Two Sides of an Investment Story: A Conversation with Yadgar Merani and Zaab Sethna
Are you curious about Lezzoo’s $1 million investment in 2019, and how Northern Gulf Partners decided to invest? On May 18, 2021 Five One Invest held a Speaker Series session with Zaab Sethna and Yadgar Merani to dive into the details of the historic investment that happened in 2019.
Lezzo and NGP: An Introduction
Yadgar is the CEO and co-founder of Lezzoo, a super application in Iraq that delivers all types of goods to customers, such as food, groceries, and pharmacy products. Started in Erbil in 2018 with a team of three co-founders, Lezzoo has since expanded to Sulaimani, Duhok, and Baghdad with a team of almost 380 employees and over 1,000 merchants across Iraq.
Zaab Sethna is a partner at the financial advisory and asset management company Northern Gulf Partners (NGP), which is active in investing in Iraq and providing advisory services for foreign investors in Iraq. Northern Gulf Partners started their work in Iraq twelve years ago in the oil and gas sector, and have expanded their focus from there. (Lezzoo was the first tech-based business in which NGP invested, after historically investing in real estate, financial services, and energy services.)
Click on the photo to see the video of the discussion between Yadgar Mirani and Zaab Sethna.
Y Combinator and the Investment
Lezzoo started their incredible investment journey a few years ago. In 2019, Lezzoo was the first Iraqi startup accepted into Y Combinator (YC), one of the world’s top accelerators, which is known for its elite networks of investors and smart entrepreneurs. Being a part of YC was a factor in successfully raising the investment that followed. Zaab valued the experience they gained in the program, and it was one of the ways in which he started to learn more about Lezzoo. However, Zaab mentioned that NGP would have invested in Lezzoo regardless of their participation in YC, because he thought the founders were a great team.
After successfully completing Y Combinator, Lezzoo began fundraising for a larger investment to help them to grow. In the summer of 2019, Lezzoo received the largest investment in Iraq to date - a $1 million seed investment led by Northern Gulf Partners and Pay It Forward, a California-based fund. The seed investment helped Lezzoo grow by 800% in their first full year of operations, followed by impressive gains of 400% and 150% in the following two years.
Advice for the Future
Zaab spoke about his belief in the coming shift in the Iraqi economy, due to the oil and gas era nearing an end, as an important driver for them shifting to direct investments in Iraqi companies. From an investment standpoint their perspective on Iraq is that the disposable income and consumption of the middle class is growing, and that presents opportunities as the youth in Iraq simultaneously take part in developing the digital economy in Iraq.
Yadgar’s main tip for entrepreneurs looking for investment was to be as transparent as possible with your investor, whether it be good news or bad. At the end of the day, he says, the investor is a part of the business, and they will help it grow and add more value to it. From his perspective, there might be some challenging parts of having investors, but the experience that they have is worth any potential difficulty to make the business succeed.
Yadgar has the goal of expanding and competing not only in Iraq, but also in the Middle East. Lezzoo is currently fundraising for a Series A round, and they will disclose more once the round is closed. Yadgar values the process and the investors with whom he speaks and reminded us that “the investor gives you the means to achieve”.
This event was generously sponsored by the German Federal Government through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.