MENA’s startup health movement: a MEMakers report
In a new report from Wamda Research Lab (WRL) in partnership with GE, we interviewed over 120 entrepreneurs, investors, physicians and experts working in the region’s healthcare industry.
While healthcare systems around the world face mandates to lower costs and improve patients’ outcomes, MENA’s health challenges are particularly severe.
According to the World Bank, by 2030 non-communicable diseases such as diabetes will account for 87 percent of all deaths in the Gulf Cooperation Council (GCC), and 81 percent in MENA countries outside the GCC.
Technologies developed by private companies can help solve mounting regional public health challenges, if they can be scaled effectively. Yet, due to the region’s nascent support ecosystem for health startups, entrepreneurs tackling regional health challenges experience significant barriers to scaling their solutions.
We identified the startups that are innovating in this field and the barriers to their growth, and we propose practical first steps to grow the impact of private healthcare companies in MENA.
Right now, MENA is growing its first generation of health entrepreneurs.
Of the companies that participated in our study, 90 percent were created in the last five years, 55 percent launched in the last three years, and 30 percent are in their first year of operation.
We found that Egypt and the UAE have the most startup activity in the healthcare industry in MENA, followed by Palestine, Lebanon, Jordan, and Saudi Arabia, respectively.
Most of MENA’s health startups are focused on offering greater transparency and access to information for consumers online. Some startups are even in the early stages of enabling patients and providers to remotely capture mobile health and wellness insights from devices, smart sensors, and from algorithms to make sense of vast amounts of healthcare data.
Investing in new territory
As health startups in MENA mature, a small yet growing population of venture capitalists and angel investors are also investing in private healthcare companies.
Of the 61 startups in our sample, 49 percent obtained investment with 21 percent backed by venture capital, 15 percent have obtained a follow-on funding round, and 11 percent have raised over $1 million.
In order to further understand the funding landscape surrounding health startups in MENA, we break down the companies in our sample by investment rounds, shown in the chart below.
Private health companies in MENA are obtaining 1st round investments (Seed) and most rounds are under $500,000. Yet, a small number of relatively older startups have received larger funding sizes in a second round (Series A).
Still, MENA’s health startups rely on more informal sources of finance: personal funds, family money, friends’ money, and grants, over any other funding sources, especially for early-stage capital.
No easy street in healthcare
Further, 41 percent of the companies we interviewed reported difficulty in conducting clinical trials to prove their concept, and 74 percent said they faced challenges in forming mutually beneficial partnerships.
Some 77 percent said growth was hampered due to the difficulty in finding the right people to hire, while 57 percent cited opaque health regulations as holding back greater involvement in the industry by potential investors and partners.
Despite barriers to growth, a rising number of entrepreneurs throughout the MENA region are tackling some of the most pressing healthcare challenges facing any region in the world.
Nearly half (48 percent), of the startups in our sample have the potential to serve people around the world. These companies address universal healthcare problems in quality, access, and costs. They also explicitly indicated that they are targeting a market that is spread over multiple continents, and are also linguistically and/or culturally inclusive.
The data collected by the WRL and GE, represents the largest collection of information on health startups and their supporting ecosystem in the region to date. The insights presented in the report can help guide decision-making processes, and in turn accelerate the region’s capacity to create, grow, and adopt advanced healthcare solutions for MENA, and beyond.