StarzPlay, a MENA-based streaming video on demand (SVOD) service provider, has secured US$25 million in its first independent debt financing from Abu Dhabi-based alternate investment firm, Ruya Partners.
With StarzPlay already enjoying over 1.8 million paying subscribers in the region, the company said in a statement that it is aiming to use the investment to strengthen its geographic and customer reach and to acquire and produce original content, while maximizing its long-term value for its stakeholders. The latest round of funds secured by StarzPlay adds to the $125 million it has raised since it was founded, with the company hoping to follow through on its ambitions to lead into a potential IPO in the future.
StarzPlay currently enjoys a market share of more than 33%, and the ongoing global coronavirus pandemic hasn’t hurt its growth- in fact, the platform has seen its number of unique users growing by 141% over the course of 2020.
And while there is stiff competition in the region’s SVOD space from the likes of Netflix, Amazon Prime, and more, StarzPlay co-founder and CEO Maaz Sheikh told Entrepreneur Midde East that his enterprise has a significant advantage over the others. “Being homegrown is our differentiating strength,” Sheikh says. “We are based in the region, understand the region, and deliver content that is relevant to our audiences here. We were the first entity in the UAE to secure an SVOD license when we launched in 2015. Since then, we have gained a 33% market share, and have year-on-year built our customer base. We have over 1.8 million subscribers, and aim to grow 30% this year, and reach four million subscribers by 2024.”
As for what makes StarzPlay stand out in the regional landscape, Sheikh points toward the content it hosts on its platform. “Our subscribers appreciate the premium content we deliver through our partnerships with leading global studios, and how we leverage advanced technology to deliver a seamless customer experience,” he explains. The Starzplay team is aggressively focused on strengthening their original content, which the $25 million debt financing by Ruya will help fast-forward – they plan to double the volume of their Arabic content – currently standing at 2,500 hours that has been developed over the last 18 months – in 2021-2022. Sheikh adds, “In fact, we have already teamed up Image Nation for the first original Arabic production. There was a slowdown in production due to the pandemic, but we are progressing to deliver the project in 2021. We also launched our first original production, Baghdad Central, in partnership with Fremantle, which received an overwhelming response, showing that stories from the region resonate with MENA viewers. In addition, the pandemic has created organic demand for our service –in the last 12 months alone, we saw a 40% increase in subscriber numbers – and I am very excited about what the future holds for us.”
With StarzPlay being able to boast figures and prospects like these, it thus becomes easy to understand the reasons that governed Ruya Partners’ decision to fund the company. “To give you a broader perspective on our investment views, we believe that the private sector is going to drive much needed economic growth and diversification in the region, and as such, we look to back enterprises that are leading that charge in their space,” explains Rashid Siddiqi, co-founder and Managing Partner, Ruya Partners. “In StarzPlay, we like the underlying sector trends where over-the-top (OTT) video streaming has become the choice in home entertainment.”
According to Siddiqi, StarzPlay’s achievements are especially worthy when considering the fact that it is an enterprise that only launched in the region in 2015. “Within the high growth OTT sector, the management at StarzPlay has done an exceptional job of executing to plan, and positioning itself as the market leader in an otherwise competitive space,” Siddiqi says. “This is no small feat for a young company, and demonstrates the strength of the management team, and the moat they have been able to build around their business. We did a rigorous review of StarzPlay, and were impressed with its financial strength, business fundamentals, robust outlook for growth, and tremendous potential to expand its reach across the wider region.”
A similar thought process seems to have orchestrated Sheikh’s decision to move StarzPlay ahead on its growth trajectory with Ruya Partners’ investment. “Ruya Partners shares our vision for the tech entrepreneurial ecosystem of the region,” Sheikh says. “They understand our business model, appreciate our results, and believe in our future plans. Going for debt financing from within the country, with a partner that values our operations and trusts our outlook, was an easy decision for us. The financing provides us the platform to go public in the next two to three years, and to double our business, expand our footprint, and create original content.”
The investment in StarzPlay also bodes well for the MENA startup ecosystem, with Ruya Partners saying it’s keeping an eye out for more innovative companies from the region that it can potentially fund. “We will continue to evaluate new opportunities in the region, and we see strong potential for tech related investments,” says Mirza Beg, co-founder and Managing Partner, Ruya Partners. “Our focus is on investing in private sector enterprises that are well positioned within high growth sectors, and where we can back a strong management team to take the business to its next level. As it relates to startups, given that we are a private debt investor, we look for companies that have been through successful equity funding rounds (past Series A and B, if not C), and where we can see a visible path to profitability. For potential partnerships, we like to see consistency in the track record of the management team, strength of the shareholder base, and a proper governance structure in place.”
At this point, when asked for his advice for entrepreneurs seeking funds for their enterprises in our current circumstances, Sheikh underlined the importance of building a sustainable business, which will be what attract investors today. “As an entrepreneur, it is critical that you have a strong business model that is relevant not just for now, but for the long term,” Sheikh says. “When pitching, show that you understand the market, the challenges and opportunities ahead, and have a clear strategy for addressing unprecedented risks/challenges. Investors evaluate the understanding and ambition of the leadership, so strong management of your team of experts is important. You must demonstrate innovation, and have a strong tech-driven strategy, even more so as industries pivot to digitization. Show your agility, flexibility, and relevance to the market- now, and in the future.”