Paving Startup Fortunes in MENA

Why startup ecosystems are blossoming across Middle East and North Africa

The year was 2013. The location Cairo, Egypt.

In the aftermath of the Egyptian revolution, at the country’s 1st major entrepreneurship conference, a young starry-eyed first-time founder hobbled onto the stage with trembling knees and sweaty palms.

He proceeded to deliver a pitch that seemed epic at the time, but in retrospect was pure cringe. But somehow, it worked!

A group of angels voted to invest and he received seed funding of $100,000 for his startup, a milestone that had only been accomplished a handful of times in the country’s fresh startup scene.

That founder was I, Basil. Those sweaty palms were mine.

Since then, I have watched the region go through several evolutions, with new tech hubs emerging, some disappearing, some flourishing, some bubbles popping, but overall growing.

MENA has become one of the most dynamic startup regions globally.

The lifeblood of the MENA (Middle East & North Africa) startup ecosystem is its youthful energy, mirrored by its demographic bulge of tech-savvy, ambitious young minds. Over the last decade they were not just participants, but creators of a digital renaissance, from mobile apps to fintech solutions, reshaping how a region interacts, transacts, and evolves.

But youthful vigor is not enough alone. For ecosystems to thrive, they have to go through enough real experience that propagates those learnings to the next generation, usually through startup exits or at least reaching certain revenue/ funding milestones.

When looking at funding activity and exits, the top 3 markets are UAE (United Arab Emirates), KSA (Kingdom of Saudi Arabia) and Egypt.

Let’s start with Saudi Arabia, which was extremely late to the tech race. That is what makes their transformation over the last few years even more impressive. The government's “Vision 2030” has not just seeped into the economy, but has transformed it. Mega-round investments flowed like the oil that once defined its market, positioning KSA as a beacon of venture capital ($1.4 billion raised in 2023). Amidst this backdrop, startups like emerged as titans of e-commerce, encapsulating the spirit of Saudi innovation and the lucrative potential of its digital markets. There are also flagship tech events like “LEAP” that attracts over 80,000 people and pushes it closer to achieving it’s “2030 Vision” plan.

Further south, the UAE had already cemented itself as a hub of technological advancement over the last decade. Their strategy was to make Dubai a magnet for the world’s brightest and most ambitious innovators, so Dubai and Abu Dhabi had become synonymous with ‘future cities’. Careem, once a local startup, now part of the global Uber family, epitomized the UAE's journey from a land of potential to a pinnacle of entrepreneurial success. “Free zones” that enabled a frictionless and tax-free system to setup new companies, attracted entrepreneurs from around the world, leading to a vibrant and active expat community. Beyond tech and business, Dubai and Abu Dhabi have some of the highest quality of life, safety and entertainment of any startup ecosystem, making it attractive to move there whether you’re young & single or have a family.

While MENA startup hubs are very recent, the pace of growth has accelerated.

Back in Cairo, the startup scene thrived against all odds for a long time, yet is currently facing a truly catastrophic set of challenges. At first, post-revolutionary turbulence gave way to a robust ecosystem, nurturing ventures like Swvl. What started as a solution to the chaotic public transport system, Swvl had expanded its wings across borders and even IPO’ed on Nasdaq.

However, the vibrant entrepreneurial spirit that once dominated Cairo’s streets is now tested by a series of financial headwinds that affect both startups and the investment climate. The Egyptian pound has faced severe devaluation, which has a two-fold impact on startups. First, the cost of importing technology or goods has skyrocketed, burdening startups that rely on foreign tools and online services. Second, this devaluation has deterred foreign investment, as investors are cautious about currency risks affecting their returns. This hesitance from investors is crippling for startups that depend on external funding to scale operations.

Yet even in the face of such challenges, great startups continue to emerge from Egypt. Some of the most successful include startups such as Trella, MaxAb, RabbitMart and MNT-Halan, which just reached unicorn status, supported by a large and highly skilled local software development community.

In the region, VC firms and accelerators play important roles in shaping the startup ecosystem. Among the top VC firms, STV stands out with significant investments in technology-driven companies. Wamda Capital also continues to influence the startup landscape through strategic funding and support. 500 Startups' MENA Fund, known for its wide reach, invests across various stages and sectors, propelling a diverse range of businesses. MEVP (Middle East Venture Partners) and Flat6Labs further anchor the investment scene with their focused portfolios and regional expertise, driving innovation and entrepreneurship across MENA.

Over the last year, the MENA region has seen a significant influx of investments into startups, totaling approximately $2.67 billion with a notable focus on early to growth-stage startups. The region has also seen high-profile exits, such as Careem acquiring Munch:On. Mergers and acquisitions (M&A) continue to be the most common exit, increasing by 30% in 2023. This trend reflects a broader pattern of increasing consolidation within the region's startup ecosystem, where companies are acquiring competitors (especially those finding it difficult to survive tough economic times) to expand their geographic presence and enhance their product offerings.

Accelerators are equally crucial in nurturing early-stage startups, providing them with the mentorship and resources needed to scale. Flat6Labs serves as both a VC and an accelerator, with multiple programs across the region that fast-track growth for new ventures. Techstars Hub71 in Abu Dhabi is renowned for its global network and tailored support, helping startups achieve new heights. AstroLabs, operating in Dubai and Riyadh, offers specialized programs that empower startups. Seedstars is another notable accelerator, focusing on impactful startups in emerging markets. Lastly, Plug and Play ADGM in Abu Dhabi connects startups with large corporations, enhancing their development through innovation and collaboration.

The recent emergence of KSA as a tech-hub and funding hotspot has forced the surrounding markets like UAE to continue to level up their game to attract top talent and simplify the process for businesses with more benefits and accelerators, which can only benefit founders in the long run.

I myself first moved to Dubai to join the “Dubai Smart Cities” accelerator, part of the ‘Silicon Oasis’ free zone. It was a great way to have a “soft landing” into a new market, to have the runway to build my network and start generating local revenue. And I’m still here years later, actively mentoring new startups across MENA and throughout Europe.

So as someone who is currently based in Dubai, I see so many positive developments in the MENA startup ecosystem despite the global economic downturn and regional challenges.

If you have any questions about the region or considering moving here, reach out and I would be happy to help!

Our previous post walking founders through an overview of how VCs operate was inspired by a wild Twitter debate last week on whether startup founders should talk to Associates in VC firms.

Our advice? Just take the meeting with a VC Associate.

The stats do not lie, VC’s do not cut a lot of checks!

If you do not have a prior relationship with a Partner or any potential warm intros into a Partner, your best shot is to talk to an Associate. VC firms have Associates for a reason, to source deals. Many deals that get reviewed in Investment Committee meetings to decide on who to fund start off as deals initially championed by an Associate.

And many of the best VC Partners today started off their careers as Associates, rising in the ranks of VC because of their ability to source and lead deals. Even if you do manage to pitch a Partner, there is zero guarantee they follow through, submit to the Investment Committee, and push the deal through.

Startup fundraising is a long game. Often the best strategy is to work lower down the food chain, build relationships, learn how the firm works, get advice, earn trust, tweak your startup & pitch, and position your startup as a high-quality, backable deal. Any decent Associate will have the patience, curiosity, passion, bandwidth, and incentive to help a founder along the journey.

Taking the transactional approach of only speaking to Partners means you will 1) miss out on potentially great VC partners, and 2) reduce your chances of a successful raise.

If there is FOMO for your deal, you secured your lead, and you are closing your round, take the transactional approach. In all other cases, play the long game, build your VC network, and increase your odds of securing a deal with the right VC partners.

Basil was rocking the stage at the Startup Loft during AWS Summit Netherlands last week talking about how AI can be your startup co-founder and using Generative AI services to accelerate the process. He also had a chance to meet with a ton of amazing startup founders!

Basil making it happen in Amsterdam to support startups.

Meanwhile Mark was in Miami to participate in Miami Tech Week, with various talks, hackathons, and plenty of parties. While Miami is not the of the size of many other startup ecosystems, it has grown significantly in the past four years.

Always a welcoming sign, the Miami startup scene has seen lots of growth!

While Mark already left Miami, the action is still going strong with eMerge Americas from April 18-19 and the Miami Tech Week After Party by Startup Grind right after on Friday evening.

In Germany, one of the world's largest industrial trade fairs is happening. Hannover Messe is happening from April 22-26 in Hannover and the AWS team will have a booth there to talk about AWS for Industries and how Generative AI is transforming all businesses.

In Kuala Lumpur, we're hosting AWS Startup Day Malaysia on April 23 featuring talks from Malaysia's leading startups and investors, plus a special keynote by Dr. Werner Vogels, CTO of Amazon.

In London, the AWS Summit London comes to town on April 24 at the ExCel with keynotes, tech talks, hands-on builder workshops, and our Expo Hall.

And in San Francisco, Mark is attending Startup Grind Global Conference in Redwood City on April 23-24, with over 100 startups pitching, demoing, and networking. If you are attending, let's definitely meet up!

Come join me at the Startup Grind Global Conference.