MENA unicorns set to emerge due to favorable regional conditions, according to a recent report by Saudi firm STV.
Saudi Technology Ventures (STV), a leading regional technology VC fund, claim in a new report that the region will see the emergence of over 45 MENA unicorns (companies with a projected value of over USD 1 billion) by 2030. The report claims that the 45 firms could reach a total equity value of over USD 100 billion.
MENA unicorns: The regional environment
The new report states that the MENA region is ideally placed to support the rise of technology unicorns. With 55% of MENA’s population under the age of 30, the consumption of digital media is on the rise, with social media being used on average for 3.5 hours a day.
The report, titled “From Startup to IPO: Unlocking a $100B+ Opportunity” details the environmental factors which, STV claim, will allow startups, and MENA unicorns, to thrive. The report details in-depth analysis of the MENA region and explores how it might be possible to support the ecosystem to further encourage entrepreneurship and bolster efforts at scaling technology companies across a range of sectors and states in the region.
Challenges
According to STV, there are a series of challenges that face technology startups. These include being able to crack the largest markets in the MENA region, the creation of sustainable growth channels and maintaining regional independence while maximizing growth. STV proposes a “playbook” by which investors and founders might overcome these hurdles.
Saudi prominence
The report covers the growth potential of the entire MENA region, but focuses on Saudi Arabia as an anchor market for venture capital activity and IPOs. STV claim that Saudi’s high GDP, ongoing political and social reforms, and a strong public market – which the firm claims is one of the global top 10 in terms of market capitalization – position the country as an attractive market for investment for technology-related companies and MENA unicorns in particular.
Finally, the report covers the advances made within Saudi through the creation of regulatory sandboxes, the promotion of digital adoption and APIs within government entities and the state’s ongoing investment in regional VCs. The role of regulators and government stakeholders is highlighted as being pivotal in supporting the local and regional investment scene and in attracting the attention of international investors.
Investment slows in July
Despite the MENA region attracting USD 1.8 billion in investment in the first half of 2022, according to MAGNITT, in July investments slowed to USD 105 million, the lowest monthly level to date in 2022.
The full STV report can be downloaded here.