A Panel discussion on the two sides of an investment story
On February 28th, 2022, Five One Invest hosted a Speaker Series session with Hasan Alsoud (Founder & CEO, TipTop) and Mazen Sirwan (Director of Communications and Digitalization, Korek Telecom). The panel discussion touched on Korek and TipTop’s recent $5M investment, Korek’s experience in corporate investing, and TipTop’s startup journey.
Korek, a mobile phone operator based in Erbil, in the Kurdistan Region of Iraq (KRI), has been operating in the telecommunications sector in Iraq since 2000. Korek covers all eighteen governorates in Iraq and offers wireless telecommunications services.
Founded in 2020 by Hasan AlSoud and Kerem Aksoy, TipTop is a B2C online food delivery app that provides its users with a fast and efficient way to order food from its partners (over 350 restaurants). The app, currently serving over 50,000 customers, is one of the first Iraqi dark stores. “Q-commerce” is the latest online commerce trend, where users enjoy the delivery of goods within the hour. Slightly more than a year since its launch, TipTop had raised $7M in investment - $5M of which came from Korek. In August 2021, TipTop launched “TipTop Jet,” a restaurant's direct delivery ordering system.
Corporate Venture Capital
Historically, corporate venture capital (CVC) has been uncommon in the Iraqi market. Modern-day CVC comprises two goals: strategic and/or financial. Modern-day CVC’s strategic goal is to create efficiencies and increase agility by outsourcing innovation. CVC investments increase sales and profits by using startups’ technologies, connections into new markets, and various new resources. The financial goal of CVC investments is for leverage - financial returns through exits, IPOs, or sale of shares.
Recently, the Iraq investment scene has witnessed a boom in CVC, as evident by the latest deals, such as Al Sharqiya Media’s investment (five-figure deal) in Orisdi, Korek’s investment ($5M) into TipTop, and Earthlink’s investment (five-figure deal) into IoT KIDS. During the panel discussion, Mazen Sirwan noted that TipTop was Korek’s first CVC investment, but it definitely will not be the last. Although Korek will not launch a dedicated venture fund, it will invest directly into startups as a corporate entity.
Mazen explained that Korek’s decision to invest in the entrepreneurial ecosystem was strategically driven. Korek’s product life cycle will decline, and its roles as a data and voice provider will become obsolete. Telecom providers face fierce competition from Elon Musk (the Starlink satellite internet venture), Google, and Facebook. Users will soon have access to fast, reliable, and free services. Of course, this will come with certain conditions, where subscribers are required to use Google or Facebook accounts to access these free networks services. Mazen maintained that people will eventually not be willing to pay for telecom services. With this in mind, Korek’s strategy is future-looking. Pre-empting the retirement of their services, Korek has jumped on the bandwagon of CVC investments to venture into new product categories and markets.
The Investment Journey
The whole investment journey started with a billboard sign. Mazen was driving around when he noticed an advert for an app (TipTop) with similar colors to Korek’s. The advert intrigued him. Separately, a different delivery startup had approached Korek looking for investment. When Hasan heard of this move, he approached Korek and asked for a meeting to discuss the possibility of an investment deal. Mazen agreed to meet with Hasan and better understand TipTop’s valuation. Mazen left the meeting frustrated. He recalled, “I left the meeting bothered. The valuation announced by TipTop was unrealistic. The business plan was all wrong. And I will not invest in this startup.” Korek’s investment team convinced Mazen to have another one-on-one meeting with Hasan. During the meeting, Mazen and Hasan discussed TipTop’s plan and vision. Mazen was finally onboard. He, the CMO, and Chairman’s advisor agreed to have Korek, as a corporate, invest in TipTop.
Korek’s Investment Thesis
Mazen stated, “We invest in people first. The vision is important to us in business because you can change an idea, but the vision can’t be changed.” What motivated him to invest in TipTop was not the business plan - as he mentioned, “anyone can write a business plan”- but the people and the team. The team’s enthusiasm, knowledge, and experience were what drew him. In other words, the team’s potential was the deciding factor.
Mazen explained that Korek’s investments are industry agnostic, but the startup must be tech-enabled. However, that does not negate investments in “traditional'' non-tech enabled startups. If the startup has potential and will ultimately benefit the country, Korek will consider investing.
TipTop’s Startup Journey
Hasan launched TipTop after noticing the influx of big players into the Iraqi market. The entrance of investors, such as Rocket Internet and Delivery Hero, seemed like a sign of confidence in the market. So, he decided to test out the market. The Kurdistan Region of Iraq offered an excellent launching pad; it displayed stability, safety, robust infrastructure, and electricity. Before the idea of launching his startup materialized, Hasan identified an app he would like to invest in. His messages were left unanswered, and if he did receive an answer, it was unprofessional. That is when Hasan decided to take matters into his own hands and launch his own startup. He faced many challenges on the way, such as where to register and who would develop the app. Now Hasan has registered TipTop in three countries: Iraq, Turkey, and Dubai. Hasan is currently busy negotiating his next investment round - a Series A deal.
Final Words of Wisdom
Hasan’s advice to startups is to look beyond financing when searching for an investor. Founders need to ask themselves, “what is the added value you will get…I am looking for added value.” Hasan advises entrepreneurs to view their relationship with an investor as similar to a marriage partnership. The relationship should include mutual respect, trust, and above all else, benefits over and above the monetary value of the investment.
When considering Korek as a potential investor, Hasan evaluated several factors. First, Korek’s reputation and brand name. Korek’s market credibility bolsters TipTop’s credibility. The second is the power of data. Korek has over six million subscribers and has accumulated user data for more than 20 decades. As Hasan explains, “One cannot put a price on this data. It is invaluable. This data will allow us to understand consumer behavior, usage, and needs and cater to enhancing TipTop’s products and services accordingly.” Both Korek and TipTop will benefit from shared user data helping them grow their market presence. Hasan concluded, “If it (the investment deal) was only about money, many people are willing to give you money.” It is all about value creation and ensuring long-term wins.
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