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Thursday, Oct 02, 2025

Middle East start-ups must smash 'scale-up ceiling' to achieve Unicorn status

Middle East start-ups must smash 'scale-up ceiling' to achieve Unicorn status

Research from New York Data Analytics firm CB Insights revealed the Arab world has just one single Unicorn

A “scale-up ceiling” must be broken if Arab innovation is able to product the MENA region’s next Unicorn, according to Areije Al Shakar, fund director at Al Waha Fund of Funds.

Recent research from New York Data Analytics firm CB Insights revealed the Arab world has just one single Unicorn – Emerging Markets Property Group, in the UAE, which is currently valued at $1 billion and whose investors include OLX Group, KCK Group and EXOR Seeds.


Al Shaker told Arabian Business: “Certainly population size is an issue, but a number of countries with populations smaller than even Bahrain’s – such as Estonia, Malta and Luxembourg – each boast their own Unicorn.

“There is an abundance of talent in the region, but Arab innovation is faced with a ‘scale-up ceiling’. If we can break it, the sky is the limit.”

While home-grown billion dollar companies in the region may be in short supply at the moment, there are plenty examples of hugely successful start-ups, such as Souq.com, which was taken over by Amazon in 2017 in a $580 million deal.

Al Shakar stressed the mindset had to change from one of consumer, to innovator, while investors must have the “risk appetite” to fund projects.

She said: “In general we’ve always been great consumers of innovation. We have the ability to buy the new technology and bring it over. We actually do have great innovation that is happening on the ground across the region and then, where the scale-up ceiling happens is that we do have investors and do have fund manager that are able to write the cheques up to a series B or series C.

“We even have the appetite. Investors are ok to risk that money because it’s not such a big cheque, but once you get to the Series C and D levels, the cheque sizes get bigger and so the risk appetite needs to get bigger.”

Ride-hailing app Careem has arguably been the greatest start-up success story from the region in recent years, following its $3.1bn sale to Uber, which was officially completed at the start of this year.


Al Shakar believed the positive ripple effects of the move will continue to be felt across the region for some time to come.

“I think we need more Careems and more successes. But Careem is a success, not only as a unicorn, but I see it as a university or a school because the type of talent that it employed and how many of those talent, whether they were at the top co-founder level, or engineer level, they didn’t have to be the C-Suite, but these people graduate out of Careem and start their own different types of tech businesses and end up becoming engineers in other businesses,” she said.

“There’s kind of an overflow effect and I think, whether we reach unicorn level or the millions level, I think what we’re creating is an environment and an industry where people can thrive.”

Despite being set up only two years ago, Bahrain-based Al Waha Fund of Funds has so far deployed tens of millions of dollars to a range of venture capitalists, including MSA Capital, Lumia Capital, BECO Capital, Middle East Venture Partners, 500 Startups and European fund manager Finch Capital.

In July it was revealed that it made a “substantial” investment in the Bedaya Fund 1 of seed-stage UAE-based venture capital fund Shorooq Partners.


Despite the disruptive impact of the coronavirus pandemic, Al Shakar said VC confidence in the region has been at an all-time high, with the first six months of the year seeing record levels of funding.

She said the “silver lining” to come from the current crisis is the emergence of serious players in the start-up sector.

“I think it’s also been able to clear out a lot of, I guess, the impersonators. There’s a lot of times where everything becomes very much a trend and everybody wants to get into it, but you realise now the ones who are truly believers in the opportunity across the region and those who are just here to be part of the ride,” she said.

“I was talking to a fund manager who said, it’s not just with the fund managers that you see that, but you also see a lot of entrepreneurs who probably just want to start a business because programmes are out there, the grants are out there. But this kind of crisis has also been able to weed out the entrepreneurs that are actually serious and really want to grow businesses out.”

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