The Hyper-Specific Startup

The rise of Instabug, CrowdAnalyzer, and other startups solving very specific technology problems, offers an insight into the development of the technology scene in the Middle East. This rise ushers in a new normal in the region: startups rising to provide services and products far beyond the basic needs of people.

Only a short few years ago, the startups that received all the hype were startups offering food services like Yummamia or Mumm, or providing delivery of groceries like Goodsmart. While these companies still receive the majority of the hype, startups like Instabug, CrowdAnalyzer, Elmenus are competing for attention and dollars on the merits of providing technical solutions to enterprise problems.

Instabug has received $2.1 million over four rounds to provide mobile applications with a better tool to make crash reporting better. Besides not being a core consumer need, it's a niche technology need.

Similarly, CrowdAnalyzer offers a way for businesses in the Middle East to analyze customer sentiment in Arabic by developing a technology that can understand different Arabic dialects and analyzing whether it's negative, positive or neutral. It raised $1.1 million in July, 2018 to further develop its technology, and expand its market presence.

This trend shows that we are entering a new phase in the growth of the startup ecosystem in the Middle East. Growing from basic needs, to enterprise technologies shows the continued maturation of the ecosystem. Potential founders now have a stronger incentive to pursue braver (or crazier) ideas as the investor market seems more receptive to these ideas, and seems more willing to throw money behind bolder ideas.

The question is, will the same dynamic transfer to the buyer market? Thinking of consumer companies like Fresh or Al Arabi, will they invest in consumer sentiment analysis, instead of relying on the hunches of a few people who work in marketing or who have climbed up in the chain in customer service. Yes, these companies do hire market research firms like Ipsos or Nielsen to conduct market research. However, that market research tends to rely on smaller sample sizes (40 people is the typical number), as it is more qualitative than quantitative. That market research would be quite nicely complemented with a data-driven approach to customer sentiment analysis. Further, the benefit of using something like CrowdAnalyzer, which analyzes social media posts, gives far more insight to companies, as these social media posts tend to be far less polished than interviews with a research analyst coming from one of the established firms.

Potential founders who are debating wheter to focus on technology problems that are harder to solve and sell, but generally make higher margins, need not worry. The investors realize that the pie now must be smaller, but as the enterprise market matures, the money will come, and the investments made will return multiples. Instabug has been quite for a while, but it now boasts some of the strongest names in the App Store as its clients. CrowdAnalyzer is expanding rapidly, hiring at all levels of the organization to expand its footprint. Additionally, Elmenus raised $1.5 million to go beyond a simple menu website and app, and offer ordering, payment and reservation platform for users and restaurants. Investors clearly see the larger some of money will be coming from the enterprises in the near future and they are betting on a handful of companies to deliver competitive technology solutions, and provide them with the 10x returns.