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Tech startups see 10-fold surge in MENA: study

Xinhua, April 3, 2016 Adjust font size:

The tech entrepreneur sector in the Middle East and North Africa (MENA) has grown by over 10-fold since the nascent venture capital industry emerged in the region four years ago, a local venture capital said in a statement on Sunday.

Beco Capital, a regional venture capital firm focused on technology investments in the Gulf Cooperation Council (GCC) countries, said an e-mailed statement that the expansion seen in the six GCC countries "allows for more and better quality investments in promising startups."

Dany Farha, co-founder and CEO of Beco Capital, said they had waited for four years for the venture capital's ecosystem to mature in both quality and quantity to enable his company to make a higher number of investments at the seed stage.

He added that the GCC reached a stage where additional regional pre-venture capital money should enter into the space and a diverse pool of entrepreneurs have to come forward with quality innovation and problem-solving ideas for investments.

"At the moment, we see funding in the middle of the chain at the micro-VC, VC and Private Equity levels," said Farha.

Beco expects that the high-tech startup community will grow to a size where institutional investors and Arab Sovereign Wealth Funds can start deploying to the venture capital asset class and invest petrodollars into startup firms.

Each of the big venture capital companies is looking at an average of 1,000 potential investments, and will typically invest in less than one percent of those, said the report.

Several GCC startups have become regional players in recent years. Careem, the Arabic answer to Uber, was founded as a taxi-app chauffeur service in the UAE metropolis Dubai in 2012, and has since expanded across MENA.

In December 2014, Careem secured a 10-million-dollar funding by Al Tayyar Travel Group and STC Ventures. In November last year, the firm secured another 60 million dollars from a group of investors led by Dubai-based private equity firm Abraaj Capital. Endit