Almost 70% Of Tech Start-Ups In MENA Struggle For Funding

Almost 70 per cent of technology start-ups in the MENA region struggle to find funding due to a lack of support from banks and investors, a new survey by Dubai Silicon Oasis Authority (DSOA) has found.

The results come despite a recent influx of venture capital firms and seed accelerators, especially in Dubai.

The survey, conducted in partnership with Google and YouGov, polled around 150 start-up entrepreneurs from all sectors between the ages of 20 to 40across the UAE, Saudi Arabia, Egypt, Jordan, Lebanon and Morocco about the challenges in operating in the region.

Around 68 per cent of respondents said that it was difficult to source funds to establish a start-up in the region while about 75 per cent identified challenges in securing an office space. Another 45 per cent of the companies surveyed said that attracting trained human capital was a challenge.

While the majority of the respondents also emphasised the need for flexible labour laws to encourage and promote the region’s start-up community.

But these challenges do not act as a stumbling block for the expansion plans of these companies, the survey said.

About 84 per cent of those polled saw considerable potential in new markets, while 58 per cent remained optimistic about their growth prospects due to the surge in online shopping and e-commerce in the MENA.

The feelings of optimism were further heightened among tech start-ups with 26 per cent of them expecting an improvement in the security of online transactions.

In line with a strong economic rebound, about 72 per cent of the start-ups were launched between 2012 and 2013.

The Gulf and the wider MENA region has seen a recent wave of funding firms, looking to tap into the start-up boom in the region.

Earlier this year, Global investment firm Fenox Venture Capital joined hands with Dubai-based Innovation 360 to launch a new fund worth $100 million to invest in start-ups across the Middle East, Asia and the US.

Dubai-based entrepreneurship platform AstroLabs also announced that it had launched a new tech hub in partnership with digital giant Google in Dubai to help tech entrepreneurs access high growth markets. The 6,500 square foot facility will feature a large training space, a café, and will be set on a promenade.

In addition, government initiatives are also fuelling the growth of start-ups to generate employment.

Recently Dubai-based business park developer TECOM announced an investment of Dhs4.5 billion in its business parks Dubai Internet City and Dubai Media City. The planned investment will create an innovation hub that will provide office space for SMEs, start-ups and multinationals.

Moreover, TECOM, which is also building the Dubai Design District on Business Bay, said that it will create a start-up fund and a competition to encourage emerging local designers.