The Lowdown on the MENA Tech Ecosystem


By Philip Bahoshy

Maturity and a mindset shift are transforming the region’s startup ecosystem

It has been fascinating being part of and tracking the Middle East and North Africa (MENA) startup ecosystem over the last four years. As we move into the new decade, the landscape has changed at such an accelerated pace that it’s been hard to keep up, according to MAGNiTT data and research. 

2019 did not disappoint. The region saw its first unicorn exit, the highest number of investments to date, and increasing international investor interest.

Funding landscape

MENA-based startups are seeing more investment capital being deployed than ever before; 2019 marked another record year for the number of investments, which reached 564. Investment capital in the region has also hit an all-time high, even if we exclude the ‘mega-deals,’ namely investments in ecommerce platform Souq (acquired by Amazon), and ride-hailing app Careem (acquired by Uber).

The number and size of investments led to a 7% year-over-year (YoY) increase in the average ticket size of startups in the region. Just to put it into perspective: 2009 saw US$15 million in funding (in five venture deals), while 2019 saw that amount reach $704 million. This news is encouraging, and startup founders are now more confident to raise larger rounds.

Supply versus demand

I have often been asked: Where is the funding gap for startups in the MENA region? My response is always: all stages. While it is encouraging to see an increase in funding amounts, there still remains a disconnect in the demand and supply for capital in the region across all stages. As startups grow and we hear more success stories, aspiring entrepreneurs are more and more inspired to start ventures of their own.

This cultural shift will culminate in two trends: (1) more startups will raise early-stage funding, and (2) more startups will successfully graduate to later rounds. In terms of numbers, 64 startups were able to raise later rounds compared to 57 in 2018 (MAGNiTT). Capital supply needs to match this demand, and many founders are turning to international investors to get there. 

Emerging hubs

Innovation remains top of the agenda for governments across the region. In many cases, we are seeing them put money where their mouth is. 

Abu Dhabi’s Hub71 was created to spur innovation in the capital of the United Arab Emirates with $250 million in funds to help regional and international startups scale in the region.

Saudi Arabia has seen a policy shift and a 92% growth in the number of deals YoY (MAGNiTT). Multiple initiatives have eased startups’ ability to enter the country, access education, and scale within the Kingdom. Recently, the Public Investment Fund of Saudi Arabia announced a $1 billion fund to spur venture investments. 

Egypt, given its population size, remains a key hotbed of innovation. Many early-stage companies and founders are solving significant market issues that are local to them, with startups like Halan (tuk-tuk hailing app), Vezeeta (medical care scheduling platform), and Swvl (bus transportation network) raising large rounds of funding.

Dubai, with its 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 evolving ecosystem. We also saw the announcement of the new Dubai Future District, which combines the free-trade zones of Dubai International Finance Centre, Dubai World Trade Centre, and Emirates Towers. This initiative also includes an AED1 billion (US$273M) fund to spur innovation and digital transformation. 

Maturing ecosystem

Maturity is vital for the region to continue this upward trend. Last year saw clear signs that can act as catalysts for further growth. Those of us in the ecosystem are encouraged by Uber’s $3.1 billion acquisition of Careem early this year, as it marked the first unicorn exit for the region. This milestone was meaningful for many founders who looked for the light at the end of the tunnel. It also highlighted a takeaway for all founders: scale is the name of the game.

It’s also important to note that mindset always matters. When growing a startup, it’s essential to look at capturing as big a pie as possible. Careem led the way, but we are seeing more examples as the ecosystem matures. Top funded regional startups include UAE’s Kitopi (foodtech), Kuwait’s Boutiqaat (ecommerce), and UAE’s PropertyFinder. 

We have also seen more investors–over 200–making investments in MENA-based startups than ever before, as well as more exits than any previous year. Moreover, mergers and acquisitions have led to a consolidation of industries. Needless to say, there is a growing international appetite for MENA-based startups as they continue to increase their footprint.

About the Author

Philip is the founder and CEO of MAGNiTT, the largest investment data platform for the MENA startup ecosystem. Raised in the UK with Iraqi origins, he obtained an MBA from INSEAD in 2013 and a BSc in Economics from the London School of Economics. Philip has lived in the UAE for more than twelve years and is passionate about developing the MENA startup ecosystem.

This story was originally published in Jumpstart Issue 29: Back to Basics as A Spotlight on MENA Tech.


Share on facebook
Share on twitter
Share on linkedin
Share on email


What Can Drones Be Used For, and Do They Have a Future?

What Can Drones Be Used For, and Do They Have a Future?

In January 2023, Australian soldiers used drones to search for a missing woman. The drones helped them reach areas that might have been too challenging for a human to enter. For the past few years, the drone economy has been booming. Global investments in the industry amount to US$1.15 billion, with China leading the market.

2022 FIFA World Cup

The Most Controversial VAR Decisions at the 2022 FIFA World Cup

The footballing world has welcomed many new technological developments in recent times. Its goal is to make decision-making more accurate and provide a better experience for players and fans alike. These technologies include the video assistant referee (VAR), semi-automated offside technology (SAOT) and sensor-equipped footballs, all used extensively during the 2022 FIFA World Cup in Qatar.

Self-funding Your Startup? Follow These Expert Tips from Proven Entrepreneurs

Self-funding Your Startup? Follow These Expert Tips from Proven Entrepreneurs

Starting a new business can be an exciting and challenging endeavor, with securing funding being one of the biggest obstacles. Traditional funding options, such as venture capital and angel investing, can be time-consuming, especially for new and untested businesses. In such cases, self-funding, or “bootstrapping”, might be a viable option.

Navigating Ghost Job Postings: How to Avoid Them

Navigating Ghost Job Postings: How to Avoid Them

Job searching can be a daunting task, especially with the risk of encountering scams or fraudulent job postings. Ghost job postings, which refer to open job positions that are not actively being filled, are a common issue that jobseekers should be aware of. According to a survey by New York-based financial consultancy Clarify Capital.

Can AI Help You Flirt Better

Can AI Help You Flirt Better?

“Excuse me, but I think you dropped something: my jaw.” This is the pick-up line the famous artificial intelligence (AI) chatbot ChatGPT dished out when we asked for some viable options. Not the most original, sure, but not bad for a trained algorithm.