There can be no good without evil. The globalisation of trade and the rapid proliferation of e-commerce and social media have boosted the capacity of organised criminals to sell fake goods with greater speed and efficacy.
For entrepreneurs Wassim Merheby and Jamil Zablah, the co-founders of blockchain-based traceability start-up Verofax, this is as an opportunity to “fill market gaps” and “empower businesses as well as consumers”.
Abu Dhabi-based Verofax offers a unique solution to businesses looking for compliance and brand protection, including serialisation, traceability and anti-counterfeiting solutions. All products are blockchain registered to prevent forging and tampering.
"Not only authenticity … but the high quality characteristics, such as 'organic' or 'sustainability', can also be verified through Verofax," Mr Merheby, 49, tells The National.
“Manufacturers offering validation can boost sales, reduce negative ratings … whereas, consumers will feel confident and safe when making purchases,” Mr Merheby, a serial entrepreneur from Lebanon, who has worked with companies such as Nokia, Microsoft and Nestle, says.
Users can also trace the product’s condition in transit and check inventory receipts.
Blockchain is a digital chain of transactions that are linked with each other using cryptography – a mechanism for secure communications – on an open ledger. The database is a real-time library of records that are difficult to tamper with since each change creates a new record.
Using Verofax’s blockchain technology, retailers and manufacturers can create a unique identity of their products, in the form of a Quick Response (QR) code or a barcode, which can be scanned to verify authenticity.
It traces the product’s complete lifecycle – from the sourcing of raw materials to post-sale user engagement that allow businesses to gain insightful feedback.
Founded in December 2018 at Abu Dhabi Global Market with an initial investment of $250,000, Verofax has billed close to $200,000 thus far.
Currently, the company is working with only select businesses on their “bespoke products”, Mr Zablah, 43, a Jordanian-Australian says.
It will push out the consumer version of the app in the UAE in the first quarter of 2021, followed by a rollout in Saudi Arabia in the second quarter.
“Verofax helps pharmaceuticals and other consumer goods manufacturers to meet evolving product traceability regulations and growing consumer demand for product safety, security and legitimacy … enhancing trust in their brand,” Mr Zablah says.
“We are helping companies to create ethical as well as responsible brands … helping governments to manage quality standards, compliance requirements and making duty and tax collection a seamless process,” he adds.
The amount of counterfeiting worldwide totalled $1.2 trillion in 2017, which is set to reach $1.82tn by the end of this year, primarily due to the rise in e-commerce platforms, according to a 2018 Global Brand Counterfeiting Report.
By comparison, the global traceability and brand protection market is estimated to reach $55 billion by 2025, with food traceability alone accounting for $22bn, according to Verofax’s own estimates.
Businesses can subscribe to Verofax’s monthly or yearly plans on the basis of their product category and on the number of items they produce.
“The process is very simple. They [businesses] just need to go to our site, subscribe to our service, upload product details, certifications and get started,” Mr Zablah says.
The Covid-19 pandemic upended some of Verofax’s plans for this year. Though it delayed the company's fund raising activities, the start-up's business gradually increased.
“The impact was very negative during the early days of the pandemic, but it turned positive after [a] few months,” Mr Merheby says.
Verofax was in touch with potential investors in Hong Kong, who had committed to a big investment round. But they went into quarantine in January and stopped all communication.
“By the time we terminated our agreement with the Hong Kong investors and started exploring this part of the world, it was already March and nobody was listening to us,” Mr Merheby says.
“It harmed us a lot between March and June … nobody wanted to engage … we thought that the whole business was at risk. But things rebounded from July ... everybody started talking about the importance of validating supply chains as [the] manufacturing of Covid-19 vaccine was on,” Mr Zablah explains.
Verofax has recently closed half of a planned $1 million round.
“Our investors include a UK-based venture capital firm, a Canadian company and a British-Indian investor,” Mr Zablah says, adding that Verofax expects to secure the remaining $500,000 by end of this month or in early January.
With the launch of the consumer side of the app early next year, Verofax expects a boost in earnings and hopes to breakeven by the first half of 2021.
“We had to delay our Saudi launch due to Covid-19 … now we are scaling up very fast and hope to make profit by the end of next year,” Mr Merheby says.
The co-founders say there was a point when they were contemplating an early exit but their plan changed after the launch of Nasdaq Dubai Growth Market in October, a new exchange that aims to help small, fast-growing companies access to capital markets.
“Before this announcement, we were open for an exit if we found a good investor. Now things have changed … we are aiming to get on Nasdaq, get listed regionally and grow our business further,” says Mr Merheby.
The market, which will be operated by Nasdaq Dubai, will allow small and medium-sized companies to sell shares through initial public offerings and is being established as part of the Dubai Future District initiative.
Verofax, which has a workforce of six employees in Abu Dhabi, plans to hire more people in 2021 in different geographies as it expands its business.
“We will be hiring across Asia, Africa and Middle East. Our business model is different," Mr Merheby says. "We need to have people on ground to do in-person meetings and give product demos. We also need staff to run call centres in local languages.”
Verofax recently signed an agreement with Auri, a Kuala Lumpur-headquartered lifestyle brand, to jointly launch its traceability app across Asia. It expects wider adoption by suppliers of fashion and lifestyle products in the Asian market in the first quarter of next year.
The company is currently in the process of finalising a licensing agreement with an undisclosed partner in Africa and will be hiring staff there as well.
Headcount in Asia will almost double to 12 and in Abu Dhabi it will rise to 18.
Verofax is also working with Abu Dhabi health authorities to create traceability technologies to manage the safe delivery of medicines in the emirate.
“We have received a letter of support from the Department of Health, Abu Dhabi, and are working with them to develop innovative products. We have received a similar letter of support from the NHIC [National Health Information Centre], Saudi Arabia, and soon we will start our work there,” Mr Merheby says.
Q&A: Verofax's co-founders Wassim Merheby and Jamil Zablah
Who is your role model?
Mr Merheby: I am so impressed with the work of Tesla's founder Elon Musk. He has taken big risks in his entrepreneurial journey that have rewarded him very well. It is overwhelming to see how he is disrupting so many industries simultaneously. I am a big fan of his passion, energy and ideas … not only me but all entrepreneurs have something to learn from his futuristic vision.
Any suggestion to upcoming entrepreneurs?
Mr Merheby: There are so many and it is really hard to pick one. But my suggestion to fellow entrepreneurs is that it's always important to consult a lawyer before you do anything. It's always advisable to draft a legal agreement to avoid last-minute hiccups. Always make sure that you are 100 per cent covered legally and if that is not the case, never get into any business.
What type of entrepreneur are you?
Mr Merheby: I am definitely a risk-taker but I always try to balance it to ensure I would not take any hasty business decision. I can't afford too many risks, as I also have a family to take care of.
Mr Zablah: I am a mix of a risk-taker and a patient businessman. I prefer taking calculated risks when it is about chasing my dreams and ambitions. I believe if you have a vision to address a next-generation problem then you have to follow a challenging path. Sometimes, it could be entirely out of your comfort-zone … but results will be very fulfilling.
How do you define Verofax in one line?
Mr Zablah: Verofax is an enabler, an OS [operating system] of certainty in transactions in global trade.
What is your mantra to success?
Ms Zablah: Never run after quick gains. Even if you have to wait a little longer for profits because you are following a lengthy and ethical business approach that aims to solve much bigger challenges, it's worth waiting. When all your corners are covered, success and profits will follow you automatically.
Company name: Verofax
Founded: December 2018 at ADGM
Founders: Wassim Merheby and Jamil Zablah
Based: Abu Dhabi
Funding: Initially self-funded with a $250,000 investment. Recently closed half of a $1m funding round and currently aiming to finalise remaining $500,000 this month or early next month.