The start-up scene in the Middle East and North Africa (MENA) region is expanding rapidly, and Saudi Arabia is becoming a major source of finance.
A new Rasmal report states that in September, 60 MENA firms raised USD 328.3 million, demonstrating growing investor confidence in the region’s entrepreneurial prowess.
This financial wave, which is the result of both government initiatives and a growing appetite for risk and innovation in the private sector, emphasises the increasing significance of the MENA region in the global start-up scene.
Gripping the majority of the MENA cash raised, Saudi Arabia emerged victorious in the regional investment competition, securing USD 165.34 million for 13 firms. This substantial investment supports the Kingdom’s Vision 2030 strategic economic diversification goals, which seek to lessen reliance on oil and promote the development of the technology and innovation industries.
Cities like Riyadh and Jeddah are becoming important hubs for startups, thanks to increased private investment and government measures that foster a strong environment for the growth of entrepreneurs.
Government initiatives like the Public Investment Fund and other venture-focused programmes have largely been responsible for this change. Due to the Saudi government’s initiative, the private sector has shown interest in investing in the country, with venture capital firms, accelerators, and incubators eager to support homegrown talent.
By creating an atmosphere that is supportive of entrepreneurs in a variety of sectors, including technology, logistics, healthcare, and energy, these initiatives are building the groundwork for long-term, sustainable growth.
A major newcomer to the MENA startup scene, the UAE has raised USD 114.32 million for 28 different start-ups. Particularly Dubai continues to draw investors because of its business-friendly laws and position as a global entry point.
September saw significant investments in industries such as finance, e-commerce, and property technology, demonstrating the UAE’s resolve to become a global leader in this field.
The region has benefited greatly from efforts like the Dubai International Financial Centre Innovation Hub, which have been essential in luring capital and expertise.
This expansion is a testament to the UAE’s efforts to diversify its economy, lessen its reliance on oil, and establish itself as an innovative, resilient nation. The range of industries benefiting from investments emphasises even more the nation’s all-encompassing growth plan to create a diverse and sustainable future.
Although the United Arab Emirates and Saudi Arabia dominated the funding scene, other nations in the area also showed promise. The technology and innovation sectors drew the majority of the USD 25.09 million.
Government programmes assisting small and medium-sized businesses have helped Cairo’s startup scene by offering crucial infrastructure for startups in their early stages. This expansion takes place amid severe economic difficulties, as Egypt experiences instability as a result of loosening monetary policy.
Though on a lesser scale than the giants of the area, nations like Morocco, Oman, and Bahrain are also attracting the attention of investors. Oman’s investments in e-commerce and logistics, along with Bahrain’s concentration on fintech, indicate these countries’ ambition to become major players in the regional ecosystem.
Nonetheless, obstacles persist in nations such as Iraq and Kuwait, where political unrest and regulatory obstacles impede the appeal of venture capital, leading to an inequitable allocation of funds around the area.
The Rasmal report states that with USD 134.84 million in September 2024, fintech became the top industry. This intense focus highlights the growing demand for technology-driven banking services and the region’s quick adoption of digital financial solutions. Financial inclusion is becoming a top priority for companies and governments. It is propelling the industry’s continued expansion.
Because of the continued growth in e-commerce, logistics technology also garnered a lot of attention. The demand for effective supply chain solutions has increased as customer tastes continue to shift in favour of online purchasing.
The largest investment of the month went to the logistics technology startup SHIFT, which raised USD 83 million. This shows how important infrastructure is becoming to support e-commerce and changing supply chain demands across the Middle East and North Africa.
With USD 129.08 million of the total funds raised in September, late-stage firms received most of the funding. This pattern suggests that investors are becoming more interested in projects that are scalable and successful in the market.
Investors generally consider late-stage businesses with validated business ideas to be more secure due to the unpredictability of the global economy. Nevertheless, seed-stage entrepreneurs have raised USD 57.30 million in 33 agreements, demonstrating continued interest in supporting fresh concepts and startup companies. This indicates that early-stage companies are still essential to the ecosystem.
Government-backed incubators and accelerators continue to be essential for helping early-stage businesses by offering infrastructure and mentorship to promote expansion. But the Rasmal analysis revealed a stark gender gap in funding: only 3.21% of the cash raised in September went to female founders, while male founders earned 96.79%. This disparity highlights the continuous obstacles that female entrepreneurs encounter while trying to obtain venture funding.
It will need a more inclusive investment strategy to close this gap, with more funding going to women-owned businesses. Gender inclusion is being promoted by programmes such as the TiE Women MENA Programme, but more has to be done to support a diverse and balanced business environment throughout the region.
Notable businesses that obtained capital in September included the USD 40 million online car sales marketplace Syarah and the USD 30 million financial company TON. These businesses highlight the variety of industries that are becoming popular, from financial services to automobile e-commerce, and they also highlight the range of opportunities available to investors in the MENA area.
As a whole, the MENA startup scene is well-positioned to grow further thanks to supportive government regulations and investor interest in important markets. Rising global tensions, though, might affect the growth trajectory.
The emphasis on finance and logistics will probably continue, in keeping with the region’s more general digital revolution. Meanwhile, other sectors, like health technology and renewable energy, should expand concurrently due to changing demands and new opportunities.
There are still many obstacles to overcome, such as the gender financing gap and the difficulty of obtaining venture capital in some nations. However, these problems will probably be gradually resolved as long as governments, investors, and entrepreneurs continue to promote innovation.