Space42 mulls funding round for satellite mapping project in Africa

Space42, the Abu Dhabi-backed satellite communications company, is considering a new fundraising push to expand its satellite mapping project in Africa.

While the financing is in early talks and no formal target for the amount it will seek to raise has been set, the Space42 initiative aims to provide detailed maps for all of Africa’s 54 countries that can be used for logistics, disaster response and urban planning, Bloomberg reports.

Working with Microsoft and U.S. mapping firm Esri, Space42 has said it expects to license the data it collects to governments, and later make it available to businesses.

Space42’s potential funding efforts involve discussions with the African Union Development Agency and other financial institutions active on the continent, according to Bloomberg. Among Space42’s shareholders are the Mubadala sovereign wealth fund, G42 tech company and International Holding Co.

In a related development, Space42 has secured a $696 million export credit facility from European banks, backed by French export insurer Bpifrance, to develop its Al Yah 4 and 5satellites with advanced, reconfigurable payloads, SpaceTech in Gulf reports. 

The satellites are scheduled for launch in 2027 and 2028 and are part of a 17-year UAE government contract costing $5.1 billion.

Editor’s Note: This story has been updated with additional details on Space42’s mapping project published by Bloomberg.

Saudi IPOs raised $2.1 billion in first half of 2024, leading GCC

IPO fundraising jumped in Saudi Arabia during the first half of 2024 while slowing in other Gulf markets.

Saudi companies raised $2.1 billion in 19 offerings, a 141% increase from the first half of 2023, according to Markaz, the Kuwait Financial Centre.

The largest IPO in the region during the first half of the year was Dr. Soliman Abdulkader Fakeeh Hospital Co., which raised $764 million on the Tadawul Stock Exchange on June 4.

Across the GCC, the value of IPOs declined 32% to $3.6 billion during the first half of 2024, compared to $5.3 billion in the same period last year, Markaz said.

The UAE’s three IPOs during the first half raised $1.3 billion, down 67% percent from 2023. Alef Education led the UAE with an offering on the ADX that raised $515 million on June 11.

The Daily Circuit: Capturing carbon in Oman + UAE cabinet shake-up

👋 Hello from the Middle East!

Today in The Daily Circuit, we’re looking at a big Cabinet shake-up in the UAE, Gulf IPO fundraising in the first half of 2024, Mubadala’s effort to sell a Brazilian iron ore terminal and a $30 million dinosaur fossil purchase by the yet-to-open Abu Dhabi Natural History Museum. But first, Oman is out front in the developing technology of mineralization.

Omani carbon capture startup 44.01 has landed a fresh round of funding as it looks to commercialize its solution in the UAE and Oman — where it has completed pilot projects — to turn CO2 into rock and trap it under the Earth’s surface. The firm, already backed by Sam Altman’s Apollo Projects, secured $37 million in Series A funding from a group of investors led by the UAE’s Shorooq Partners and Equinor Ventures. Other investors in the round include Amazon’s Climate Pledge Fund and Bill Gates’ Breakthrough Energy Ventures.

44.01 declined to comment to The Circuit on how this round values the four-year-old company, but a spokesman said the next two years will be focused on delivering larger, commercial-scale projects and continuing to refine its technology. With 50 people on staff across offices in Muscat, Abu Dhabi and London, 44.01 will “as much as double our headcount in the next two years” in engineering and research, the spokesman said. The company also plans to court clients working on carbon removal technologies and so-called “hard-to-abate” industries like steel and cement manufacturing.

Carbon dioxide can turn to rock naturally in a process called mineralization when absorbed by a certain kind of rock. 44.01, named after the molecular mass of CO2, has techniques to massively speed that process up – from decades to less than a year. Part of the firm’s sales pitch is that rock formations capable of mineralizing and sequestering carbon dioxide are found on every continent, making it a transferrable solution worldwide. 

“Our investors bring a wealth of international expertise and experience that will help us to accelerate our development and ultimately mineralize CO2 at scale worldwide,” Talal Hasan, Founder and CEO of 44.01, said. “We believe mineralization can play a significant role in protecting and repairing our climate.”

July 2-Aug. 25, Riyadh, Saudi Arabia: Esports World Cup. An international competition for professional gamers with a $60 million prize pot. Boulevard City.

July 15-17, Abu Dhabi, UAE: USA Basketball Showcase. The 2024 USA Basketball Men’s National Team will host the national teams of Australia and Serbia for three matches. Etihad Arena. 

July 15-26, Granada, Spain: ADIA Lab International Summer School. A course of lectures and case studies to explore the critical role of trust and safety in AI, examining the ethical, technical and societal implications of AI applications. University of Granada. 

July 16-19, Aspen, Colo.: Aspen Security Forum. Pentagon leaders, defense contractors and security officials from around the world meet for a four-day conference. Aspen Institute.

July 27-Aug. 4, Washington D.C. Mubadala Citi DC Open. Tennis tournament featuring nine of the world’s top 20 players. Rock Creek Park.

Aug. 12-15, Riyadh, Saudi Arabia: Saudi Food Expo. One of the kingdom’s largest trade shows for the food & beverage industry. Riyadh Front Exhibitions. 

Sep. 30-Oct. 2, Dubai, UAE: Future Hospitality Summit. The global conference for leaders in the hospitality industry expands this year at a new location with dedicated space for ESG planning, country pavilions and a larger exhibition area. Madinat Jumeirah.  

Investors see tough times persisting for Israeli startups

Israeli venture capitalists see little chance in the next year of relief from the ongoing drought in investment that has forced many startups to cut staff or close down.

“This may be the worst year for fundraising since the 2008 economic crisis,” Alan Feld, co-founder of Vintage Investment Partners, told the Eli Hurvitz Conference on Economy and Society in Jerusalem on Wednesday. “It’s true, there is a global crisis, but the decline in Israel is sharper than the one in the U.S.”

Feld, whose firm manages $3.6 billion in assets, led a succession of Israeli investors who expressed deep pessimism about the technology industry, which has been Israel’s banner of success for the past three decades as a spawning ground for startups. At the same time, they called on the government to spend more money on science and math education to be competitive with China, India and other growing tech hubs. The conference, sponsored by the Israel Democracy Institute, provides an annual review of the country’s financial performance and featured speeches by Finance Minister Bezalel Smotrich and Bank of Israel Governor Amir Biron.

Echoing Feld was Yossi Vardi, a serial entrepreneur and elder statesman of Israel’s startup culture, whose assessment of the industry these days is dark. Much of the problem, however, is self-inflicted, Vardi argues, coming from the ferocious political battles over government efforts to overhaul the judicial system.

“We are facing a terrible crisis — there will be no high-tech and there will be no foreign currency, there will be no money for anything,” should the judicial changes become law, Vardi said. “Put aside the quarrels and toxic talk. If we find a logical way to conclude the current national debate, we have a bright future.”

First-quarter investment in Israeli technology companies sank 71% to $1.7 billion from the same period last year, according to a study by the IVC Research Center, an industry group, and LeumiTech. Moody’s Investors Service downgraded the country’s credit outlook last month from positive to stable, citing a “deterioration of Israel’s governance.”

“The economy and the high-tech industry need trust, stability and certainty,” said
Tal Barnoach, a co-founder and general partner in Disruptive VC. “Today we are suffering from both the global crisis and the government conflict, which may be causing irreversible damage to the industry in its early stages.”

While nursing its wounds during the current slowdown, Israel needs to invest in science education to make sure it recaptures its edge when the economy warms up.

“Israeli academia is not competitive globally,” said Eugene Kandel, chairman of the Start-up Nation Policy Institute and former chief economic adviser to Prime Minister Benjamin Netanyahu, who led the panel discussion on tech investment. “Israel can’t depend on second-rate brains. Very quickly, to my regret, we’ve stopped being competitive on first-rate brains.”

Michael Eisenberg, co-founder of the Tel Aviv-based VC fund Aleph, said Israel can increase its pool of skilled technology workers by investing in training programs for underemployed populations such as Arab citizens and Haredi Orthodox Jews. He said the government must also heavily increase funding for math and science education in all schools. “We have to make sure that within a decade, every child in the eighth grade knows how to program,” Eisenberg said.

Yifat Oron, managing director in Israel for New York-based Blackstone, the world’s largest alternative assets manager with $991 billion under management, said the firm is still bullish on Israeli technology companies. “It is important that Israel will continue to be the right place for high-tech companies both in good and in difficult times,” she said. “Israeli governments have known how to do this for decades, and it is important that we do not take our foot off the gas.”

Cash tightens for Israeli start-ups, ushering in new era of job cuts

Israeli tech workers are polishing their LinkedIn profiles. The trend is clear with fundraising for Israeli companies in the second quarter of 2022 down 31% from the same period last year, according to a survey by Greenberg Partners. And as the money dries up, so go the jobs. 

Just this week comes the news that cybersecurity outfit Snyk plans to lay off 30 employees after a September 2021 investment round that raised $530 million. StreamElements, which helps users draw revenue from streaming video, cut 20% of its staff last week, less than a year after Softbank led a $100 million investment round for the company. Alibaba, the Chinese e-commerce juggernaut, told employees it plans to shut its Tel Aviv R&D center, leaving at least 40 people looking for work.

Not a day seems to go by without another almost-boilerplate headline that goes like Mad Libs: “(Insert company name) is laying off  (insert two- or three-digit figure) employees after raising (insert eye-popping dollar figure) less than a year ago.”  

The frequency and intensity of the news stories could have you wondering if the Start-Up Nation is facing a new version of the dot-com bust of 20 years ago?

Not so fast, industry insiders say.

Israel is not alone in suffering from the economic woes roiling the globe. As annual inflation has risen to 4.1 percent, the shekel, which traded for 3.10 against the dollar a year ago, weakened to 3.52 last week. While unemployment is at a two-year low of 3.6% – about half the level in European Union countries – layoffs are very real and likely to climb as Israeli firms expect to further slow their hiring, according to the OurCrowd High-Tech Jobs Index.

Hiring Freeze

In the most recent survey by OurCrowd, a Jerusalem-based venture capital funding platform, some 48% of the businesses polled reported “cautious hiring plans” for the balance of 2022, higher than earlier this year. More said they planned to freeze bringing on new employees. At the same time, many of those affected by layoffs at Israeli companies are, in fact, employed overseas or they don’t hold coveted roles in development and engineering. 

When they have those jobs, employees being laid off are still likely to find other companies seeking their talent, according to venture capital firms. There are still far more open positions today than available employees, especially in technical talent areas like engineering and data science, where Israel is considered strong, analysts say. The shrinking market may also reduce wage inflation, which could lead more companies to hire locally rather than offshore to Europe or India.

“Israel’s high-tech salary inflation and high valuations have made our start-ups less attractive M&A (merger & acquisition) and investment targets for strategic companies on a global scale in recent years,” said Doron Zauer, managing partner at Initium Group, which advises multinational corporations on Israeli business opportunities. “Start-ups going bankrupt and shedding jobs is a tragedy for those affected, no doubt, but the lowering demand might reduce the sky-high salaries that we have seen over the past several years,” he told The Circuit.

To be sure, many Israeli companies are still seen as promising investments. Cyolo, which uses “zero trust” technology to regulate network access, announced last week that it raised $60 million in a funding round led by National Grid Partners.

More Rational Deals

Though painful for employees, reducing staff often improves the fundamental economics of a start-up – especially in the early stages. Investments go further and allow a much longer runway of activity before the company needs to pursue the next financing round. It also can provide more rational valuations for companies in both early-stage transactions and exits.

In PwC Israel’s Hi Tech Exit Report 2021, Yaron Weizenbluth wrote that last year’s record-shattering five-fold growth – which featured 171 deals and a total value of $82 billion – could not be sustained. 

“Uncertainty about inflation, combined with capital markets that are not as accommodating for the experimentation in 2021, will ultimately lead to a more selective market in terms of what companies go public and what valuations they will get,” wrote Weizenbluth, head of PwC Israel’s technology group.
Initium’s Zauer doesn’t see the shakeout  as necessarily damaging.

“This would be good news to many, and will also give birth to a new wave of startups founded by repeat entrepreneurs,” he said.

Robert Lakin is editor of the Substack newsletter, TLV Strategist, and former markets editor for Bloomberg News in Tel Aviv.