From Local to Global: The Urgent Shift for MENA’s Startup Scene

Over the past 15 years, the MENA region has transformed into a vibrant hub for innovation and entrepreneurship. Yet, to truly capitalize on the opportunities before us, both founders and investors must embrace a fundamental shift: building businesses that don’t just thrive locally, but excel on the global stage.

A Rapid Evolution of the MENA Startup Ecosystem

MENA has rapidly emerged as a dynamic hub for tech startups, driven by strategic government initiatives, favorable demographics, progressive regulations and global investor appetite. The UAE and Saudi Arabia have been at the forefront, heavily investing in their startup ecosystems to diversify economies and reduce reliance on oil.

Demographic Goldmine: Nearly two-thirds of MENA’s population is under the age of 30, creating a vast pool of young, tech-savvy consumers who are driving demand for digital products and services. This demographic advantage has also led to a surge in entrepreneurial activity. Former startup employees are now launching their ventures, and a wave of serial founders is emerging, creating a more mature and dynamic ecosystem.

Strategic Location and Progressive Regulations: The UAE and Saudi Arabia, strategically positioned between the East and West, have become magnets for global talent, thanks to progressive policies like golden visas, tax incentives, and subsidies. These countries have shown remarkable resilience in navigating global challenges, making them attractive destinations for entrepreneurs and investors alike. Over the past four years, there has been a notable influx of global talent relocating to the region, further enriching the local startup scene and accelerating its growth.

Global Investors Take Notice: International venture capital funds are increasingly turning their attention to the MENA region. Heavyweights like General Atlantic, Balderton Capital, SoftBank, Founders Fund, and Tiger Global have already made direct investments in local startups. These investments are fueled by the region's untapped potential and the opportunity for these funds to secure LP commitments from local investors, signaling growing confidence in MENA’s startup landscape.

Challenges on the Path to Scale

Despite these advantages, scaling a startup in MENA comes with its own set of challenges.

Navigating Regulatory Complexity and Market Fragmentation: The MENA region's diversity is reflected in the varied legal and regulatory frameworks across its countries. For startups operating across borders, this regulatory landscape can be challenging to navigate. This is also a reflection of the market size that is relatively small if you compare it to giants like the US, Europe or even South East Asia.

The Skills Gap: Despite the young and educated population and influx of international talent, there remains a significant gap in the skills needed to build and scale tech companies. Tech talent, in particular, is scarce, expensive, and challenging to retain. This results in startups turning to remote teams in countries like India, Pakistan, or Eastern Europe to fill these gaps cost-effectively. Specialized roles, such as product marketing for SaaS, C-levels with scaling experience as examples, often need to be sourced from outside MENA.

Why Global Expansion is a Must

Market Reality

Historically, founders built their startups in the UAE, expanded to KSA, and then targeted the wider GCC. But in the last 2-3 years, the playbook has changed. More founders are choosing to build from and for Saudi Arabia first, driven by its larger market size and access to capital through entities like Jada Fund of Funds and SVC .

With a total population ranging from 350 to 450 million, MENA’s market is concentrated in three main hubs: the UAE, Saudi Arabia, and Egypt. Together, these countries have a combined population of around 156 million and  GDP of $2.9t, significantly smaller than other regions or individual countries.

While addressing the market size within MENA can be appealing to many founders, building truly scalable and valuable companies presents significant challenges. For SaaS and B2B startups for example, expanding beyond MENA isn't just an option—it's essential. As the chart below illustrates, our region accounts for only a small share of the global market. This reality holds true for most other industries as well.

The Case for Going Global

Most of the world’s leading decacorns (companies valued at over $10 billion) have achieved their valuations by expanding beyond their home markets. Global expansion plays a significant role in reaching such high valuations, as it allows companies to tap into larger markets, diversify their revenue streams, and increase their influence and brand recognition.

Almost all US-based decacorns have a significant global presence. Companies like Airbnb , Stripe , Databricks , Snowflake , and Coinbase have operations in multiple countries, serving a global customer base. Decacorns in Europe, such as Spotify (Sweden), Klarna (Sweden), Revolut (UK), and Adyen (Netherlands) have all expanded significantly outside of Europe. Their global operations, particularly in the US and Asia, contribute greatly to their high valuations.

MENA startups need to do the same, to reach such heights. If companies from larger markets go global to achieve big scale (US could be the only exception), our regional founders need to do the same. We have several unicorns – Careem , Property Finder , Kitopi , Jahez International Company , Tabby , Tamara and others– that may struggle to achieve decacorn status in our region alone.

At the same time, not every company needs to expand beyond our region. Some may find it challenging to compete internationally, where the unit economics within their industry might be more favorable here. However, it's important to recognize that these businesses may face a ceiling in terms of scale and growth potential.

Why This Matters for VCs and LPs

Global expansion isn’t just good for startups; it’s essential for the entire venture ecosystem in MENA. While the exit activity has been rising, the returns are often modest and don’t provide the outsized gains that VCs need. Capital markets in our region are developing positively, but we are still not in a place to offer the returns we are all seeking. Without delivering these alpha returns to LPs, the sustainable growth of the ecosystem cannot be maintained at a healthy level for a very long time.

Going Global is Possible

The last decade has shown that going global is not just possible—it’s achievable. While MENA has produced a few globally recognized companies, such as Emirates and Etihad , as well as DP World , a global leader in logistics and maritime services managing over 90 ports and terminals worldwide, the region has yet to achieve the same level of global recognition in the tech sector.

There are examples of a few promising companies like Fresha (now in the UK), Writer (previously known as Qordoba, relocated to San Francisco), Seez (operating in Europe), and Instabug . They all are a testament that it's possible to start in MENA and expand globally. These companies were born in MENA, raised their initial capital here, and then successfully ventured abroad. Although not in the decacorn stage, they have realized that a market like the US or Europe, is as valuable if not more than just building and scalling locally.

Shifting the Mindset: Building for Global Markets

Overcoming Investor Hesitation

In my 12 years in the VC and startup ecosystem, I've often seen investors recommend that founders focus on the MENA region first, citing the complexities of larger markets. While this advice is understandable, logical and very true—global expansion is no easy feat—if we don't swing for the fences, we can't expect $10 billion+ companies to emerge from our region. It's essential for founders to ensure their vision and future plans align with those of their VCs before forming partnerships.

A New Approach

It’s time for MENA founders and investors to rethink their strategies. Building and focusing solely on the region is no longer enough. Startups need to scale internationally from the outset, creating solutions that can compete on the global stage.

Success in this area requires buy-in and support from local investors. We have what it takes, and it is a necessary evolution for our venture ecosystem. It’s the key to unlocking MENA’s full potential and taking our place on the world stage.