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
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.