Finding funding is key to the growth of many start-up businesses – but it’s not just about the money, writes Ben Flanagan.
And so when Sara Alemzadeh moved to Dubai from her native New York to launch her tech venture, she was looking for clout as well as cash when approaching investors.
She found both and in 2014, with fellow co-founder Ranya Khalil-Aghamardi, started Designer-24, an online business that rents out luxury dresses to women in Dubai. It recently launched in Lebanon, where Designer-24 also has its first physical retail store.
The idea sprung from a wedding the two entrepreneurs attended in Lebanon. Having received a last-minute invite, Ms Alemzadeh ended up borrowing an outfit for the occasion – which got the two talking about the potential of a luxury dress-rental business.
Ms Alemzadeh, an American citizen with Iranian roots, says Designer-24 is now embarking on a regional expansion. That is thanks, in part, to investment from two luminaries of the Mideast tech scene. Designer-24 has completed two rounds of funding, with the Jabbar Internet Group involved early on. Jabbar is led by Samih Toukan and Hussam Khoury, who co-founded Maktoob.com – which Yahoo acquired for $164m in 2009 – and had a role in forming retailer Souq.com, later named the region’s first $1bn-valued ‘unicorn’.
Such experience was exactly what Ms Alemzadeh and her partner were looking for when seeking to fund their own business, which now employs about 10 people.
“We didn’t want money – we wanted smart money,” she said of the fundraising drive, speaking to Benchmark from New York.
Here Ms Alemzadeh – who moved to Dubai in 2014, having worked for a decade in New York as a Morgan Stanley oil trader – explains her entrepreneurial journey.
Q&A with Sara Alemzadeh, co-founder and chief executive of Designer-24
How many dresses are available to rent via Designer-24?
Between Lebanon and the UAE we have over 1,500 dresses. When we launched we owned all of the dresses. [But] now we have a really cool feature where women can rent out their own dresses. A lot of women in the Middle East just have a lot of dresses that they’ve worn only once or twice.
What kind of uptake is the service getting?
The growth rate has been pretty amazing. So we’re now looking at opening in new markets… Saudi, Kuwait and Jordan are the three markets to watch out for in the next three to six months.
Why did you choose Dubai as a place to launch your start-up?
For a few reasons. One being the fact that Dubai is the hub between East and the West. In terms of the population of the UAE, it’s 9 million, but with intra-region tourism, that swells. Also a lot of the tech companies start in the UAE, just because they have made it so friendly in terms of the free zones, and they’ve really attracted a lot of investment. It is a hub for the Middle East. It seemed like a natural place to have our base.
What were the toughest challenges you faced launching Designer-24?
Launching our website took longer than we expected. And logistics obviously in the region is a challenge. Not only are we running a two-way logistics company, but the timing of delivery is integral. If you’re ordering a designer dress for a wedding you have on Friday, and you don’t receive it by Thursday night… that doesn’t work.
How did you fund the business?
To begin with Ranya and I funded the business to get it off the ground. And then we did a seed round, where we brought in some really exciting investors. The guys who did the bulk of it were Samih Toukan and Hussam Khoury from Jabbar Internet Group. When we were launching the company we created a shortlist of people we would be excited to get on board from a strategic perspective. So we did research on the region and these guys were pioneers.
We met with Samih on our first trip to Dubai, when we were about to launch our beta site, after we had purchased the first set of dresses. And we showed it to him. It’s like going on a date: you either feel the fit, or you don’t, from the beginning. And it just fit. He really loved the concept, we really got along with him well. And we closed that round very soon after meeting him. We just did another [funding] round where we brought in MEVP – Middle East Venture Partners – as well as Choueiri [the Dubai-based media representative company].
A lot of people say it’s hard for Middle East start-ups to get funding. But I guess if the formula is right it makes all the difference…?
The Middle East is obviously a growing market, it’s a younger market from a technology perspective, than the West. So you don’t see the huge multiples… That being said, there are active investors, the VC community is growing, and we’ve been really lucky to work with some really great people who have supported us.
Figures from ArabNet show that 13 percent of MENA start-up founders are women. What do you make of that?
If you were to look at the global number of, for example, CEOs that are female – I would think it wouldn’t be that far from that. So those numbers don’t sound like they are unreasonable vis-à-vis the rest of the world. I think that it is obviously growing. Maybe five years ago it was more like 5 percent. People have asked me that question, ‘as a female founder, have you found it to be more difficult, or less difficult?’ And I have to say, I found the region to be really open and supportive – I haven’t noticed a gender issue in any way.