Notorious “super-incubator” Rocket Internet is ramping up in the Middle East.
Rocket and telecom provider MTN Group are partnering to form Middle East Internet Holding (MEIH), which will develop Internet businesses in the region. MTN plans to invest up to $410 million dollars into MEIH and Africa Internet Holding, which (as you’d expect) supports Rocket Internet’s companies in Africa.
Rocket Internet is the world’s largest incubator program — it has started more than 100 companies across five continents. Its portfolio companies have collectively attracted nearly a billion dollars in financing in the past year, and Rocket itself raised a staggering $500 million in July 2013.
The firm creates and grows “fast follow” companies, meaning it takes established Internet models — primarily e-commerce — and plants them in emerging markets. Its strategy is to pour millions and millions of dollars into these companies until they gain dominance in the region. Nine digit funding rounds are not uncommon.
This deal indicates Rocket’s strong interest in the Middle East and intent to grow its footprint there. It already owns a Zappos clone called Namshi that sells to the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman. Rocket portfolio companies Easytaxi, Lamudi, and Hellofood also have a presence in the region.
The Middle East is an often overlooked corner of the world when it comes to Internet tech, but it has tremendous e-commerce potential.
There are 110 million Internet users in the Middle East and North Africa. Around 30 million are already shopping online, and e-commerce sales are estimated to reach $15 billion in 2015, up from $9 billion in 2012. This is just the tip of the iceberg ( or oil well), as the Middle East is home to considerable wealth and a population that spends for luxury.
Souq.com, Cobone.com and Sukar.com are the three biggest local e-commerce sites. Let’s see if Rocket and $410 million can change that.