by Orion van Ravesteyn

The MENA Region has experienced rapid year-on-year growth in deals, with activity mainly focused on technology, financial services, and consumer markets which are supporting the region’s drive to move away from oil and gas. However, there is said to be a pre-pandemic fall this year since activity has dropped in the region. The region has invested a whopping $3.2 billion across 580 deals in Q2 of 2023 being the lowest quarter since Q3 in 2018, according to PitchBook Data.

Governments in the region have recognised the importance of fostering entrepreneurship and innovation and have been investing heavily in the startup ecosystem. Major cities such as Dubai and Riyadh have become prominent startup hubs. Dubai in particular has launched the Dubai Future District and the Dubai Future Foundation to promote innovation and technology startups which has surely made it a favorable destination for startups. Middle Eastern governments have introduced policies and regulatory changes to facilitate entrepreneurship and attract foreign investments, such as Saudi Arabia’s ‘Vision 2030’, diversifying economies and promoting innovation.

Corporations have shown increasing interest in venture investing and innovation, with many established companies having set up their own venture arms and innovation hubs to support startups and tap into new technologies. Cross-border collaboration has also become more prevalent with startups and VCs from different Middle Eastern countries partnering on projects, creating a more vibrant and interconnected ecosystem.

With the impressive rise of VCs in MENA I wanted to shed light on three who have made waves in the industry and focus on the impressive work they have done so far.

Arzan Venture Capital

Founded in 2013 by Hassan Zainal, Arzan Venture Capital has been making its mark with 46 investments in 10 countries. Investing in early-stage businesses they’re committed to building long-term relationships with the Middle Eastern’s most talented entrepreneurs, priding themselves in investing for success and delivering impressive financial returns to their investors.

Being one of the earliest VC firms to start in MENA, they have been investing in young, fast-growing tech teams across the region, Despite some being global this has allowed them to add real value and work closely with the startup companies. Arzan Venture Capital has invested in some of Arabia’s well-known companies from Careem to Zid and we are most definitely excited to see what this VC firm will do next!

EQ2 Ventures

Co-founded in 2015 by Joel Ayala, Abdulaziz Alrugaib, Elie Habib, and Hosam Arab, EQ2 Ventures has made an impressive impact within the Middle East and Africa. With their first investment in 2015 into Digital Content and Adtech, they have since branched into B2C Marketplaces, Fintech, and SaaS industries, investing in Seed to Series A companies.

With a large portfolio of 24 companies, EQ2 has also invested in ArabyAds which empowers e-commerce marketing by offering digital advertising platforms across the brand’s, customer's life cycle from customer acquisition to retention to monetization.

Another incredible brand making waves within MENA is Ai-fluence, offering end-to-end solutions, and optimizing and scaling global influencer marketing strategies. With a 55% YOY revenue growth, they’re sure to continue making waves within the Middle East and Africa!

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Saudi Technology Ventures

Founded in 2018 by Abdulrahman Tarabzouni, Saudi Technology Ventures has over $800 million in capital and is one of the largest VCs in the Middle East. Their growing portfolio comprises 30 growing companies, working with companies including Careem, Foodics, and Wajeez.

STV believes the MENA region can output 45 unicorns by 2030 and create “digital giants”. Their main focus is on delivering innovative solutions tailored to local needs, definitely a VC we need to keep an eye on and see what impressive work they continue doing!

Governments within the Middle East have been actively supporting the startup ecosystem. While technology startups have been the main focus, Middle Eastern venture capital firms may diversify their investments into sectors such as renewable energy and sustainability reflecting global trends and regional priorities.

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With Middle Eastern countries continuing to strengthen their cross-border collaboration, they’ll continue creating a more interconnected regional ecosystem which will lead to increased opportunities for startups and venture capital firms. Some firms have already started expanding their presence beyond the region, seeking opportunities in international markets.

Cairo-based startups have raised about $1 billion in funding since 2014, which amped up in 2017. The rise of VCs within the Middle East has facilitated the development of sustainable VC ecosystems, backed by government wealth funds, This has been a key pillar in the economic diversification strategies.

Recommended reads:

Faster Capital's look at VCs in the MENA Region

PWC's 2023 TransAct: Middle East

Silicone Valley in the Middle East

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At Atara Partners we are in the business of helping start-ups grow through our unique approach to executive search. If you’d like to learn more about Atara Partners and our work in executive search contact us here. Or check out our blog on the CEE region.