The Use of Venture Building vs. Venture Capital in the MENA Region
Ahmed Nasser, Founder & CEO, Annex Investments
In a recent interaction between Asia Business Outlook, Ahmed shared his insights on the current Venture Capital scenario in the MENA region and several other aspects. Below are a few extracts from the exclusive interviewIn a recent interaction between Asia Business Outlook, Ahmed shared his insights on the current Venture Capital scenario in the MENA region and several other aspects. Below are a few extracts from the exclusive interview
The role of venture capital in the MENA region’s startup ecosystem in recent years
Venture Capital is playing a very significant in the MENA region’s startup ecosystem in recent times. By providing investments, expertise and guidance on various aspects to the startups, VC firms are directly fuelling their growth and innovation in the region. Also, the widespread presence of VC firms has help create a dynamic entrepreneurial ecosystem in the region. There has been a significant increase in the number of VC firms focusing primary on the MENA region, and this is a clear indication of the region’s strong potential and the investor community’s growing interest in the region. Also, businesses across industries such as fintech, e-Commerce, healthcare and renewable energy have witnessed substantial investments in recent times.
Venture Building is a comparatively new concept in the MENA region and offers a host of advantages & benefits to startups here
The advantages of venture building for startups in the MENA region, particularly in comparison to traditional venture capital
Venture Building is a comparatively new concept in the MENA region and offers a host of advantages & benefits to startups here. Compared to traditional venture capital mode, venture building model startups receive comprehensive support beyond just capital. This includes having access to a network of industry experts, access to necessary resources, operational guidance, and strategic support throughout their journey. In a region such as ours where startups face unique set of challenges related to regulatory frameworks, market entry, talent acquisition and many others, this approach has proven to be a real game changer. Venture builders leverage their experience and local knowledge to offer customized support to each startup and help them tackle these challenges with ease. Venture builders engage a lot more with the startups as compared to VC firms, and they do not expect a startup to have its MVP ready. Instead, they engage with the startups closely right from the scratch and offer them access to their industry network and skilled talent. Personally, I see venture building as a model that is more profitable than venture capital.
The key factors that VC firms look for when making investment in the MENA region
Some of the key factors that help a startup attract inventors’ interest are market potential, strong founding team, traction & growth, unique selling proposition and many more. Some of the major challenges that startups in the MENA region face while raising investment includes limited access to capital, lack of regulatory frameworks that support entrepreneurship and difficulties in attracting experienced talent. To successfully address these challenges, it is important to foster an enabling environment through measures such as regulatory reforms, investor-friendly policies and providing support for entrepreneurship education and skill development. Abu Dhabi, Riyadh and Dubai are the perfect examples of how governments in the rest of the MENA region should make amends to their regulatory framework and investment policies.
"Startups across all regions have a lot of homework to do in today’s dynamic business landscape in terms of attracting venture capital, and this is truer in case of startups in the MENA region"
What role do government policies and initiatives play in supporting the growth of venture building and venture capital in the MENA region?
Having good government policies and initiatives plays a crucial role in supporting the venture building and venture capital. Governments must create a favorable regulatory environment to encourage entrepreneurship, provide incentives to investors and facilitate easy access to capital. As a result, venture studios are emerging as the go-to partners for startups in the Gulf region due to their comprehensive approach, towards supporting startups. Also, government led funds and incubators can also play a vital role in nurturing startups and attracting venture capital.
What advice would you give to early-stage startups in the MENA region seeking funding?
Startups across all regions have a lot of homework to do in today’s dynamic business landscape in terms of attracting venture capital, and this is truer in case of startups in the MENA region. Startups must do a proper research, identify VCs that perfectly align with their values & aspirations and then approach them for their funding needs. Risk tolerance of investors is another very niche aspect that every startup must pay close attention to while looking for investments in the MENA region.