Cities in the MENA region are experiencing significant growth in their startup ecosystems, signaling their emergence as promising contenders. However, it is worth noting that Silicon Valley still retains its position as the world’s most promising startup ecosystem, as highlighted in the report from Startup Genome.
Analyzing data from 3.5 million startups across 290 global ecosystems, metrics such as business performance, funding, market reach, and talent consistently place Silicon Valley as the leading startup ecosystem. New York and London are closely behind, as reported in the study.
According to the report, there was a 35% annual decline in VC funding in 2022. This decline can be attributed to various factors, such as Russia’s invasion of Ukraine, disruptions in energy and supply chains, and the rise in inflation and interest rates.
Despite the overall decline in funding, the MENA region showcased resilience from 2021 to 2022. The region experienced a slight decrease of 5% in early-stage funding, a 19% decline in fundraising totals for Series B rounds and beyond, and a 14% decline in total VC funding. Notably, Tel Aviv, Dubai, Cairo, Riyadh, and Abu Dhabi emerged as the top five ecosystems within the MENA region.
Abu Dhabi witnessed significant growth, ranking as the sixth fastest-growing ecosystem globally and the largest in the MENA region. The report highlighted the fintech, cleantech, agtech, and new food sectors in Abu Dhabi for their talent density, support resources, and startup activity. Factors such as the golden visa program and strategic location make Abu Dhabi attractive to startups. Emerging ecosystems in the region include Amman, Sharjah, Casablanca, Tunis, and Beirut.
Dubai holds the 12th position in the global rankings of the top 100 emerging ecosystems. The city receives favorable scores regarding access to funding, connectedness, and market reach. However, it lags in collective knowledge and has a moderate ranking in talent. The ecosystem value of Dubai is estimated at $21 billion, calculated based on the value of exits and startup valuations from 2020 to 2022.
Cairo has made notable progress in the emerging ecosystems ranking, advancing to the 51-60 range from its previous position. The city experienced a significant boost in its ranking. Furthermore, Cairo’s ecosystem value witnessed impressive growth, increasing by 97% to $8 billion.
Riyadh has made substantial progress in the emerging ecosystems ranking, moving from the 61-70 range to the 91-100 range. This significant improvement reflects Riyadh’s growing potential as a startup ecosystem. Additionally, the city’s ecosystem value experienced remarkable growth, increasing by 100% to reach $10 billion.
The report emphasized that 2023, despite being a year of recession, presents a favorable opportunity for investment in startups.