Announcing Investment in Souktel

Q&A session after announcing the Souktel deal at Yamsafer’s office-warming party last Tuesday. From right to left: Jacob Korenblum, Mohammad Al-Kilany, and Saed Nashef.

Souktel is Sadara’s second investment (following Yamsafer) in a Palestinian tech startup. Our up-to $1 million investment will go towards expanding the company’s service offering, winning larger accounts, and entering new markets. Souktel’s team built a service that uses SMS-based communication to solve the problem of connecting people in far-flung communities with the information they need. Their target users are potentially in the hundreds of millions, and the impact of the work they do on improving people’s lives is readily evident.

Launched in 2006 out of a Harvard Business Plan Competition, Souktel set out to solve a fundamental problem of connecting job-seekers with relevant employment opportunities in frontier markets. Remote communities in countries including Sudan, Somalia, Iraq, Morocco, and Kenya among others, encounter movement, cost, and infrastructure barriers to access timely and relevant information about available jobs. To solve this problem, the company developed SMS-based services including job-search and job-match to connect employers with job-seekers. These services also include AidLink, a service connecting at-risk communities with emergency aid organizations. Today, Souktel operates in 20 countries in Middle East, Africa, and Asia, with close to 20,000 job-seekers and over 700 employers.

Although this is decent traction, it’s barely scratching the surface of a huge opportunity. Mobile penetration in frontier markets has seen significant growth in recent years. Take Africa, for example. The GSMA reports an average growth of 30% per year over the last 10 years. They forecast that mobile subscribers in Africa will reach 735 million by end of this year. India is another example, where 70% of the population are mobile subscribers. In Palestine, over 95% of the population carry a mobile phone. In such markets, rural (and in many cases urban) communities have limited access to wired internet infrastructure, and data access over cellular networks (2G, 3G, etc.) is limited and cost prohibitive. Under such conditions, SMS-based informational and transactional services offer much needed solutions to real-life problems.

One example is Nokia Life, a service for farmers that delivers information via SMS on weather, crop prices, and farming tips. It has reached 76 million people in India, Indonisia, and Nigeria among others. Another example is M-Pesa, Kenya’s mobile payments service launched in 2007, and now has 15 million users with a total transactions value of Ksh 1.4 trillion since inception.

Thinking of Souktel’s offering in the context of these markets, it becomes clear how significant the potential really is. It also becomes clear how the technology infrastructure and business partnerships Souktel has in place so far can be leveraged to extend their service offerings beyond the HR and aid worlds. Souktel’s operational capabilities in hard to reach markets, and the relations they’ve built with locally established telco’s are both assets and barriers to future competitors. Souktel’s primary revenue models include:

  • Profit Sharing: The company receives a percentage of margins on premium SMS’s – both from SMS’s sent by job-seekers and by employers. On average, a job-seeker sends up to 10 messages per month.
  • Posting Fees: Employers pay a job posting fee for each job ad posted on the company’s network
  • Franchising: Franchisees of Souktel’s services pay a combination of franchise and support fees.

I was introduced to Jacob Korenblum through Khaled Al Sabawi, and first met him in July 2011. It didn’t take very long to know that Jacob and his team have the “right stuff”, and the opportunity they’re bringing to us was worth a serious look. Ideally, this investment should have closed by end of 2011, but we faced unexpected hurdles multiple times throughout the process. Although I’d like to think this was an exception, it’s probably a good idea if you are out fundraising to keep in mind that sometimes, despite all efforts to the contrary, delays are unavoidable.

I’m excited to have Souktel join Sadara’s portfolio, and look forward to working with Jacob, Mohammad, Kristen, Muhannad and the rest of the team to take the company to the next level.

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  • Mohammed

    Good Luck for you all ( Sadara & Souktel )

    • saednashef

      Thanks, Mohammed.

  • “لو كل شاب أو فتاة في العالم العربي فكرفي المشاكل والتحديات كفرصة للتغيير، تخيلوا شكل الوطن العربي كيف سيكون!!”
    تشرفت بالتعرف على محمد السنة الماضية، وأحببت في خدمتهم أن لديهم رؤية واضحة.

    • صحيح عندهم رؤية واضحة وهذه أحد الأسباب اللتي عززت قرار الإستثمار

  • Mohammad Khatib

    Thanks for sharing this with us +Saed. Gives us an idea of the thinking that went when you decided to invest in Souktel. Congrats guys and good luck!

    • saednashef

      Thanks, Mohammad. And glad you found it useful. These guys have a great platform. We now have to help them to put it to even greater use.

  • Great venture meets great VC. Looking forward to seeing SoukTel’s faster growth & success that this series A round provides. Great job guys

    • saednashef

      Thanks, George. Also, thanks for having Peeks arrange the event around the announcement.

    • Thanks, George. Also, thanks for having Peeks arrange the event around the announcement.

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