BECO Capital, a venture capital firm that provides early-stage growth capital and hands-on operational support for technology companies in the Middle East and North Africa (MENA) region, recently reported that the tech entrepreneur sector in the area has achieved tenfold growth lately with the help of a growing venture capital industry.
The company said the technology ecosystem has been growing in the last four years with the help of major players including angel investors, incubators, accelerators, venture capital firms and government initiatives.
“With over 109 players currently investing in the technology startup sector across its various stages, from incubation to angel investments all the way to providing (venture capital) growth and late-stage capital, the market and ecosystem will grow even faster,” Dany Farha, co-founder of BECO Capital, told Gulf News Journal.
Growing entrepreneurship trends in the region is another key factor that stimulates growth. A new entrepreneurial generation with the skills and ability to create winning companies is emerging. For example, in the last decade, Gulf Cooperation Council (GCC)-based entrepreneurs have built many successful businesses with enough scale and exported them to larger region markets.
Besides, with the economic slowdown and low oil prices, entrepreneurs in MENA are building their own companies while contributing substantially to income, output and employment.
"A weaker economy fuels a more entrepreneurial and innovative approach in a tough and competitive work environment," Farha said. “Consumers and enterprises start looking for the most innovative solutions, and technology companies provide these."
The venture capital industry in the region is evolving with a much deeper startup ecosystem, government and private initiatives and increased attention from international venture capitalists and strategic investors. Farha said he believe that the regional ecosystem will keep growing, which has already raised sizable funds over the last 24 months. New government and private initiatives are being set up while international venture capitalists have slowly started to converge on the region, having already invested in some local tech companies.
“(Venture capitalists) with a solid track record and investments are boosting startups,” Farha said. “More funding will accelerate the creation of our ecosystem, introduce more tech companies and build local tech success stories, ensuring that MENA participates in the global tech revolution, and contributing to a better region.”
He said that supporting winning startups or potential “unicorns” will create sustainable economic value and contribute to alleviating the standards of living. Access for startups to smart capital and operating within friendlier regulatory frameworks in the region could tackle some of its pressing challenges and fast track the role of entrepreneurship and innovation in an evolving Arab world. This will encourage more entrepreneurs to come forward with great ideas and build new ventures creating a positive virtuous cycle.
Concerning investment in the technology sector by venture capitalist firms, Farha said he think that more money should be allocated to the ecosystem from institutional investors, governments and sovereign wealth funds. In addition to more funding, large businesses and governments should view tech startups, and small and medium enterprises, as efficient and effective suppliers to the economy.
“With more awareness of (venture capitalism) as an emerging asset class amongst traditional investors including family offices, high-net worth individuals and financial institutions, the (venture capitalism) industry can pour more investments into innovation, knowledge economy and technology space and therefore make a great impact on the economy,” Farha said.