Despite an expanding pool of funding opportunities for entrepreneurs in the Middle East and North Africa (MENA), many obstacles remain, according to a recent report that analyzes data from 254 entrepreneurs and 65 investors in the region.
“Access to funding is a critical determinant in startup growth,” explained Jamil Wyne at Wamda Research Lab, project lead of the report. But in the MENA, he says, “finding investment and lending sources is excessively challenging for entrepreneurs.”
Positive developments in the region’s investment environment:
* The number of funding sources for entrepreneurs in the region has increased substantially since 2008 to over 50 in 2013.
* The number of investments in the report sample increased from 28 in 2009 to 99 in 2012.
* Many funders in the region are planning to expand into new countries in the next few years.
* Funded companies have similar plans, with many looking to open offices in the UAE and Saudi in the coming years.
Remaining challenges include:
* Large gap facing startups seeking to raise funding sizes over USD500K and above; “the majority of investments were under USD500K and most were USD200K or below.”
* Very few cases of debt funding and follow-on funding rounds; “68% of surveyed companies had not yet received follow-on funding.”
* Multiple lingering non-financial challenges, including communication gaps between entrepreneurs and funders; “more channels of communication between potential investors and investees create mentoring opportunities as well as opportunities for investors to gauge needs and challenges of entrepreneurs outside their portfolio.”
For more information, check out the report.