In Egypt, there are many ways to listen to music online, and Anghami is one. The app costs just one Egyptian pound per day — that is, US$0.064; or just ₦25 if you’re in Nigeria— and it is free for the first three days. At the time it came, in 2012, Egyptians had not understood what ‘music streaming’ was, and so co-founders, Elie Habib and Eddy Maroun’s burning of the startup’s first few resources in order to explain those words could be justified.
About ten years have passed since then —competition now stiffer and more hardened — and the startup is still alive. In fact, it is marching at its own pace — 70 million users; additional offices in Dubai, Cairo and Riyadh; over 57 million songs; over 10 billion streams in 2019 alone, and doing 1 billion streams every month lately.
However, these facts are no longer its major pre-occupation, at least for now. It has a big project.
The project is simple: Anghami is going public in New York, via Nasdaq (the second largest stock exchange in the world), and at a valuation of $220m!
“Today is a very exciting day for all of us at Anghami and our partners globally,” Eddy Maroun, the co-founder and CEO of Anghami broke the news.
“ Elie and I co-founded the company in 2012 with a vision for Anghami to be a first of its kind, digital media entertainment technology platform in the MENA region. Today, we have taken a significant step forward in our growth plans in seeking to become the region’s first Arab technology company to list on Nasdaq. Being a U.S. listed public company gives us access to growth capital and a global platform that is the best in the world,” he said.
The listing will be done through a merger with Vistas Media Acquisition Company, a special purpose acquisition company (SPAC).
Six months ago, Vistas went public on electronic trading platform Nasdaq through SPAC, in a $100 million Initial Public Offering (IPO).
By the second quarter of 2021, Anghami’s deal on Nasdaq would have been closed.
Benefitting from this listing will be investors — Samena Capital, Middle East Venture Partners (MEVP), and MBC Ventures — who collectively own 68% of the company. Other beneficiaries will include Anghami’s founders and about 60 other employees who own stock options in the startup.
Through the listing, the company expects to have $142 million of cash on its balance sheet at closing which will be used to fuel its growth.
And although Anghami’s founders will continue to lead the company, F. Jacob Cherian, the CEO of Vistas Media Acquisition Company is expected to join the combined company as Co-CEO for a period of one year.
Vistas Media Company, the parent company of Vistas Media Acquisition Company, had already committed $40m in the proposed IPO alongside UAE’s Shuaa Captial.
A Few Lessons We Learn
Weeding Out Vanity Metrics From The Numbers
As a music streaming platform, Anghami could have simply chosen to throw around vague figures about its users, such as its share of voice in music streaming in the Middle East, etc., while consuming investors’ money. However, CEO Habib, in a recent interview, said the company’s focus remains how to turn in money. And to be specific about this money, he said a significant number of over 1 million were already paying for Anghami as at 2019.
‘‘We realized that if [a streaming service was] going to fail it was probably going to be for not generating [enough] revenues; or if [it was] paying more to labels than it could afford,” said co-founder Habib.
“Our business case was for 300,000 users by the end of 2012. We ended March 2012 with 1 million users, way more than expected…We see potential, we see high returns and that’s why we keep on investing. We haven’t scratched the surface of the market,” he said, further.
Whoever Is The Fastest To Respond To Customers’ Pain Points Wins The Race By A Half
Anghami’s founders believed in data and this must have helped them a lot. One of such helps included discovering and fixing one of the most excruciating pain points for customers — payments. Not everybody in North Africa has credit cards, said Habib; and so it was only reasonable for Anghami’s team to find a way to get around this.
‘‘Let’s take an example,’’ he said. ‘‘Amazon bought Souq.com, which is a big eCommerce service based out of Dubai. Souq had 70% cash on delivery three years ago. Last year, they had 75% cash on delivery. The volume grew, but the percentage of cash on delivery grew even higher. The concept of cash on delivery, which is not available on Amazon UK, is available across the region [in the Middle East]. People are not used to paying by electronic payments.”
Today, the music streaming service partners with major telecommunications companies across the Middle East for its payment services through mobile money.
“As far as I know, Spotify has no coverage on any mobile network [in MENA] today. Also, we provide multiple pricing tiers on mobile that can go, with certain networks, down to $1/month. [Anghami works] on any browser, as many users in emergent markets have low-end devices,’’ he said.
Habib also said the company’s biggest revenue stream comes in from mobile operators.
Read also: How Startups Are Changing The Face Of Africa’s Music Streaming Service
Responding To The Almost Uniform Cultural Demands Of The Middle East As Well As Making Money Across Cultural Nuances
Anghami’s greatest success is perhaps that it is the first to use high-grade musical content to fulfil the peculiar cultural desires of the Middle East in a legally creative way, that not only pays artistes what is due to them but also promotes previously unheard and undigitised voices.
However, although the company believes so much in content, there is always a limit on the content it can upload on its platform given the restrictive laws of most countries in the Middle East. But its team also found a way to build around the restrictions.
“For instance, a lot of labels prefer by default not to provide licenses for explicit content, and we worked a lot to [get those licenses],” he said.
“Take the Lady Gaga ArtPop album back in the day: it was released in the Middle East where she was like holding the ball [between her legs], but if you look up the the artwork, in the Middle East version she was wearing black leggings. Labels were afraid, so we worked to make sure that labels would actually open up [her] music because teens in the region are the same [as teens anywhere].”
In summary, Anghami not only allows artistes to create their own dashboards, it also produces its own music, thereby retaining a bulk of the royalties it would have paid out to artistes.
In the last eighteen months, SPACs have become a very popular tool for companies looking to go public. Elie hopes that their Nasdaq listing will inspire other startups to follow suit, but he cautions that SPACs are not suitable for all businesses. “The structure and governance have to be right. You have to be ready to do it. Anghami has been profitable throughout 2020 which was a very difficult year so we’re very optimistic about the future,” he said.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer
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