MENA PEA Report on Venture Capital in the Middle East and North Africa

by wamda, September 6, 2011

Venture capital in the Middle East and North Africa is booming, and will only continue to grow.

A new report released by the Middle East and North Africa Private Equity Association (MENA PEA) demonstrates this growth in the region, providing a comprehensive overview of the state of venture capital (VC) in the MENA region and its players.

The report reveals:

A snapshot of VC growth:

- the number of VC deals closed from 2009-2010 is triple the number of deals closed in the 2 years prior.
- VC funds raised in 2010 were equivalent to the sum of funds raised in the previous 4 years.
- a record US$300 million was raised by the venture capital industry in the Middle East and North Africa (MENA) last year.

Current Top Sectors for VC Investment:

1) IT and Software sector2
2) Industrial Manufacturing
3) Media
4) Telecom

Where new startups can find good opportunities for growth:  

- developing human capital solutions for large companies
- working in sectors like tourism, mining and maritime, healthcare, and renewable energy.
- create regional analogues to some of the IT VC-backed success stories in Europe and North America

Where new investment vehicles can make a splash:

- investing in the "missing middle": businesses valued between USD500,000 and USD8 million that are beyond the seed startup phase but smaller than a private equity investor might require.
- sectors such as education, technology, tourism, and hospitality are especially ripe for "middle" investments.

What the entrepreneurship ecosystem needs to develop in order to grow:

- a cultural willingness to fail
- a wide network of potential mentors and supporters
- a legal and regulatory system that makes it possible to start and run businesses effectively
- a mature technology industry.
- bankruptcy laws and procedures that make posisble the orderly dissolution of assets.
- simpler laws regarding contracts, corporate structures, corporate governance, legal ownership and post-IPO lock-ups and exits further complicate the future of VC activity in the region.

Download the report to read further and view a complete directory of venture capital firms, legal issues that VC firms face, and macroeconomic investment data.

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