It is difficult to recall a time when messaging large numbers of people was impossible, but that was the reality for brothers Ahmed and Hassan Hamdan, who wanted to message the members of a student club at their university in Saudi Arabia. This was back in 2006, when Whatsapp did not exist, Facebook had yet to make it to the Middle East and BlackBerry Messenger had a limit on the number of people one could message in one go. The only alternative was sending emails, but few people had mobile internet connectivity and the way most people kept in touch was via SMS.
“As a software engineer it encouraged me to make a bigger impact and find a solution,” says Ahmed Hamdan.
This solution was a website called Resalaty, where users could upload their contacts and automatically send thousands of people SMS messages in one go.
“In 2006 there was no [startup] ecosystem as we have today, for us it was a crazy idea to do something different, we never entered this to be a venture, to raise capital, we didn’t have business acumen, we were just students at university,” he says. “We were surprised that people loved it.”
The website was simple, those who were lucky enough to access the internet on their mobile phones relied on 2G connectivity at the time, smartphones were not yet available and mobile apps were limited to simple games and utility tools.
“You did not have a fancy interface to build applications to manage use cases like this. Internet connectivity was not very popular, and social media was not so popular, there was no such medium to [message large groups of people].”
Resalaty sold SMS messaging packages on the website. Users could choose to send 500 messages for $20 or 1000 messages for $40.
“The market had good purchasing power, people would spend money to socialise and stay connected and build communities. The other alternative is you call everyone, or you send an SMS from your mobile, which was more expensive [than Resalaty],” says Hamdan.
While Resalaty started out at university and targeted students, Hamdan noticed that businesses had also started using the service too to message their customers. The website’s early corporate clients included Saudi Telecoms Company and Etisalat.
“We started to see a slight drop in personal cases because other alternatives became available, but we started to see some business cases, that signal pushed us to pivot in 2010 where we completely shifted to business communication,” says Hamdan.
This was in part a result of the students who had graduated and entered the workforce, using Resalaty within their own organisations for events and marketing and messaging customers. By 2010, Resalaty had 1000 clients and had established offices in both Bahrain and the UAE. By 2012, it had expanded further across the Middle East and North Africa (Mena) with offices in Jordan, Egypt and Sudan.
But it took several years before Resalaty, an SMS-focused marketing tool, evolved to Unifonic, the cloud-based B2B customer engagement platform that it is today, utilising voice, video and email-based solutions as well as machine learning and artificial intelligence.
The startup bootstrapped for several years, reinvesting its revenues into the business. This was at a time in Saudi Arabia when there were no VCs or angel investment networks. Even in the wider region, investment in startups was limited to only a handful of investors. At one point, Hamdan’s wife sold her jewellery to fund the business.
“No one would give us financing, banks would give you nothing, family offices did not understand what we wanted to build and why,” he says. “We had to completely rely on our income and profit and sometimes do crazy stuff like taking personal loans, selling assets and taking credit cards.”
The company underwent several pivots and incorporated other services like social media in order to finance the company.
“If we had funding we probably wouldn’t have done it [offering non-core services], we had to do some non-scalable stuff to scale,” says Hamdan.
The first time Hamdan and his brother sought VC investment was in 2015, after they had rebranded Resalaty to Unifonic and it took them two and a half years to close the round, raising $21 million from STV, Raed Ventures, Endeavor Catalyst, Riyad Taqnia Fund and ELM Investments.
Saudi Arabia’s ecosystem has come a long way since then. The country’s investors have become the most active in the Middle East’s startup ecosystem and while it may have taken Unifonic two years to set up a legal entity in Saudi Arabia, regulations have improved greatly in recent years.
“It was a different world to today. There are always challenges in a business, but we had to do it the difficult way, we had many trials and errors and experimentations and failures. The only [financial] support was from family and friends and people who believed early on in our space and passion,” says Hamdan.
Of course, Unifonic has faced no challenge in raising investment as of late. It was the first Saudi-based startup to receive funding from Softbank (in its $125 million Series B round in which Sanabil also participated), after it sought investors who could help it expand globally.
“We met 70 growth-stage funds from all around the world and we shortlisted a few. With Softbank it’s a great experience so far, we’ve been working with them since September, they have been a tremendous help, as we expected, from the internationalisation side, governance side, future plans whether it is IPO or M&A – they have that experience,” says Hamdan.
Now, the main challenge facing Unifonic and other Saudi startups is finding talent.
“Being able to attract talent is by far the biggest challenge and then there is some policy regulation, competitiveness frameworks, the consistency in the way we develop policies. The speed of change is faster, but these are the challenges we still have,” says Hamdan.
After the Series B round, Unifonic is doubling its efforts on its product and expanding across the world.
“We’re looking at markets in Asia and Africa, they’re going through the same journey of digital transformation, but we’re taking this very carefully, we would like to be in fewer markets with higher leadership position. Our key three markets are Saudi Arabia, the UAE and Egypt, our other top four markets are Pakistan, Nigeria, South Africa and Indonesia,” says Hamdan.
The company is also looking to grow its 200-strong team, spread across 33 countries, having expanded 60 per cent a year over the past three years. Each employee has equity in Unifonic, a conscious decision made by the brothers to instil a sense of belonging.
“The team is the most unappreciated asset in any company and we can do much more to really unlock many opportunities if we tap into the culture, team and core values and provide them with a roadmap to succeed as individuals,” says Hamdan. “I work for them more than they work for us.”
Unifonic’s goal now is to go public within the next two to three years, with another fundraising round scheduled before then.