Not very long ago, it was common to hear startups in the Middle East described as being borrowed from Silicon Valley—“the Stripe of Cairo” or “the Airbnb of Riyadh.” It made sense when the ecosystem was young and global validation mattered. But that language is fading. Today, founders are leading with local insight, solving real-world problems, and building on fundamentals that matter.

That shift signals something deeper. It’s less about fitting into a global narrative and more about shaping one that starts here.

THE APPROACH TO ENTREPRENEURSHIP 

Entrepreneurship in the Middle East is shaped by a mix of cultural, economic, and regulatory factors. Family businesses hold a dominant position, often influencing investment and business decisions.

“Success is often built on personal relationships and trust, making networking and social capital critical for entrepreneurs,” says Philip Bahoshy, CEO and Founder of MAGNiTT.

Economically, the region has long depended on oil revenues, but the push for diversification presents challenges and opportunities for entrepreneurs. Innovation in non-oil sectors is critical in responding to shifts in consumer behavior and rapid technological change.

One of the biggest challenges, says Bahoshy, is the fragmented nature of the market. “While it has a population of over 350 million people, it’s spread across 17 countries, each with its regulatory frameworks and demographic nuances.”

Governments across the region are stepping up, introducing funding programs, tax incentives, and incubators to strengthen startup ecosystems. However, Bahoshy points out that despite progress in streamlining business registration and licensing, regulatory hurdles still need to be lowered to boost investor confidence.

 “With labor markets heavily dependent on foreign workers, entrepreneurship policies should prioritize local talent development and inclusivity. Investing in skills training and fostering an innovation-driven workforce will be key to long-term sustainability.”

The region can’t replicate Silicon Valley’s playbook because that model, says Elissa Freiha, Founder and CEO of Womena and Board Member of the Dubai Chamber of Digital Economy, “is built on a financial infrastructure that doesn’t exist here.” In the US, venture capital is often backed by taxpayer dollars and pension funds. In MENA, capital is more concentrated and less accessible, especially for early-stage founders.

Also, entrepreneurship is still considered risky and less prestigious than traditional career paths, influencing the founder’s mindset and family support. Regulatory unpredictability adds another layer of complexity, requiring founders to build not just for scale but also for resilience.

From a policy standpoint, the region’s startup environment reflects strong government influence, risk-averse cultures, and economic dependence on employment in low-productivity sectors, including government jobs, says Sami Mahroum, Director of Public Policy at Oliver Wyman.

“What works here,” he explains, “are business models that cater to local needs, especially a burgeoning youth bulge, leverage public-private partnerships, and solve real, regional problems, whether in logistics, housing, fintech, education, or energy.”

Unlike Silicon Valley’s pursuit of billion-dollar ideas, startups in the Middle East often gain traction by addressing underserved markets with practical, region-specific solutions, including social enterprises. In that sense, the region may have more to learn from Africa, India, and Southeast Asia than from the West.

STARTUP MODELS: SILICON VALLEY VS MIDDLE EAST

The Silicon Valley model thrives on hypergrowth—a raise fast, spend fast, grow fast mentality. But that kind of capital simply isn’t widely available in the Middle East, says Freiha. When it is, funding tends to be concentrated in specific sectors or stages. “There’s a much bigger gap in the funding ladder, especially post-seed and Series A,” she says. “Building a business that depends on continuous fundraising is risky.”

What works better in the region, Freiha argues, is a return to traditional entrepreneurship: focus on monetization from day one, prioritize cash flow, and grow slowly but steadily. “It’s a different kind of ambition, rooted in sustainability rather than speed.”

While Silicon Valley remains the global benchmark for startup ecosystems, the Middle East operates on a different wavelength, shaped by its investment culture, government involvement, and market structure.

In Silicon Valley, where venture as an asset class is decades mature, venture capital fuels a high-risk, high-reward mindset, with investors readily backing early-stage startups, even with uncertain profitability, says Bahoshy. Investors tend to be more risk-averse in the Middle East, where formal startup investing has been around for just over a decade. They prefer later-stage investments, proven business models, and family-backed ventures.

Still, the region is changing. Government-backed funds are becoming more active, and international VC interest is growing. Unlike Silicon Valley’s private-sector-driven environment with a wide range of funding sources, from angels to IPOs, the Middle East’s startup engine is largely powered by public-sector initiatives. Sovereign-backed VC programs, grants, and tax incentives are playing a key role in driving innovation and economic diversification.

Scaling a startup also looks different. While Silicon Valley encourages a “move fast and break things” ethos, founders here often scale through strategic partnerships, personal networks, and close alignment with government entities. The region’s fragmented market requires trust-based expansion across borders rather than rapid disruption.

The industries seeing the most startup growth also diverge. Silicon Valley’s strength lies in deep tech, AI, and SaaS. In contrast, Middle Eastern startups are gaining momentum in sectors like fintech, e-commerce, logistics, and mobility, while traditional industries such as oil and gas, real estate, and infrastructure continue to dominate. Ultimately, while Silicon Valley is built on aggressive risk-taking, the Middle East’s startup model is relationship-driven, government-backed, and shaped by regional economic priorities. Beyond the Gulf, the region is also an exporter of talent rather than an importer, unlike Silicon Valley. “The Middle East has much to gain from engaging with its highly skilled diaspora,” adds Mahroum.

Culturally, there is a preference for a steady job and a career, a safe investment in global, mostly American assets, and then embarking on an entrepreneurial endeavor locally, he adds. 

THE MINDSET, THE MENTALITY 

In contrast to Silicon Valley’s “move fast and break things” philosophy, entrepreneurship in the Middle East is anchored in trust, relationships, and long-term stability. This mindset favors strategy over speed.

“Rapid, unchecked disruption can clash with regulatory frameworks, cultural expectations, and risk-averse investors who prioritize sustainable growth over speed,” says Bahoshy. That said, agility and innovation are still key. Startups that balance speed with strategic partnerships and regulatory alignment are the ones best positioned to succeed in the region’s evolving ecosystem.

Freiha puts it bluntly: “‘Move fast and break things’ is a luxury mindset. It only works in ecosystems where failure is celebrated, and experimentation is well-funded.” In Silicon Valley, millions can be poured into an idea that may never succeed because the system is built to absorb that risk. 

“In the Middle East, we don’t have that luxury,” she adds. 

Here, capital is scarcer, and failure carries a heavier, often reputational, cost. 

Freiha argues that the region needs a different model. “We need one that prioritizes resilience over recklessness, one that moves with intention, not just speed.”

THE MIDDLE EAST ADVANTAGE 

Startups in the Middle East have a distinct edge in industries rooted in local realities: logistics, Arabic-language content, Islamic fintech, food security, and female-focused services. Freiha believes Silicon Valley often overlooks or poorly understands these sectors. 

“We also face direct and urgent challenges in areas like climate tech, water scarcity, and energy transition”, she adds. “So there’s both necessity and opportunity for innovation.” Startups founded on lived experience, she believes, are uniquely positioned to develop solutions with real impact.

Across the region, governments have launched major initiatives, from Saudi Arabia’s Vision 2030 and Egypt’s Digital Transformation Strategy to programs like the Dubai Future Accelerators. Some of the most effective policies have included simplified business licensing, government-backed funding platforms, and dedicated free zones for tech startups. 

Mahroum highlights the role of institutions like Saudi Arabia’s Monsha’at and the Digital Government Authority in nurturing the startup ecosystem. Programs like Abu Dhabi’s Hub71 and Dubai’s Future Accelerators have created structured channels for startups to co-develop solutions alongside public entities.

But there’s room to go further, he says. “Shifting from government-as-funder to government-as-customer would be transformative.”

By prioritizing procurement from local startups, particularly in sectors like healthcare, education, and sustainability, governments could provide predictable demand, validate emerging business models, and draw more private capital into the ecosystem.

“Procurement reform,” he adds, “with streamlined onboarding, faster payments, and real innovation partnerships, could do more to scale startups than another round of funding.”

THE DEFINITION OF SUCCESS 

Success in the Middle East should be defined by a startup’s ability to solve a meaningful local or regional problem while building a viable business, adds Mahroum. 

“Unicorns are impressive,” he adds, “but they’re not the only measure of impact.” In a region grappling with high youth unemployment and saturated public sectors, startups that create jobs, empower SMEs, improve service delivery, or enhance competitiveness are equally, if not more, valuable.

Bahoshy also agrees when he adds, “Success for a startup shouldn’t just also be about reaching unicorn status. It’s about survival and scalability in a challenging ecosystem.” 

He says, “A key mantra that I keep highlighting is that success breeds success. We welcome exits and successful liquidity events to drive the next evolution of the venture market here in the region, many of which do not need to be unicorns.”

A key lesson from Careem and other successful exits, such as InstaShop and Amazon, is that they create the next generation of successful founders.

Still, the numbers highlight how challenging the path can be. According to MAGNiTT, just 7% of early-stage startups in MENA (excluding Saudi Arabia) reach Series A. That number drops to 2% for Series B and just 0.3% for late-stage funding. In Saudi Arabia, the picture is only slightly better: 8% make it to Series A, and just 1% progress to the late stage. Shutdown rates remain high—25% in MENA and 19% in Saudi Arabia.

For Freiha, success is about viability and longevity.

It’s about building something profitable, sustainable, and valuable to the community. It’s about creating jobs, navigating the complexities of local markets, and surviving the inevitable ups and downs.

Without the same safety nets or infrastructure for “failing forward” as in Silicon Valley, she says, startups in the region must prioritize resilience over hype. “That may not make headlines,” she adds, “but it’s what will move the needle on economic development.”