Source: Forbes Middle East /
Movie theaters may have recently returned to Saudi Arabia, but some investors are banking that the country won’t lose its voracious appetite for online videos, which thrived during the decades-long ban on cinemas.
This week Saudi Technology Ventures and VentureSouq injected $9 million into Riyadh-based Telfaz11, a digital media company founded in 2011 that helps produce and distribute Arabic video content. It’s what’s known as a Multi-Channel Network, or MCN, which is an organization that offers a variety of services to YouTubers, such as assistance with content creation, advertising and cross-promotion, usually in exchange for a percentage of revenues generated by videos.
In addition to being connected to a number of viral videos, Telfaz11 has produced a variety of YouTube shows, including Temsa7LY, Khambalah, Alkhallat and Telfaz11 Top 5. Combined, the YouTube channels that Telfaz11 represents have more than 20 million subscribers. The company says it works with brands such as Reese’s, Nescafé Arabiana, Dunkin’ Donuts, Saudi Telecom Company and Volkswagen.
“Saudi Arabia’s ongoing wave of economic diversification has unlocked a new era of entertainment in the country, opening doors to a whole new world of opportunities for local players like Telfaz11 and attracting tremendous investor interest in the Saudi market,” said Alaa Yousef Fadan, CEO of Telfaz11. His company is using the funds to accelerate its long-term growth plans, including expanding its team and exploring expansion into neighboring markets, among other things.
Telfaz11 is far from the only player looking to capitalize on the space—there’s also UTURN, an entertainment company founded in 2010 in Jeddah that raised $1o million from Beirut’s Leap Ventures about two years ago.
In a blog post announcing its investment in Telfaz11, STV noted that although the growth in demand for online videos in the Middle East and North Africa is among the highest in the world compared to global averages, there is still a relative lack of regional content. “We believe the digital and entertainment ecosystems in Saudi Arabia are ripe for disruption and can unlock value on a regional level,” said Waleed Alballaa, a partner at STV, which took lead on the investment.
STV is an independent venture capital fund anchored by Saudi Telecom. It closed its first investment in 2016, when it took part in Careem’s Series D round. Meanwhile, VentureSouq is a U.A.E.-based group of angel investors. Its portfolio includes companies such as Fetchr, Souqalmal and Reddit, among others.