targets venture capital and other private sector investment with an eye on long term cultivation and growth. It is one of Sanabil’s biggest investments in a high-growth, high-impact tech company in the Kingdom.

The cash injection will be used to expand activities both within Saudi Arabia, where new products and jobs can be expected, and across the Middle East and other emerging markets where the growth is fastest. “We are hiring!” Hamdan announced on LinkedIn after the series B deal was announced.

Can Unifonic become a unicorn by entering the ranks of regional startups that attain a valuation of more than $1 billion? We will see in the next rounds of financing, and, ultimately, by its value in an IPO or a trade sale. But the backing of Vision Fund has given it a kick-start on that journey.

• Frank Kane is an award-winning business journalist based in Dubai.

Twitter: @frankkanedubai

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