(MENAFN - Khaleej Times) The UAE's startup industry has set an example of successful exit stories and founders reaping rich returns on investments, ever since the Souq-Amazon deal was inked for $580 million, followed by Uber's acquisition of Careem for $3.1 billion. The industry is now poised for record year in startup exits and young entrepreneurs are encouraged and strongly supported by the government, investors, accelerators and mentors.
The UAE is, in fact, offering a multicultural and vibrant ambience to budding entrepreneurs with the sole objective of boosting skills and development, which harnesses innovation and growth. The first half of 2019 remained very buoyant as the UAE remained the largest recipient of startup funding by number of deals, followed by Saudi Arabia, Bahrain and Tunisia, which have also emerged as a stronger ecosystem, according to the 'H1 2019 MENA Venture Investment Summary Research - Scaling beyond borders' study issued by Magnitt on Monday.
The first half of the year saw $471 million in total funding and 238 deals, indicating an increase of 66 per cent compared to the first half of 2018, as well as a 28 per cent increase in the number of deals - this is the highest number of deals in the first half of a year on record. The UAE accounted for the lion's share of total investment amount at 66 per cent, as well as 26 per cent of all deals in the first half.
The top sectors of the Mena startup industry include fintech, e-commerce, delivery and transport, food and beverage, IT solutions, education, consumer services and healthcare. The first half witnessed fintech recording maximum business and received the largest number of investments, accounting for 17 per cent of all deals - indicating an increase of 9 per cent compared to the same period last year. E-commerce was at 12 per cent, followed by delivery and transport and food and beverage.
The Mena Fintech Association - an inclusive, not-for-profit body that fosters an open, cross border dialogue for the region's fintech community - plays a vital role in promoting the regional innovators by bringing to light their solutions to global platforms, paving the way for new revenue streams for all stakeholders.
Dubai-based Nihal Abughattas, founding board member of the Mena Fintech Association, said: "Fintech, accounting for 17 per cent of all deals in the first half of 2019 and retaining its top spot as the most active industry, is evident enough to see the growth it has registered. The increase largely comes from early-stage venture investments and accelerator programmes. The region offers tremendous potential that redefines the fintech industry constantly. Innovation has paved way for 250 fintech ventures to be set up by 2020 in Middle East region."
Similarly like fintech, the food and beverage industry has indicated a jump of over two per cent in investments over the first half of 2018 and Shane Shin, founding managing partner at Shorooq Investments, who is a regular investor in food startups, says the food and beverage industry will always be in demand.
"This is a natural phenomenon that technology and unique business models have already started to influence every aspect of our lives, be that such traditional industries as food and beverage. We will see more and more changes happening fast and unless we adopt, we will be left behind, restaurants and companies will be more difficult to cope with and the larger conglomerates will be forced to comply with the changed lifestyle... we are excited to experience this massive growth in this sector and food and beverage companies have begun to embrace the entrepreneurial spirit," added Shin.
More institutions have started investing in Mena-based startups and this was evident with a 30 per cent jump over the first half last year. Around 130 institutions invested in Mena-based startups in the first half of 2019 and 30 per cent of these investments are from outside the Mena region, including Asia, the US and Europe.
Philip Bahoshy, founder and CEO of Magnitt, said: "The first six months of the year have proven to be extremely busy and interesting at the same time, all of which is extremely positive for the regional ecosystem. The momentum of 2018 has successfully flown into 2019, which has been reflected in the number of deals and the amount invested in Mena-based startups. The region has so far seen 15 startup exits take place in the first half, an increase of five compared to the first half of 2018 and we expect this to continue, and 2019 to be a record year in startup exits."
The optimism in regional startup growth can be attributed to series of initiatives, meetups and conferences and decrease in the barriers to enter new markets. "If there is one thing that the success of Careem and Souq highlights, it is that scale is the name of the game. Founders must recognise the importance of looking outside of their home markets. They should look to develop regional aspirations, if not international ambitions, for their scalable companies," added Bahoshy. -
Journalist. Period. My interests are Economics, Finance and Information Technology. Prior to joining Khaleej Times, I have worked with some leading publications in India, including the Economic Times.