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Huge market gaps and rising customer needs offer up opportunities for Middle East start-ups, says investment expert

Huge market gaps and rising customer needs offer up opportunities for Middle East start-ups, says investment expert

Huge market gaps in different verticals and fast rising customer needs offer great potential for start-ups in the Middle East to emerge as success stories, according to a leading investment expert. It is, however, challenging at the investors’ level as opportunities are very difficult to find, and due to the economic circumstances, are not that

Huge market gaps in different verticals and fast rising customer needs offer great potential for start-ups in the Middle East to emerge as success stories, according to a leading investment expert.

It is, however, challenging at the investors’ level as opportunities are very difficult to find, and due to the economic circumstances, are not that high on the stake, especially for start-ups and small businesses.

“I can see very professional and dedicated [start-up] teams in the Middle East that have big visions and high potential, especially in Saudi Arabia, the UAE, and Egypt,” Hesham Zreik, chief executive officer of FasterCapital, a Dubai-headquartered online incubator and accelerator, told Arabian Business.

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“Some of these start-ups are A-class ventures and are on the same level as their counterparts in other Western and European markets and ecosystems,” Zreik said.

Zreik’s comments are backed by the fact that the region’s start-up ecosystem has only so far created only a few unicorns – among them are Careem, Souq and Kitopi joining the exclusive group last week after a $415 million C-series funding round – despite being in existence for several years.

The real estate sector led the start-ups in the region in attracting the highest investments, accounting for 24 percent of the overall funding in 2019, followed by e-commerce and the beverages sectors, according to Statista, a market and consumer data firm.

Zreik also said the recent policy measures initiated by countries like the UAE and Saudi Arabia, to attract foreign direct investment (FDI) and high calibre talent, has grabbed the attention of global investors.

“Definitely global investors are getting less and less hesitant about investing in start-ups from the Middle East and Northern Africa (MENA) region now.

Hesham Zreik, chief executive officer of FasterCapital.

“The market as a whole is getting more global attention and this is especially true for the Gulf countries because of the measures that are encouraging and attracting FDI,” said the chief executive of FasterCapital, which itself is currently engaged in helping several start-ups from the region and globally to raise investments from its worldwide network of investors.

Saudi Arabia-based tech venture Favyo and UAE ventures Yalla Basket and Munch Text are among the start-ups which have recently signed up with Raise Capital, the fundraising platform of FasterCapital, for securing $1m to $3.5m in funding.

FasterCapital is also currently working with DibIn, an online bidding start-up from Greece and Huddl5 from Pakistan, to help them raise growth capital.

The Dubai-headquartered incubator and investor has also finalised a capital-raising agreement with Volonte Business Management, a female-led start-up in the UAE, and initiated talks with another two female-founded start-ups in the GCC – KutKoot and BFF Gram – to help them raise investments.

The recent policy measures initiated by countries like the UAE and Saudi Arabia, to attract foreign direct investment (FDI) and high calibre talent, has grabbed the attention of global investors.

Zreik, who has co-founded more than 40 start-ups and invested in over 100 start-ups to date, said attracting foreign investors and investment companies enriches the market and creates a more open ecosystem and will help lots of start-ups in the Middle East that are struggling to attain the capital they need.

However, he said the regional start-up ecosystem still has to overcome several challenges to achieve its full potential.

“I believe the challenges might have to do more with talent acquiring and supporting the founders properly to make these investment opportunities more attractive to foreign investors. Other challenges certainly have to do with the political and economic difficulties,” Zreik added.

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