CASE STUDY | VENTURE CAPITAL
Scaling to exit with Dubai Future District Fund
100% focus on the outcome scenarios – Scale Up MENA! Masterclass
What happens if we hand-pick 20 of the leading growth founders across the UAE, bring in a handful of venture capital investors and take them through the Scale Up MENA! Masterclass? The outcome: 2 successful M&As, 1 mega IPO and 1 IPO in waiting. Not bad for the booming MENA ecosystem
“Possibly the most unique training I have taken part in. The highs and lows of being a start up founder squeezed into two days.” – Michael Hunter, CEO & Co-founder, Holo
The persistent challenge: MENA founder’s don’t scale
Over the past decade we have seen an explosion of early-stage entrepreneurship activity across the MENA region in general and Dubai in particular. Co-working spaces, incubators, accelerators, angel networks, seed-stage VC funds, founders and events; the building blocks of the early-stage entreprenurship ecosystem has been booming. A record number of startups is getting launched. Founders move from all over the world to set up in Dubai. New VC funds are announced regularly. Yet, the region still has a shallow track record of breakout successes and founders truly scaling up.
Lack of ‘scaling mindset’
Not easily found in the data, but often coming up in our sessions is the ‘lack of scaling mindset’. “We have a small market”, said one founder, referring to the UAE and KSA as the two home markets. “Yes, but when are you launching in Turkey, EU and USA….?”; we asked. Multiple people have brought this up, the lack of a true international scaling mindset is holding many founders back from going global and aiming to build generational businesses. [TB1] This spans access to markets, access to revenue, but also access to investors and exit opportunities.
For many founders, growing across the local markets is ‘enough’. This needs to shift. We need founders and early backers that can shift the mental model for what is possible and build global winners out of Dubai.
When will we see a Dubai version of TikTok (Bytedance, China, $330BN), Lovable (Sweden, $6,3BN) or Thinking Machines ($50BN, US company, Albanian founder)?
Shallow seed-to-A conversion
Today, the conversion from seed to series A in MENA sits around 7%, vs. global averages between 10% – 14%. This indicates a healthy number of seed-stage deals, but too few that can mature fast enough into a more grown up startup, with the traction and metrics to secure a strong series A funding round.
Limited growth rounds
Limited international investor appetite
Compared to other ecosystems, the feeling is that the MENA region is still not able to attract significant capital from outside the region. Today, local investors very much dominate the negotiation table, pitch sessions and cap tables. It’s changing, but a growth in international capital would strengthen the market
Few large IPO’s and M&A exits
The talk of the town, ‘lack of exits’ is real, but at the same time, nobody wants to exit companies at undervalued valuations or on premature deals. More time, more mature companies are needed first, then the focus should shift to successful listings and exit transactions.
Combined, the lack of scaling mindset, low conversion rate, limited growth rounds and growth investors and shallow exit market is holding back the ‘scaling up’ part of the ecosystem in the region. But, given the momentum from the early-stage ecosystem, the rapidly rising quality of founders, the influx of capital, the quality of VC firms now going back to the market to raise their funds II, III and IV, the strong government leadership, this is changing.
Connecting the ecosystem with Scale Up MENA!
The solution: a long-term playbook to build scale up ecosystems.
Step one: The Scale Up MENA Masterclass
We have seen this playbook before.
In our global work with startup ecosystems, from Switzerland to Canada, Norway to Singapore, we have seen how startup ecosystems mature into scale up ecosystems. It does not happen by itself, but it can happen.
Growth stage accelerators, unicorn programs, emerging fund manager programs, Superangels, serial exited founders, corporate venture teams, LP development programs, IPO readiness programs and strong government support are all key building blocks in a more maturing, scaling up ecosystem.
Over the past decade we have helped write this playbook for ecosystems and government agencies globally.
One of our key tools; the Scale Up! Masterclass. Originally developed in partnership with the Norwegian national innovation agency, and since delivered in 50+ countries, 1000’s of founders has mastered the keys to scaling up in this program.
A year ago, in Cairo, we started the development of a 100% MENA version, Scale Up MENA! Based on a year’s research into term sheets, deal syndicates, investor networks and ecosystem trends, the Scale Up MENA! development work has taken us to conferences in Saudi Arabia, VC summits in Abu Dhabi, founder interviews in the UAE and everything in between.
After a year’s development, it was time to bring the Scale Up MENA! Masterclass to market. Our first call, to our friends and long-term collaborators at Dubai Future District Fund. “Would you be interested in running a unique, first-of-its-kind?’. “Yes, let’s make it happen!”
Should we take the investor roadshow for five new investor term sheets?
“This was an awesome couple of days for growth-stage venture founders experiencing a simulation of rapid scaling and exiting (and some hostile takeovers too) – thanks again to Christian Rangen, Scott Newton and Sanjana Raheja for running it!
Founders don’t learn through textbooks and theory – everyone learns best through doing and this simulation is a great safe space to experience how to scale fast with a path to exit. Thanks also to Karim Wazni for sharing the realities of what it takes to IPO in MENA. Now onto the real-life exits ahead…”
– Tiffany Bain, Principal Portfolio Development Dubai Future District Fund
What is Scale Up MENA?
Scale Up MENA! is an experimental learning simulation, delivered in a Masterclass, Accelerator or Classroom format. Participants form teams, select a case company and work to scale this from idea to successful exit. Along the way, the teams race to develop a growth strategy, raise 1-3 SAFE notes, secure first revenue, select advisors, develop a GTM strategy, expand into new markets, raise 3 – 12 rounds of equity financing, meet 600+ real life investors and term sheets, deliver partial liquidity and ultimately deliver a winning exit transaction – all wrapped into a couple of days’ worth of intense work. Global founders have called it “stunning”, “mind blowing – but in a good way” and “something every founder should experience”.
Scale Up MENA! covers a series of topics all founders should master
“Recently wrapped up a fantastic masterclass on term sheet negotiation. It was incredibly clear, practical, and provided a ton of founder-centric insights. Loved breaking down investor dynamics, leverage points, and how to protect long-term control. Easily one of the most actionable sessions I have taken.”
– Anuscha Iqbal, Co-Founder @Qanooni
DAY 1: Navigating the founder’s journey – where years are hours
The 20+ participants, a mix of Series A & B stage founders and Dubai-based VC investors quickly formed teams, selected their case companies and we were off to the races. Four teams, five participants per team. Retail Mind – shaping the future of retail (Dubai) LogiFlow – AI-powered logistics solutions (Dubai) VisionGuard – AI-solutions for smart cities (Bay area, San Francisco) Leo Bank – Digital banking startup (Abu Dhabi)
Could all of them outperform Careem’s $3,2BN exit? Who would come out on top?
SAFE conversion on the Founder’s Journey
Laying the foundation: growth strategy, foundational equity
Right from the start, participants shaped early growth strategy, set up initial equity splits and cap tables and, most importantly, stepped into their roles.
Seed stage investor pitch for Leo Bank.
Ramping up, stacking SAFE notes, securing first revenue
An undisputed fact of startup life, the burn rate, also got real very quickly in the Masterclass. With a 200.000 opening capital, plus a few government grants, the 50.000 burn rate to roll the dice and make progress in the market is a steep cost to manage. Fortunately, each team’s IRM (Investor Relations Manager) quickly found a way to tap into friends and family investors, leading each team to quickly assess 10-15 family offers for early-stage financing. Uncapped SAFEs, interest free loans and ‘set any terms’ were prevalent, while CROs (Chief Revenue Officers) scratched their heads trying to find paths to first revenue, a key milestone for any startup.
Analyzing 100’s of term sheets requires focus
Scaling up, from SAFEs to equity
But markets wait for no founder, and burn rates leaped from 50.000 to 100.000, then 500.000 as teams were closing SAFE notes, negotiating with advisors and trying to avoid the most complex of advisor terms. Just like in real life, most teams quickly got into SAFE stacking, an art and science most MENA founders learn to deal with. Priced round, preference shares, accelerator programs and board seats all hit founders as day 1 progressed at pace. At the same time, CPOs (Chief Product Officers) were sprinting to get the product development of the ground and grow the AI Stack to level 5 (triggering a big KSA AI grant, courtesy of Saudi Data & AI Authority (SDAIA).
As the day progressed, Superinvestors, the complex term sheets that would often require a small army of lawyers to unpack were starting to make their way into the market. Careem Cartel, Global Ventures, Beco Capital and MEVP, were just four of the 90+ Superinvestors the teams faced, each with unique and distinct term sheets and deal structures.
Reviewing the fine print on complex Superinvestor term sheets
Scaling, scaling, with Softbank, Mubadala and PIF on the cap table
Scaling, not just starting, was the key theme of the Masterclass, pushing founders to think bigger (remember, the scaling mindset gap), invest more aggressively in global growth (35 markets to choose from), and scale their cap tables with Amazon, Softbank (mostly secondaries), Mubadala, PIF, BECO, Nuwa Capital and White Summit capital as later-stage investors.
The Zoo. Which bragging-rights animals can you capture?
Delivering returns, realizing an exit transaction
Every startup has two sets of customers. Your ‘product customers’ and your ‘equity customers’. What’s your strategy to create value for each of them? The four teams really got into that during the final stages of day two. Team one, Retail Mind, accepted an cash- and equity, $1,2BN M&A deal with LogiFlow. Team three, negotiating from a superb position, managed to land an $87BN M&A deal, delivering 267X back to their early investors (which came in at an exceedingly high valuation to begin with). Team four, Leo Bank structured a total of 15 equity financing rounds to hit a $1,2 Trillion valuation (think, OpenAI, just in MENA), and start IPO preparations for a future listing.
Raising capital is one thing, but can you also return capital?
Shaping the market was team two, LogiFlow, using their cap table as a strategic weapon to consolidate the market space and quietly killing off their competition. With 19,7% of their equity, or about $89BN, LogiFlow managed to acquire and consolidate two competitors.
What a winning cap table looks like, great work team LogiFlow
Finalizing the day, each team was tasked with a final board presentation on their IPO readiness and a recommendation to the board on why, where and how to take the company public.
Joining the Masterclass, Karim Wazni, Executive Director with Moelis, served as board member, asking the challenging questions of the founders hoping for a ‘quick flip IPO process’. Having been involved in 20 IPO transactions in the region, Karim brought a wealth of knowledge on how to structure IPOs in line with the MENA market – advising founders on cap table choices, governance, corporate setup and equity stories to lead a high-growth startup into public market success.
Wrapping the day, with two companies on path to public market listing – and two companies nursing their early M&A exits, team two, LogiFlow and team four, Leo Bank, got to share the winning position on the podium – having successfully scaled from idea to IPO ready exit in MENA in just two days – a pretty impressive achievement by any standard.
Unique insights into the MENA exit market right now
Founder insights
“Just wrapped up an incredible two-day workshop on Scaling and Exiting for Founders, hosted by Dubai Future District Fund who I’m deeply thankful for the invitation. If only I had attended something like this 20 years ago during my first venture… In just 16 hours, we covered what felt like a year’s worth of founder lessons thanks to Christian Rangen of Strategy Tools and the team.
What made it stand out?
We worked in teams, simulating startup journeys through multiple funding rounds – navigating curveballs, spotting opportunities, and making tough decisions founders face every day.
The process was gamified, which brought a whole new level of energy and engagement.
Special guests (thank you,Karim Wazni / Moelis & Company team!) joined to evaluate and share feedback, adding immense value.
Most importantly, this wasn’t just another “sit-and-listen” seminar. It was fully interactive. We were the participants. The experts simply facilitated. We don’t just learn by listening, we learn by doing. And the DFDF team clearly gets that.
Two days. High-impact insights. High ROI on time invested.
– Fahmi Al-Shawwa, Founder, CEO, Immensa
“Firstly I would like to thank you for a very energizing session and 2 days spent in a wonderful setting so very well orchestrated by you. I can safely say that “the 2 days flew by – quite often reminding me of the basics that we sometimes forget, often helping me relate the simulation to real life situations we have come across in our own business at Camb.ai and sometimes challenging my fundamental beliefs.
I remember what you said at the start – either we will come out of it saying we totally get it or we will say what was that. I totally got it. The best program so far I have attended and at what speed. Precisely designed, immaculately delivered, in a totally no judgmental setting. Kudos.”
– Avneesh Prakash, CEO, CAMB.AI
-“Attending the Masterclass was a unique experience that brought out a lot of perspective. Albeit building a business is hard work, but it was interesting to see how impactful optionality and capital strategy can be when delivering a strong IRR for all shareholders involved.
It taught me that the journey of a founder in the start up world requires fast, impactful decision making early on with more slow, deliberate decision making later on the in the journey.”
- Harsh Sajnani, Founder & CEO, Kingpin
Where else can founders study 600+ term sheets in just days?
Impact & Outcomes
Building out the ‘scaling up’ pieces of an entrepreneurial ecosystem does not happen by itself. It needs to be built, developed, nurtured by leaders, founders, investors and ecosystem heroes. In the first ever Scale Up MENA! Masterclass in Dubai, we saw what the top talent in the ecosystem in capable of. They leaned in, proved that the region without a doubt has the talent to take the ecosystem to the next level.
Looking ahead, we are excited to see what these founders can build and realize in real life.
Conclusion
The purpose of Scale Up MENA! is to positively contribute to founder’s getting better at navigating the founder’s journey. From foundational equity, early SAFE notes, cap table management, secondary liquidity and realizing a strong exit strategy,
What we saw in the first ever DFDF Scale Up MENA! masterclass fully confirms, the ecosystem is rapidly maturing and evolving in the right direction.
These founders aced it, and delivered substantial value in just hours – now, the next step is to replicate this in the real world.
Facilitator notes – Chris Rangen
What struck me in Dubai, was the immense experience and high-caliber profiles of the participants. Ten years in investment banking. Eleven years as Managing Director at leading investment firms. $160M term sheet negotiations with Goldman Sachs. Successfully exited serial entrepreneurs with the battle scars from navigating the founder’s journey.
When we planned this Masterclass with DFDF, we were told, even warned “these are exceptional founders”. And they were.
Building legal ai tech, large scalable health tech solutions, advanced climate tech and the future of mobility in the region, these were not your average seed-stage founders, but founders that had largely made it through the 93% drop off rate and gotten into the more mature Series A and Series B territories.
Chris, Scott, Sanjana, Alain, Strategy Tools
Combining this with the depth of experience; the participants could slice through most term sheets (Superinvestors) in seconds, structure SAFE notes for optimal conversion outcomes, manage cap tables for long-term outcomes and find paths to generate billions of ARR. This is not easy. Most founders around the world, from Vancouver to Cairo, Copenhagen to Cape Town, struggle with these concepts. In Dubai, the participants could make the mental leap from starting to scaling, and scaling to exit (value realization). As we kept throwing harder and harder challenges (we call them GP Tasks and Strategic Dilemmas) at the teams, we saw where the energy flowed and where the harder terms got hard. Doing preferred partial liquidity at Series A for an early angel investor? No thanks. Doing a blended financing deal with a Sovereign wealth fund pegged to your required ARR multiple YoY? Nope? Bringing in a lawyer angel investor, with 4% equity but another 10.000 warrants at $2 strike price? Never! The teams were sharp in spotting the good deals, doing the great deals and avoiding the shady, tricky deals with significant dilutive impact. This, of course, is a skill we would wish for all founders to develop.
Zooming out, our program with DFDF in Dubai was also our world-premier of the Scale Up MENA! Masterclass in Dubai. Based on the proven Scale Up! platform and based on 12+ months of development, with 100’s of hours studying term sheets, SAFE notes, deal syndicates and ecosystem programs, this was the first ever multi-day Masterclass in Dubai. Based on the feedback, I think it’s safe to say that it worked. Looking ahead, we aspire to take 10.000 founders, angels, VCs and ecosystem builders through our programs in MENA towards 2030 and beyond – ultimately contributing to the long-term success of the startup- and VC ecosystems across MENA.
Dubai is quickly becoming a global finance hub
About the client
Dubai Future District Fund is Dubai’s venture capital fund of funds and investments platform. Anchored by the Dubai International Financial Centre and Dubai Future Foundation to strengthen venture capital investing in Dubai. Since inception, Dubai Future District Fund has backed fund managers and founders across Dubai. Today, counting nearly 185 fund investments and 270 active startups across direct and indirect strategies, DFDF is one of the leading players shaping the future of the Dubai startup- and venture ecosystems. Learn more.
Do you want to explore how we can bring the Scale Up MENA! Masterclass to your ecosystem, community, accelerator or program? Get in touch today.
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