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Arab startups lead new generation of tech-savvy enterprises, says new study

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WTD Bureau
Dubai

Nearly 500 startups opening businesses
and seeking funding are spurring a new round of entrepreneurial boom across the
Arab World as more young executives take on the new roles of business owners or
managers, according to a new report titled ‘The Future of Arab Startups:
Challenges and Opportunities in a Connected World.’ The report published by
Orient Planet Research, an Orient Planet Group venture, was released on the
sidelines of Step Conference 2017 in partnership with STEP Group and
Utalenta.com.
From Egypt in North Africa down to the
UAE in the Arab Gulf, aspiring business owners engage in setting up businesses
and securing funds to help them start their own enterprises. The report presents the challenges and
opportunities for startups in the Arab World and their increasing role in
spurring the growth of small- and medium-sized enterprises (SMEs) in the
region. It explores the various types of support startups receive from the
government, private and social sectors in order to succeed, as well as their
increasing attractiveness to global companies as platforms for expansion in the
region.




Nidal Abou Zaki, Managing Director,
Orient Planet Group, said: “There is consensus among all sectors of society –
government, private, and civil society – that supporting entrepreneurship is
key to addressing unemployment and other social issues, which could open up
huge opportunities for the youth and present modern-day solutions to the
problems we face today. The report reveals how several successful regional startups
are inspiring the young generation to run their own business, which is a very
refreshing development in a region that has been facing many political and
economic challenges.”





Nidal Abou Zaki, Managing Director, Orient Planet Group
Ray Dargham, STEP Group co-founder and
CEO, stated: “The startup movement is very much alive across the region and is
being led by a younger generation of Arabs looking for profound change in
society. The release of the report proves to be both timely and strategic as it
puts forward the importance of startups and the role of digital transformation
in opening up huge opportunities for growth. It also significantly highlights
the growing interest of government and private sector to invest in these
entrepreneurs, particularly the really innovative businesses which have the
potential to reach larger markets. It is a birds-eye view of what is happening
on the ground.”

Ray Dargham, 
Co-founder and CEO, 
STEP
Group
The report noted that Millennials or
the young generation born from the 1980s, as well managers working in companies
are keen to open their own business as they prefer to work independently and
achieve a good work-life balance, rather than get tied-up into a routine job.
It also highlighted that access to
digital technology plays a crucial role in the recent growth and success of
startups in the Middle East and North Africa, with many of the leading
successful startups in the region supported by high internet penetration and
mobile phone ownership in some Arab countries such as the UAE, Qatar, Lebanon,
Egypt and Saudi Arabia. The massive interest of young entrepreneurs in digital
technology as an ideal platform to start up a business is visible in key events
in the region, such as the inaugural Tech Startup Movement which was launched
at the latest version of Dubai’s GITEX where more than 450 startups
participated.
The report also found that private
investment funding for key startups has been consistently growing, having
reached USD 750 million from 2013 to 2015 and up to USD 870 million in 2016.
Most companies that closed funding deals last year are startups that have e-commerce
-based or internet-related services, with the UAE having the most number of
deals.
Startups are also increasingly
attracting international investors, including impact investment groups looking
to develop cutting-edge enterprises that can be scaled up at the global level.
Some of the region’s most popular startups including Souq.com, Careem and
Fetchr are 2016’s biggest deal makers. Government funding through SME funds has
also become increasingly accessible for startups with up to USD 22.5 billion
being provided by huge markets such as Egypt, the report added.





The report further revealed that across
MENA, about 116 organizations directly provide support services to startups.
They comprise venture capital investors, incubators, accelerators, platform
providers for business plan competitions, online resources, social venture
capital firms, and business networks.
Abou Zaki concluded: “Certain
challenges continue to hinder many startups from succeeding such as lack of
business planning among new entrepreneurs or disinterest among job seekers who
prefer government posts over entrepreneurial positions. Fortunately, many young
Arabs are realizing the importance of being independent and learning to raise
their own business. This is a very important momentum that government and
private sector investors should not miss to support as the young generation
will soon be key drivers to economic growth in the region.”

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