Mobile first startups are finding support from governments in the Gulf as a downfall in oil prices forces states to choose public sector jobs and look to entrepreneurs to bridge the gap.
Recent $1 billion valuations of local startups Careem, a ride-hailing app, and retailer Souq.com, acquired by Amazon in March, have created a momentum in the region’s young but maturing entrepreneurial market. Across the Gulf, governments are trying to attract entrepreneurs who might give the next ‘unicorn’ to the region.
Tech startups in the Gulf are localising ideas that succeeded abroad, from Amazon to Uber. Also, despite a tougher economic environment, venture capitalists are not holding back. Reports showed that Wamda Capital, Middle East Venture Partners and Beco Capital are the most active VC funds in the region by total number of transactions.
According to a new report released by Magnitt, an online engagement platform for startups, over $870m was invested in startups across the MENA region in 2016, which is an increase of 424% when compared with the investments made in 2015. A major part of the funding – $625m, accounting for almost 72 per cent – went to Careem ($350m), the taxi hailing application and online retailer Souq.com ($275m). The UAE rising up as the Silicon Valley of the region with most number of startups, funding and transactions in 2016. The average ticket size of disclosed funding also increased from $0.8m in 2014 to $3.1m in 2016.
Despite the rising government support for entrepreneurs in the Gulf, local entrepreneurs have to grapple with various laws, consumer preferences and norms across nearly two dozen different countries to reach the full market and the region still lacks enough accessible early-stage financing.
According to the World Economic Forum, the Gulf and North Africa need to create 75 million jobs by 2020 just to keep employment close to current levels. Failing to do so could lead to slow economic growth. Demographics and time are forcing governments to look to the private sector where creative startups and savvy entrepreneurs can provide an economic lifeline to stability.
Head of the Saudi Arabian General Investment Authority, Saudi Prince Saud bin Khalid al-Faisal, says part of the reason why the kingdom has the largest scholarship program, with more than 200,000 students studying across the globe, is to extensively expose them to ideas. “We would like them to get bitten by the entrepreneurship bug, so they can come back and do their own thing,” he said.
Some of the startups holding up the entrepreneurial flag in the MENA region, and inspiring all the budding entrepreneurs are:
- Careem : On-demand taxi service
- YallaParking : helps people find and rent parking spots
- Fetchr : GPS-based shipping
- Mumzworld : Online retailer of children’s apparel and items
- The Luxury Closet : Marketplace for pre-owned designer labels
- HolidayMe : Customized travel services
- com : Online used car dealer
- GetBaqala : hyper-local grocery delivery
- io : online marketplace for training (personal trainers) and nutrition plans
- com : Largest e-commerce platform in the Arab world
- Washmen : An Abu Dhabi and Dubai-based on-demand laundry service
- me : An online marketplace for fish.
- Maharah : Maharah is a mobile app for maintenance and civil work
and many more.
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