UAE startups rising.
The number of investments in Mena-based startups was up 31 per cent in 2019, with 564 investments and $704 million in total funding. - File photo
Philip Bahoshy, founder and chief executive, Magnitt.
Taha Sajid, chief technical consultant, Limar Global Tech.
Ahmed El Sherif, managing director at Rainmaking Innovation Egypt.
The UAE is known to encourage entrepreneurs to unlock the potential that the nation has to offer them in fulfilling their business aspirations.
The recent reforms introduced by the wise leadership of the country to boost confidence among startups also proves that the ecosystem has matured, and is now expanding its reach in the region, with Egypt and Saudi Arabia complementing the growth.
The latest report from Magnitt indicates that the number of investments in Mena-based startups was up 31 per cent in 2019, with 564 investments and $704 million in total funding, up 13 per cent compared to 2018, excluding previous mega-deals in Souq and Careem.
"With exits at an all-time-high, including the Mena region's first unicorn exit, the region's founders, investors, and governments are seeing the returns on their efforts in the tech venture space," said Philip Bahoshy, founder and chief executive, Magnitt.
In 2019, Egypt, for the first time ever, accounted for the largest number of deals in Mena with a jump of 25 per cent, while the UAE accounted for the lion's share of total funding and a surge of 60 per cent.
Egypt is the largest and most promising startup hub of the Mena region. The government has been working very hard to open up opportunities for foreign investments. Rainmaking is working with Egyptian entrepreneurs and local ecosystem players since 2014 and has engaged more than 150 startups, provided support to almost 900 founders, and worked with nearly 70 local partners so far.
So how do Egypt and the UAE complement each other in the startup space? "Egypt provides an extensive pipeline of startups, entrepreneurs and talents, while the UAE offers significant availability of infrastructures and funding. Together, Egypt and the UAE could build an active alliance to drive innovation in the region and export innovation globally from the UAE," said Ahmed El Sherif, managing director at Rainmaking Innovation Egypt.
"We expect a big spurt of funds to support startups over the next three to four years. In terms of industries, we are recording the greatest interest from local corporations into innovation investments in the fintech, insurtech, tourism, healthcare, industrial sectors, and impact industries."
Similarly, Saudi and the UAE complement each other a lot in the startup space. "The UAE has leapfrogged in innovations, bringing in international investors, and taking away the lead, but Saudi is already catching up," says Taha Sajid, chief technical consultant, Limar Global Tech.
"I have not come across any one business startup, who have started in either of these countries but not have their eyes on the other; Saudi for the investment perspective and the UAE for getting market exposure. It is due to the fact that in order for startups to grow, they need to have a proper ecosystem, have market adoption, get the investment for liquidity, loyal customers, all of these things are possible if you are not only restricted to one jurisdiction. Apart from less travelling distance, they share the same cultural/religious/traditional aspect and even the resources ethnicity, like most people belong to Mena, India, and Pakistan, they understand each other well, which makes them complement each other," added Sajid.
Saudi Arabia will emerge as a popular startup hub in the Mena region; the main reason is the cultural change through the national transformation drive of Vision 2030 and the ease of doing business with the direct involvement of the Saudi government through its proper structure.
"Any startups, whether local or international, if the idea is appealing and suits the local market, will get the proper guidance through different bodies. If there is a fintech startup, regulations have clarity in terms of business activities that need to be regulated or not and how SAMA and CMA are interrelated. Secondly, there is a separate framework for local and international entrepreneurs with the proper step and process flow. All this process is being driven by the Ministry of Commerce and Investment, supported by incubators like Badir and facilitators like Fintech Saudi. On the other hand, if you are an IT startup, there is digital transformation hub driven by the Ministry of communication and IT, so all the bases are covered when it comes to supporting startups," said Sajid.
Innovation remains top of the agenda for many governments from across the region. According to Magnitt, Hub71 in Abu Dhabi was created to spur innovation in the capital with $250 million in funds to support regional and international startups scale in the region. Moreover, also Saudi Arabia has seen a shift in policy. Multiple initiatives have eased the ability of startups to enter the country, access education and scale within the Kingdom. Only recently, the Public Investment Fund (PIF) announced a $1billion Fund of Funds (FoF) to spur venture investments.
Egypt, given its scale and educational system, remains a key hotbed of innovation, with many early- stage companies and founders solving big market issues that are local to them. "Dubai, with a first-mover advantage, continues to assess how best to encourage and foster the startup ecosystem with new legislation and support, including golden visas for founders to help develop its ever-evolving ecosystem," added Bahoshy. - email@example.com
Sandhya D'Mello Journalist. Period. My interests are Economics, Finance and Information Technology. Prior to joining Khaleej Times, I have worked with some leading publications in India, including the Economic Times.
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|Publication:||Khaleej Times (Dubai, United Arab Emirates)|
|Date:||Feb 7, 2020|
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