The Rise of Startup Funding in MENA

MENA Region

Idris Shabbir Anandwala

MENA has seen a large amount of money pouring into tech start-ups to bring innovative solutions to existing problems. According to MAGNiTT’s State of the MENA Funding 2016 report, a whopping $870M was invested in startups, a rise of 424% in investments from 2015.

MENA has witnessed two unicorns this year: Careem is an on-demand taxi app which has its operations in nearly 40 cities including, Dubai, Islamabad, Istanbul and Casablanca. Souq.com, a marketplace, selling a wide variety of consumer products from electronics to branded sportswear. In March 2017, Amazon.com Inc. acquired Souq.com for around $650 Million, making it one of the biggest exits in Middle Eastern region.

UAE continues to be the leader of investments in MENA with $232Mn (excl. Careem and Souq) invested in 50% of deals in 2016. Adding on, TURN8’s General Partner, Kamal Hassan has announced a US $60 Million Venture Fund for Seed funding followed by Series A Round.

The ecosystem in UAE has proved to be conducive to the growth of entrepreneurship. It offers free-zone areas, networking events such as STEP Conference, Wamda Mix n Mentor and so on. These networking opportunities provide entrepreneurs easy access to potential Investors and Partners. Over the past couple of years, there has been a spike in the number of incubators as well.
UAE’s liberal culture, compared to other GCC countries such as Bahrain, KSA and Kuwait, has nurtured the growth of startups. Expo 2020 and oil fluctuations have induced UAE to adapt and adopt its leadership, similar to markets such as the Silicon Valley.

The Growth of Crowdfunding in MENA
Crowdfunding in MENA has not thrived, and still persists to be an untapped potential. This is owing to regulatory challenges (especially for donation-based crowdfunding platforms) from the Finance Ministry as faces the threat of being used for money laundering or terrorist financing.
To list out a few, the following are active Crowdfunding Platforms in MENA region:

1. Eureeca:
Based on equity-based crowd investing model, Eureeca was founded in 2013 and is based in Dubai with offices in Kuala Lumpur and London. It has raised funds in nearly 56 countries with 65% of their campaigns being overinvested. Its main focus is to provide funds for SME’s with equity in return.

2. Zoomaal:
Dedicated purely to the Arab world, Zoomaal is based on donation-crowdfunding model and charges a 5% fee for each successful project. It does not only focuses on creative and artistic people but also for startups and hardware designers in the MENA region.

3. AfkarMENA:
Jordanian based reward crowdfunding platform, AfkarMENA supports all kind of creative ideas from making films to supporting NGOs for their social initiatives. They charge 5% fees for the project and every time the creator makes another project on their platform, fee reduces by 0.5%. Lowest it can go is 4%. For NGOs whoever, a fee of 4% is charged and they can keep the money if they have not achieved their target.

4. Alfamnah:
Known as the first crowdfunding platform in the MENA region, Alfamnah was founded in 2012 and works similar to Zoomaal except it does not focus on startups and only on creative enthusiast in The Arabian World. It charges a fixed amount of fee US$100 on uploading to post the project on their site and 6% commission is charged on the total amount of fund raised.

5. Shekra:
Based in Cairo, Shekra’s model works on Islamic financing of risk-sharing combined with equity-based model and investors take a stake in the startups rather than charging a fee for the project.

6. Yomken:
A non-profit crowdfunding platform, Yomken focuses on innovation and helps SME’s, students and designers to solve problems, creatively. Based on reward-based crowdfunding, Yomken offers companies to post challenges and anyone who comes with a creative solution is then rewarded in terms of cash and other incentives.

7. ZingoHub:
ZingoHub is a first-of-its-kind crowd funding marketplace, with the sole mission to empower creators and innovators. The website not only allows for crowdfunding but also to sell or pre-order your product. MENA region has very few reward-based crowdfunding platforms such as ZingoHub.

(The opinions expressed in this article are the author’s own and do not reflect the view of the gccstartup.news or TMA Worldwide & images have republished with the author’s permission)

About the author
Idris Shabbir Anandwala Marketing Coordinator, Millennium Insurance Brokers Co. LLC
He is a graduate from Amity University Dubai and is experienced Marketing Coordinator with a demonstrated history of working in the startup industry.

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