Fragmented markets are the ‘biggest challenge’ for MENA startups: Wamda Chairman
MENA startups “biggest challenge is how do you scale these businesses while markets are very fragmented,” said Fadi Ghandour, Executive Chairman of Wamda Group, a company that looks to support Middle East and North African (MENA) entrepreneurship through ecosystem development and venture capital funding.
“There is a huge friction to move from one country to another with different regulatory environments, with different requirements for how you set up a business there,” he said.
Ghandour was speaking on the sidelines of the 2020 World Economic Forum in Davos, Switzerland.
The region as a whole though “is experiencing a fantastic growth in the startup world, specifically in the Gulf, also Jordan, and Egypt,” he added.
The sale of Careem, the region’s first “unicorn,” to Uber for $3.1 billion last year has had many investors and commentators asking where the next billion dollar business is. Unicorns are startups that have a valuation of more than $1 billion.
Ghandour disagrees with this line of thinking, however. “Life doesn’t revolve around billion dollars businesses,” he said.
“It revolves around businesses that have scaled to a certain size, that are doing well, that are sustainable, and that can find investors … the world doesn’t end with unicorns.”
Accessing finance has been a long term problem of startup development in the Middle East, but this is a situation that is changing. 2019 was a blockbuster year for startup funding, with $3.8 billion in capital deployed, headlined by the Careem deal.
“We are seeing some really serious companies … in the region,” Ghandour said, in relation to funding challenges.